Hydrogen Europe’s Flagship Expo and conference brought hundreds of hydrogen experts across Europe together last week in an event packed with thought provoking discussions and loads of networking opportunities.
Stepping back and analysing all the interventions, the key message I took away is the need for the hydrogen market to move with speed. Timescales to develop industrial projects which can take over 5 years, supply chain bottlenecks leading to long lead times for components and targets set for 2030 means actions are needed today, and pace will be crucial if we are to meet the targets set out in Europe.
Beyond this overall message, here are my top 5 takeaways from the event:
- High ambitions for renewable hydrogen in the EU, driven by two goals: to decarbonise and to have technology leadership
Europe retains a high ambition to become a leading hydrogen economy worldwide. On one side there was a strong commitment towards scaling up the industry to meet the RePowerEU targets to produce 40 million tonnes of clean hydrogen, plus importing another 40 million tonnes by 2030. But beyond this target figure on a piece of paper, one could breathe through the exhibition floor the strong drive to develop all the “know how” and retain value generating activities within the union. Europe is looking at the hydrogen economy not only as an opportunity to decarbonise, but as a way of retaining technological leadership.
- Green hydrogen will disrupt traditional business models – new partnerships and collaborative approaches are already emerging
Hydrogen projects require a broad range of experts, and the companies across the value chain are in active discussions regarding collaborations. From renewable generator developers, through electrolyser cell manufacturers and integrators, all the way down to automotive manufacturers or large industrial groups with portfolios to decarbonise. Walking the floors of the conference centre it was common to hear about different ongoing collaborations to develop hydrogen solutions. The business-to-business conference floor also served as a stage for companies to showcase their work and link with other players across the value chain. The pressing need for skilled talent was also evident, and a growing concern for the whole industry.
The increasing collaborations happening across the value chain are creating new ways of making business. The clearest example of this was presented by GravitHy which will produce iron from the iron ore using green hydrogen and will sell this to steel manufacturers. This takes out part of the process which conventional steel producers currently undertake, while simplifying their investment to generate green products. At LCP Delta we expect to see more of this emerging innovative business models emerging to adapt to the fragmented value chain.
- A lack of standards and regulation, and the fear that progress is too slow
Regulation was highlighted by several speakers as the biggest barrier which is stagnating developments as there is no clarity on future rules which may be applied to the market. The Clean Hydrogen Alliance announced they will be publishing a standardisation roadmap at the end of the year which will cover recommendations to develop these much-required industry standards. Members of the European Commission were also present at the panel discussion to showcase the broad range of use cases being worked on to achieve a comprehensive framework.
On the other side of the coin, the event also highlighted the urgency for Europe to speed up policy development if it is to maintain leadership in the global clean hydrogen market. The US announcement of the Inflation Reduction Act in August has sent a shockwave down the European hydrogen agenda, with many companies considering investment overseas after the attractive and clear incentives offered. The fear of losing the competitive advantage currently held by the European market was present in all corners of the event. Despite the European Hydrogen Bank announcement by the European Commission, details on the investment mechanism remain undisclosed and continue to highlight the bureaucratic hurdles the EU is faced with.
- Private capital is looking to be deployed, but securing FID remains challenging
2022 was highlighted as a year of increased project investments, however, French utility Engie shared they currently have a success rate of 1 out of 3 hydrogen projects. Final investment decisions for most projects today depend on securing public funding, which is providing a lengthy process. However, there were several lenders and investment funds pitching their financing offerings as they are also looking to support projects.
Most notable financial pitches included those of Smart Energy and Hy24. Smart Energy presented a 1 GW hydrogen pipeline with a diversified project portfolio both geographically and technologically to minimise investment risk. Hy24 who has raised circa €2bn through its investment fund will dedicate 45% of funds to production deploying around 6 GW of electrolysers, and the rest will develop infrastructure for hydrogen transport. The development of these funds showcased the maturing market opportunities as a wider range of investors are willing to invest in hydrogen offerings.
- A range of technological pathways are being developed
There is an emphasis in Europe around supporting development of all technologies to ensure a fair market competition among companies. The idea behind this is the market will ultimately find key use cases for each technology and this will vary among market and customers. It also reduces the investment risk of setting all expectation in a single solution and diversifies the origin of materials required, protecting our markets from a single supplier dependency.
The floor of the Expo showcased a variety of product offerings, with fuel cell offerings – and more specifically fuel cells for mobility applications – accounting for a large portion of the exhibitors. Transport applications account for the largest number of hydrogen projects developed currently, which was noticeable in the company stands. However, all the discussions on achieving future targets were still heavily production centric.