Proposed green hydrogen projects are surging across the globe as governments seize opportunities afforded by post-pandemic green stimulus packages. Rystad Energy research shows the global pipeline of utility scale green hydrogen developments, meaning projects with capacities greater than 1 megawatt (MW), now exceeds 60 gigawatts (GW), with 87% of this capacity coming from gigawatt-scale plants. Green hydrogen developments can be understood as hydrogen electrolyser projects that are powered by renewable sources, and such projects are currently being planned in all continents. Europe and Australia dominate the global pipeline, which includes 11 proposed electrolyser projects with a capacity of 1 GW or more. Four of these projects will come from Australia: the Asian Renewable Energy Hub, Murchinson Renewable Hydrogen Project, Gladstone Hub and the Pacific Solar Hydrogen. "Despite the growing pipeline, we forecast less than half of this capacity (30 GW) will be operational by 2035, as developers will need to lower production costs. Government support will be required to advance projects more quickly, particularly for those developments that will be powered by costlier offshore wind," said Rystad Energy's Head of Renewables, Gero Farruggio. As governments establish COVID-19 recovery strategies, green hydrogen is increasingly included as a key driver, especially in Europe. The European Union has recently released its hydrogen strategy, which calls for 40 GW of hydrogen electrolyser capacity by 2030, as well as the construction of an import supply chain with an additional 40 GW of electrolyser capacity from outside Europe, including Ukraine and North Africa. EU members have released their own billion Euro strategies, with Spain, Germany and France committing 4, 5 and 6.5 GW of green hydrogen respectively by 2030. Germany is working with Morocco to support the production of green hydrogen in the North African country, with the first 100 MW project to be a hydrogen electrolyser powered by solar. The EU's current pipeline of announced electrolyser concepts stands at 27 GW of capacity. In Asia, hydrogen road maps are driven by demand creation. Japan and Korea are looking into importing hydrogen and developing international supply chains, especially in transportation. Hydrogen is expected to feature in China's forthcoming five-year energy plan, as well as those expected from provincial authorities. China's current hydrogen production comes from fossil fuel, state-owned and state-backed corporations such as SPIC, Beijing Jingneng and CNOOC, all of which have begun projects aimed at green hydrogen production; the first gigawatt-scale project, the Beijing Jingneng facility in Inner Mongolia, is expected to come online next year. The Australian government has set high ambitions for hydrogen exports, with grants available at both the state and federal level. The government-funded Clean Energy Finance Corporation (CEFC) has committed $210 million (A$300 million) in dept or equity financing. A further $50 million (A$70 million) from the Australian Renewable Energy Agency (ARENA) will be awarded next year for hydrogen electrolyser projects over 10 MW. ARENA has already shortlisted seven applications, all with construction start expected in the next 12 months. Australia has also signed an agreement with South Korea and Japan to begin establishing an international hydrogen supply chain. The US does not yet have a clear national hydrogen strategy yet but has committed $64 million towards the research and development (R&D) of hydrogen technologies in 2020. The Biden campaign has made clean energy central to its mandate, with some reference to building up the country's renewable export potential. Finally, OPEC giant Saudi Arabia kick started its hydrogen ambitions with a gigawatt scale green hydrogen project in Neom — the green economic zone — valued at $5 billion and spear-headed by joint venture partners Air Products and ACWA Power. Most electrolyser installations currently operating are in the pilot or R&D phases, with low capacities. Europe is clearly already in the lead in terms of operational, utility-scale projects above 1 MW, with the majority of operating projects located in Germany. In terms of projects under-construction, China's previously mentioned 5 GW Beijing Jingneng facility in Inner Mongolia will likely be the first gigawatt-scale electrolyser to become fully operational, with construction already under way. The facility will consist of both a solar farm and onshore wind farm, the energy from which will feed the production of 400,000 to 500,000 tons of hydrogen (H2) per year. The majority of global hydrogen electrolyser projects will be powered by solar and onshore wind, with only five planned large-scale projects to be powered by offshore wind farms. The 10 GW NortH2 project, proposed by a Shell-led conglomerate in the Netherlands, is among the largest hydrogen electrolyser developments to be powered by offshore wind, along with the 600 MW Westküste 100 project in Germany, which is being developed by Ørsted and EDF. Ørsted has another gigawatt-size project planned in Denmark, should it win the bid to develop an offshore wind farm in Bornholm. Additionally, the capex required for onshore wind and PV have plummeted in recent years, a price factor which is critical to reducing the levelized cost of hydrogen. Notably, the capex of utility PV which has dropped from over $4 per watt (WAC) in 2011 to $0.75 per WAC in 2020. It comes as no surprise then that we are seeing so many pioneering hydrogen projects powered by solar PV. Conversely, offshore wind offers a much higher capacity factor, but at a higher price tag. Rystad Energy estimates the capex required of offshore wind is over twice that of its onshore counterpart, and four times that of onshore solar PV, making it less attractive for locations that have reasonable onshore resources. Europe has little choice but to explore offshore wind to power large scale hydrogen developments, and like the broader offshore wind sector, hydrogen electrolyser projects will likely remain reliant on government support for the remainder of the decade in order to be economically viable. For now, pure renewable energy developers dominate the global green hydrogen pipeline. Nevertheless, E&P's have an increasing presence in the broader renewable energy market, including green hydrogen; BP, Shell, Repsol and GALP have all announced green hydrogen concepts this year. — Rystad Energy
