Riding the 'hydrogen hype,' Siemens Gamesa grapples with scaling technology

A Siemens engineer working on an electrolyzer. While wind turbines have undergone rapid capacity growth in recent decades, Siemens Gamesa sees challenges in growing the electrolyzer technology. Source: Siemens AG

When the International Maritime Organization mandated stringent environmental standards for the shipping industry in 2018, ammonia made from hydrogen emerged as a potential replacement for marine fuel.

That plan piqued the interest of wind-turbine maker Siemens Gamesa Renewable Energy SA, and since then, hydrogen has become the darling of policymakers and a weapon of choice for decarbonizing industries far beyond just the shipping sector.

In a bid to tap into a booming hydrogen economy that is likely to require thousands of new gigawatts of renewables, Siemens Gamesa partnered with its parent Siemens Energy AG to integrate electrolyzers, used to produce renewable hydrogen, with its offshore wind turbines.

Using Siemens Gamesa's under-development 14-MW platform, the companies are targeting offshore fuel users like the shipping industry as well as makers of fertilizers and chemicals.

While the basic concept is not new, the falling cost of electricity from offshore wind turbines has only recently made it an economically viable proposition. "We've managed to bring down the electricity prices, that's what makes this really interesting. Ten years ago, this was way off," Poul Skjærbæk, chief innovation and product officer at Siemens Gamesa, said in a Jan. 15 interview.

But despite the improving economics, the engineer is not expecting a miracle. Scaling the technology will still take years.

"I still think that there is a little bit of a hydrogen hype around at the moment and I'm not sure everyone has completely understood all of the things that need to be done to make this happen," Skjærbæk said.

Still, the hype is good news for Siemens Gamesa, he added: "In some markets we are reaching the saturation point for injecting more wind energy."

Europe has set an ambitious target to produce 40 GW of green hydrogen by the end of the decade, some which will be made offshore. While wind turbines have ballooned in capacity over the past 20 years through fierce competition, Skjærbæk anticipates an uphill struggle scaling up electrolyzer technology. "I think it's doable — it's about investments, it's about getting it industrialized," he said.

To have a shot at scaling the concept to a reliable level by the end of the decade, money and brain-power need to be deployed now. "Now is the time to act. ... We see a market for the second half of the [2020s]," he said.

For now, Siemens Gamesa and Siemens Energy are grappling with developing a functioning, reliable prototype. The companies plan to build the first 100-MW to 400-MW projects by 2028.

"If we do our homework right, they should be profitable," Skjærbæk said. The companies, like many players in Europe's utility space, have pledged millions for the development of green hydrogen projects, but government incentives will be essential to unlock the billions needed, he added.

The profitability of green hydrogen projects will depend importantly on the value a future market will assign to zero-carbon molecules. The European Commission has tasked a cross-industry panel to come up with a market design, and a system tracing the carbon footprint of the fuel is expected to be introduced to incentivize the use of green hydrogen.

"If you buy Russian gas and crack it you can make gray hydrogen at €1 [per kg]. We are for sure not there yet," Skjærbæk said. "But there is also a price tag on the environmental side."