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Hydrogen fever in EU puts 2024 target of 6-GW electrolyzer capacity in reach

Highlights

Proposals at 5.2 GW by 2024: Platts Analytics

Spain leads way with over 2 GW

Less visibility on ambitious 2030 target

European electrolyzer project proposals are not far off the EU's target of 6 GW of capacity by 2024, which would be able to produce up to 1 million mt/year of renewable hydrogen, according to data from S&P Global Platts Analytics.

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Proposed electrolyzer projects due online by 2024 in the EU amounted to 5.2 GW at the start of July, according to the Platts Analytics Hydrogen Production Database.

There is a larger shortfall between the EU's 2030 target of 40 GW of installed electrolyzer capacity and the 22 GW of announced proposals, though the more distant time horizon gives plenty of scope for an acceleration in project developments in the meantime.

Platts Analytics noted a rapid acceleration in project announcements in the last 12 months.

"Driven by increasing governmental support, the announced production capacity for clean hydrogen continues to grow, with new large-scale projects being announced regularly," the Hydrogen Council's executive director Daryl Wilson told S&P Global Platts by email July 5.

The dataset includes announced and operational electrolyzer plants powered by renewable electricity, though for some proposals the power source is not known. The EU target is for green hydrogen, produced from renewables.

EU electrolyzer target renewable hydrogen 6 GW by 2024

Gains in Spain

Much of the announced capacity scheduled to come online by 2024 is planned in Spain, accounting for over 2.2 GW.

While projects in Denmark, the Netherlands and Spain have made early leads towards 2030 national and EU targets, there is still a long way to go before installations of the scale needed to meet these targets materialize.

"While the future of the European hydrogen economy remains dynamic, clear trends are emerging," Platts Analytics' lead analyst for European gas, Adrian Dorsch, said. "The Netherlands with its industrial clusters as well as renewable power and carbon capture storage capacity is set to be a front runner in the hydrogen space."

The Hydrogen Production Database shows Greece leading the way by 2030 with its giant White Dragon proposal of around 5 GW. Proposals in the Netherlands are near the upper bound of the country's target of 3-4 GW, and Spain is also approaching 4 GW.

Countries with more ambitious targets such as France (6.5 GW), Germany (5 GW) and Italy (5 GW) have much further to go, and less to show for it in terms of concrete announced projects.

Germany has pledged Eur9 billion ($10.8 billion) to develop renewable hydrogen, with Eur2 billion allocated for international partnerships. It is targeting 5 GW of electrolysis capacity by 2030, with 2 GW reserved for the transport sector, and a further 5 GW installed by 2040 at the latest.

Industry body Hydrogen Europe is confident the EU will meet its 2024 target, the group's head of policy, Constantine Levoyannis, said in May, citing data from the European Clean Hydrogen Alliance.

"Looking at the projects that have been submitted in this process, we're very close to hitting that 6-GW target already," Levoyannis said at the Reuters Hydrogen 2021 conference.

The EU set up the alliance under the auspices of the European Commission, with the aim of developing a pipeline of projects to meet the 6-GW target. The EC sees many projects coming online by 2025.

"We are seeing a significant interest in the deployment of hydrogen in Europe," a Commission source said June 29. The ECHA has collected over 1,000 projects, most of which will be rolled out in the next three to four years, the source said.

"These include projects for the production of almost 9 million mt of hydrogen by 2030," the source added. The EU's 2030 target is to produce up to 10 million mt/year by that date.

Consortiums bring scale

The headline capacity announcements are comprised of hundreds of individual projects, with a few gigawatt-scale plants adding to many more small-scale facilities. The top 10 projects by size account for over half the almost 22 GW of capacity announced for Europe by 2030.

Larger projects, such as the 1-GW SeaH2Land project in Northwest Europe, are often developed by a consortium of companies covering a significant portion of the renewable hydrogen value chain. SeaH2Land is backed by Orsted, Yara, ArcelorMittal, Dow and the Zeeland Refinery.

Projects of this scale typically plan to come online in stages, ramping up production over a number of years. Smaller projects also will start with a pilot phase in the single-digit or tens of megawatts, before increasing production.

Platts Analytics said electrolysis manufacturing capacity was the bottleneck in ramping up production, but said global capacity was adequate to meet the European targets.

Many of the projects in the database have not reached a final investment decision or secured offtake agreements, highlighting the degree of uncertainty there is in the rapidly expanding sector. Financing is key at this early stage of developing the renewable hydrogen market, and many projects are focused on clearing state aid hurdles to access EU funding.

Policies needed

UK-based electrolyzer manufacturer ITM Power said earlier in June that post-coronavirus pandemic economic support funds combining recovery packages with environmental measures boded well for the sector's growth prospects.

Hydrogen Europe's Levoyannis warned, however, that national governments needed to remove regulatory barriers and red tape if the sector was to thrive. He said strict "additionality" requirements -- whereby green generation used for electrolyzer projects must add to existing capacity -- and project construction rules requiring electrolyzers and associated renewables capacity to be built within 12 months of each other hindered development.

Levoyannis said three areas would be critical for financing hydrogen projects in Europe: the EU's taxonomy governing which projects were eligible for sustainable investment; EU funding programs, such as the recovery and resilience fund; and dedicated state aid guidelines for promoting hydrogen technologies.

RWE Generation's head of hydrogen strategy, Sebastian Vogel, said the company had finance available for further electrolyzer projects if needed, but more clarity was needed from regulators to support demand and give certainty to planning decisions.

"We really need to move fast to make it for 2024 and 2030, so we need planning reliability," he said. "We need stability regarding the framework and then the gigawatts will also come, but we should not waste any more time."

European hydrogen policies

COUNTRY/REGION
POLICY STATUS
BUDGET
TARGETS
DETAIL
EU
Jul-20 - EC proposal
Eur24-42 billion to 2030 on electrolysis, Eur11 billion on CCS
2024: 6 GW renewable H2 electrolysisnull null 2030: At least 40 GW electrolysis, producing up to 10 mil mt H2
First phase: 6 GW electrolysis by 2024, producing 1 million mt green H2. Second phase: at least 40 GW electrolysis by 2030, producing up to 10 million mt H2. Third phase: 2030 on, maturity for renewable H2 technologies.
France
Sep-20 - formal strategy
Eur7 billion, of which Eur2 billion from recovery funds
2030: 6.5 GW electrolyzer capacity (Eur7 bil spending)
France to spend Eur7 billion on a 6.5 GW electrolyzer target by 2030, with Eur2 billion available in 2021/22. Expression of interest organized by govt resulted in 160 proposals requiring Eur32.5 billion investment.
Germany
Jun-20 - formal strategy
Eur9 billion
2030: up to 5 GW electrolysisnull null 2035 (if possible)/2040 (latest): additional 5 GW electrolysis
Eur7 billion to be invested in German businesses and research, Eur2 billion in international partnerships. Target: up to 5 GW electrolysis by 2030, another 5 GW by 2035, 2040 latest. 2030 target equates to 14 TWh H2 production, requiring 20 TWh of green power.
Netherlands
Apr-20 - formal strategy
Eur35 million/yr
2025: 500 MW electrolyzersnull null 2030: 3-4 GW electrolyzers
Ambition for 500 MW electrolysis by 2025 and 3-4 GW by 2030. Preparatory phase to 2021 with Eur35 mil/yr funding for research, pilot projects. Green H2 projects can bid into SDE++ scheme from late 2020. Carbon capture can also be funded under SDE++.
Spain
Oct-20 - Roadmap
Eur8.9 billion global cost, most from private sector
2024: 300-600 MW electrolysisnull null 2030: 4 GW electrolysis (Eur8.9 bil costing over 10 years)
60-point plan sets goal of 4 GW electrolysis by 2030, backed by a system of Guarantees of Origin, with green hydrogen quotas for industry. Plan costed at Eur8.9 billion over 10 years, most from private sector. Spain produces 500,000 mt H2/yr. Plan to move 25% of this demand to green H2 by 2030.
Scotland
Dec-20 - policy statement
GBP100 million over five years
2030: 5 GW of renewable and low-carbon hydrogennull null 2045: at least 25GW of renewable and low-carbon H2
GBP100 million for research, innovation, demonstration of clean H2 production between 2021 and 2026. Hydrogen Action Plan in 2021 to set out implementation of policies. Aims to establish low-carbon H2 production at scale by mid-2020s, linked to CCS.
UK
Dec 2020 - Energy White Papernull null July 2021 - Hydrogen strategy due
GBP240 million Net Zero Hydrogen Fund to 2024/25
2030: 5 GW of low-carbon hydrogen capacity. First town heated entirely by H2.
Energy white paper targets 42 TWh/yr of low carbon H2 production by 2030. CCUS and green H2 projects being supported at demo stage in various clusters. Targets include Scottish capacity.
Portugal
May-20 formal strategy
Eur7 billion
2030: 2-2.5 GW electrolysisnull 10-15% H2 in gas grid, 2-5% of final energy consumptionnull null 2050: 5 GW electrolysisnull 75-80% H2 in gas grid, 15-20% of final energy consumption
Targeting 2-2.5 GW electrolysis by 2030 rising to 5 GW by 2050. 10-15% H2 in gas grid by 2030, rising to 75-80% by 2050. Total energy consumption targets: 2%-5% hydrogen by 2030, 15%-20% by 2050. System of GOs to support H2 production, plus system of financial resources.
Norway
Jun-21 hydrogen roadmapnull null Jun-20 formal strategy
NOK 200 million infrastructure, markets, R&D, NOK17 billion CCS
2025: Five maritime transportation H2 hubs, one-two industrial hydrogen projects, 5-10 pilot projects for new hydrogen tech and cost reductions.
Technology development and commercialization support pledged but no capacity targets. Focus on maritime, heavy transport, industrial processes. Focus on CCS, with a NOK17 billion "Longship" program of support announced Aug. 2020.
Italy
Nov-20 Consultation on national strategy through Dec 21, 2020
Eur10 billion investments in technology
2030: 5 GW of electrolysis and 2% share of hydrogen in final energy demand.null null 2050: H2-based generation and home heating system.
Possible creation of "hydrogen valleys" to accelerate adoption. Targets up to 20% of hydrogen in 2050 final energy demand. Ministry considering which model best suited to support renewable hydrogen production.
Poland
Jan-21 formal strategy
Zloty 17 billion (Eur 3.74 billion) in support for investments by 2030
2030: 2 GW of electrolysis, 2,000 hydrogen fuel cell buses
Hydrogen strategy includes six goals, including the introduction of H2 in power sector, offshore wind for producing green hydrogen. 500 hydrogen fuel cell buses by 2025 and 2,000 by 2030, together with 32 refueling stations.
Austria
Mar-21: Renewable energy expansion law, which includes policy strands on sustainable hydrogen.
2030: conditions for feeding H2 into existing gas grid. 5 TWh of domestically-produced renewable gas (biomethane, green hydrogen, synthetic gas from renewable sources).
Hydrogen strategy planned. NECP 2030 target of 46-50% renewable energy in final mix. Ministry of Sustainability and Tourism's 2050 long term strategy sees costs of producing green hydrogen in Austria at Eur62/MWh.

Source: S&P Global Platts

Additional reporting by Camilla Naschert, S&P Global Market Intelligence