This visionary idea of hydrogen as a fuel source is gaining more attention today. Hydrogen (H₂), the most abundant molecule in the universe, is increasingly seen as a key player in energy storage and transportation.
This would enable energy generation from renewable sources when available and use when needed, contributing to a more sustainable and flexible energy future. This week, we delve into Hydrogen Industry’s opportunities and challenges.
Is The Hydrogen Industry inevitable or just wishful thinking?
The transition to a clean energy future encounters various challenges, with one of the most urgent being energy storage. Renewable energy sources such as wind, solar are inconsistent, only available under optimal conditions. The typical solutions for storing energy, like lithium-ion batteries, are expensive, rely on scarce minerals.
This is where The Hydrogen Industry presents a promising solution. Hydrogen holds the potential to address the energy storage issue. It can generated from renewable energy sources, stored, transported in either gas or liquid form, and converted into heat or electricity as required. This flexibility makes it a perfect candidate for balancing energy supply and demand across time and space.
Hydrogen as an Energy Source
Hydrogen is currently being utilized to generate electricity. Fuel cells transform hydrogen into power, with steam as the sole byproduct. This technology is versatile, serving both small-scale needs, such as powering electric vehicles, and larger applications, like supplying energy to entire power grids.
The Hydrogen Industry is frequently highlighted for its environmental advantages. By shifting to hydrogen, we can lower carbon emissions, especially when transitioning from fossil fuels to more sustainable production techniques. This has fueled the growth of “green hydrogen.”
Green Hydrogen and Its Variants
Green hydrogen denotes hydrogen produced through renewable energy sources like wind or solar power. The electricity generated powers an electrochemical process that splits water into hydrogen, oxygen. Green hydrogen is considered the ultimate sustainability benchmark and plays a key role in the vision of a completely decarbonized hydrogen economy.
However, other forms of hydrogen production exist, each with varying environmental impacts:
Pink Hydrogen: Produced with nuclear energy, pink hydrogen doesn’t release carbon dioxide (CO₂) and is viewed as a cleaner alternative to traditional fossil fuel-based methods.
Blue Hydrogen: Derived using natural gas, blue hydrogen captures and stores most CO₂ emissions, making it more eco-friendly than conventional methods. It is seen as a bridge solution while green hydrogen infrastructure is still developing.
Grey, Black, Brown Hydrogen : These are created from fossil fuels like natural gas, coal, and methane without capturing CO₂ emissions. This production method is the most environmentally harmful and remains the dominant form today.
The Existing Hydrogen Industry
Hydrogen already plays a crucial role in the global economy, especially in industrial applications. Around 100 million tonnes of hydrogen are produced annually, with most of it used in fertilizer production (mainly ammonia), oil refining, and iron ore processing. Currently, most hydrogen is derived using natural gas, which results in “grey hydrogen.”
The transition from grey to green hydrogen could lead to a significant reduction in CO₂ emissions in these industries. However, for green hydrogen to dominate, technological and infrastructural advancements are needed, particularly in renewable energy generation and efficient water splitting for hydrogen, oxygen production.
Is The Hydrogen Industry Inevitable?
While the vision for a hydrogen-based economy is compelling, there are still significant challenges to overcome. The infrastructure for producing, storing, and transporting green hydrogen still needs to be put in place, and the cost of production needs to fall further to make it competitive with other energy sources. Furthermore, the debate continues on whether hydrogen can genuinely scale to replace fossil fuels in the coming decades or if it will remain a niche solution.
Ultimately, the success of the Hydrogen Industry will depend on political will, technological advancements, and market conditions. It may not be a matter of “if,” but “when” hydrogen becomes a significant player in the global energy landscape.
🧪 Science Needed: Challenges for the Hydrogen Industry
While the hydrogen industry, especially green hydrogen, holds promise in addressing many obstacles in the shift to clean energy. In practice is much more intricate. The technologies involved face numerous technical challenges, many of which remain inefficient, unscalable, or not viable enough to make a meaningful impact.
Energy Efficiency Challenges
A key issue with hydrogen involves energy loss at multiple stages of the process. Energy is wasted when renewable electricity from sources like wind, solar is converted into hydrogen, further losses occur as hydrogen is used to generate electricity. Additional energy is required for storage, transportation, and the development of infrastructure to support hydrogen systems.
As a result, only about 20-30 precent of the original power generated from renewable sources is ultimately usable. This becomes particularly problematic in sectors like vehicle propulsion or industrial applications, where efficiency is vital. In heating systems, the energy losses are even more significant compared compared to electric heating pumps, which have much higher efficiency.
Improvements in Efficiency
Some progress has been made, particularly in electrolysis technology. Companies like Hysata in Australia are developing more efficient electrolyzers, claiming that their system can split water into hydrogen, oxygen with 95 precent efficiency, in contrast to 80% efficiency typically found in large-scale systems today. However, the widespread adoption of such technologies remains a distant goal.
Energy Density and Storage
Hydrogen, by its nature, has a low energy density per unit of volume. Even when liquefied, hydrogen contains only about a quarter of energy in an equivalent volume of gasoline. Therefore, storing and transporting hydrogen requires significant energy input. To make hydrogen a viable energy source, it must either be compressed or liquefied, both of which are energy-intensive processes.
As a result, hydrogen storage and transport are costly, and these expenses can only be reduced through substantial technological breakthroughs. Researchers are actively working on more efficient storage and transport methods, but the challenge remains substantial.
Scarcity of Resources
Hydrogen production, primarily through electrolysis, depends on rare materials like platinum, iridium, which are used in fuel cells and electrolyzers. Additionally, electrolysis requires large quantities of clean water, which could pose problem in regions with limited water resources. This dependence on rare materials and water adds another layer of complexity to hydrogen industry.
Although resource scarcity poses a challenge for many energy generation methods, in hydrogen’s case, it adds an extra barrier to making the system both economically and environmentally sustainable.
FCVs
Hydrogen-powered vehicles, particularly passenger cars, face several challenges. Sales of FCVs in US have been disappointing. During Q1 of this year, only 223 FCVs was sold—fewer than during the same period in 2016. This decline can be attributed to several factors:
- The lack of hydrogen refueling infrastructure.
- The high cost of hydrogen fuel and fuel cell vehicles.
- The discontinuation of several vehicle models.
Electric battery vehicles (BEVs) have become the dominant force in the electric vehicle market. Nevertheless, some automakers continue to invest in and advance hydrogen fuel cell technology.
Larger Vehicles: A More Suitable Match for Fuel Cells?
While fuel cells might not be ideal for passenger vehicles, they show more promise in larger vehicles such as trucks, train, buses. In such cases, space becomes less of an issue, and refueling challenges can be addressed more effectively, especially when vehicles follow regular routes. However, even in this sector, fuel cell operators encounter difficulties in maintaining the smooth operation of their fleets.
A significant issue is the “chicken and egg” problem: fuel cell vehicles require cheaper hydrogen, an established refueling infrastructure to succeed, but these elements can only exist once a broader hydrogen production system is in place. Moreover, if the majority of hydrogen is still derived from fossil fuels, the environmental benefits of hydrogen usage are diminished.
The Path Forward for Hydrogen
For the hydrogen industry to flourish, several crucial factors must align:
Cost-effective green hydrogen: the production cost of green hydrogen must fall substantially. Many experts predict this will happen by 2030, making green hydrogen more competitive compared to blue or grey hydrogen.
Infrastructure Expansion: A widespread network for hydrogen production, storage, and refueling must be developed. This includes hydrogen fueling stations for vehicles and pipelines for large-scale transport.
Government Support: Governments worldwide are recognizing the potential of hydrogen and are starting to offer substantial incentives for production of green hydrogen, which could accelerate its adoption.
In conclusion, while the hydrogen industry faces significant technical and economic challenges, its potential rewards—clean energy storage, reduced carbon emissions, and new energy applications—make it an exciting field for research and development. With the right innovations, the hydrogen industry could shift from being a hopeful vision to an essential part of the clean energy future.
Investing in the Hydrogen Sector
For investors, the hydrogen sector presents several attractive factors that could foster growth for companies operating within this industry:
The inefficiencies currently present in hydrogen production offer substantial opportunities for enhancement. This opens avenues for businesses that can develop innovative technologies to tackle existing challenges in the sector.
Governments are increasingly supporting hydrogen, with the US offering Plug Power $1,660 million loan assurance for green hydrogen facilities and the EU Commission allocating €720m in grants for related projects.
While hydrogen’s role in energy applications is still evolving, substantial demand already exists from heavy industries. This demand is expected to facilitate the scaling of production of green hydrogen, making it a more cost-effective solution for energy storage.
Leading hydrogen energy firms in Canada, US, such as Plug Power, Ballard Power, Bloom Energy, are taking the lead in this industry. In Europe&Asia, prominent players like Nel, SFC Energy, Doosan FuelCell are also making their mark.
However, many smaller companies within the space face challenges as they work to create the necessary technologies and business models. As observed in Plug Power’s financial reports, a lot of these firms experience cash flow issues as they strive for sustainability.
That being said, the potential rewards for investors if these companies succeed are significant. For investors, it is essential to understand both the technological advancements and the economic fundamentals of these businesses.
Major industrial gas manufacturers, such as Linde Plc, Air Products & Chemicals, have been established for decades and are investing heavily in the production of green hydrogen. These large, established companies could ultimately dominate the hydrogen industry as they expand their focus into this new sector.
An additional option for investors is hydrogen-focused ETFs, such as the GlobalxHydrogen ETF, which provides exposure to a diverse range of companies in the sector. The ETF’s holdings page offers an extensive directory of hydrogen firms globally, serving as an excellent resource for uncovering new investment opportunities.
