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Electrolyser market outlook Green Hydrogen and Power-to-X projects overview 03/09/2020 VTT – beyond the obvious

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Page 1: Electrolyser market outlook Green Hydrogen and Power-to-X … · 2020. 9. 3. · 03/09/2020 VTT – beyond the obvious. 300 €/kW By 2024 at least 6 GW of electrolyser capacity installed

Electrolyser market outlookGreen Hydrogen and Power-to-X projects overview03/09/2020 VTT – beyond the obvious

Page 2: Electrolyser market outlook Green Hydrogen and Power-to-X … · 2020. 9. 3. · 03/09/2020 VTT – beyond the obvious. 300 €/kW By 2024 at least 6 GW of electrolyser capacity installed

03/09/2020 VTT – beyond the obvious

300 €/kW

By 2024 at least 6 GW of electrolyser capacity installedBy 2030 at least 40 GW of electrolyser capacity installed

Green hydrogen business is taking big steps

Page 3: Electrolyser market outlook Green Hydrogen and Power-to-X … · 2020. 9. 3. · 03/09/2020 VTT – beyond the obvious. 300 €/kW By 2024 at least 6 GW of electrolyser capacity installed

03/09/2020 VTT – beyond the obvious

Why hydrogen?

Review on Power-to-X projects

Hydrogen strategies and scale-up to GW-size hydrogen plants

Page 4: Electrolyser market outlook Green Hydrogen and Power-to-X … · 2020. 9. 3. · 03/09/2020 VTT – beyond the obvious. 300 €/kW By 2024 at least 6 GW of electrolyser capacity installed

Why hydrogen?

03/09/2020 VTT – beyond the obvious

Page 5: Electrolyser market outlook Green Hydrogen and Power-to-X … · 2020. 9. 3. · 03/09/2020 VTT – beyond the obvious. 300 €/kW By 2024 at least 6 GW of electrolyser capacity installed

Hydrogen production and applications

03/09/2020 VTT – beyond the obvious

The Future of Hydrogen, IEA, 2019

Page 6: Electrolyser market outlook Green Hydrogen and Power-to-X … · 2020. 9. 3. · 03/09/2020 VTT – beyond the obvious. 300 €/kW By 2024 at least 6 GW of electrolyser capacity installed

Hydrogen comes in many colours

03/09/2020 VTT – beyond the obvious

Hydrogen production sources are often described in colours:• Green: H2 produced from renewable electricity

• Blue: H2 produced from fossil fuels combined with CCUS

• Grey: H2 produced from natural gas

• Black: H2 produced from coal

• Brown: H2 produced from lignite

• Pink: H2 produced from nuclear power

Page 7: Electrolyser market outlook Green Hydrogen and Power-to-X … · 2020. 9. 3. · 03/09/2020 VTT – beyond the obvious. 300 €/kW By 2024 at least 6 GW of electrolyser capacity installed

03/09/2020 VTT – beyond the obvious

Hydrogen production via waterelectrolysis needs largeamounts of renewable energycapacity to produce greenhydrogen

Current electricity grid mixesmay result in higher GHG footprint than fossil-basedroutes

How green is green hydrogen?

328

691

11726

0

200

400

600

800

gCO

2/kW

h H2

GHG footprint of different hydrogen productionroutes

Grey hydrogen Electrolysis German mix 2018

Electrolysis Finnish mix 2019 - 2020 Green hydrogen

Page 8: Electrolyser market outlook Green Hydrogen and Power-to-X … · 2020. 9. 3. · 03/09/2020 VTT – beyond the obvious. 300 €/kW By 2024 at least 6 GW of electrolyser capacity installed

Hydrogen safety and use for energy storage

03/09/2020 VTT – beyond the obvious

https://hydrogeneurope.eu/hydrogen-storage

Safety concerns• Non-toxic• Highly flammable• Protocols for safe handling already

exists as a result of many decadesindustrial use

• Incidents have happened on hydrogenfuelling stations in South Korea and Norway

Page 9: Electrolyser market outlook Green Hydrogen and Power-to-X … · 2020. 9. 3. · 03/09/2020 VTT – beyond the obvious. 300 €/kW By 2024 at least 6 GW of electrolyser capacity installed

03/09/2020 VTT – beyond the obvious

Scale-up the whole hydrogen value chain• Demand for green hydrogen must be created to scale-up production,

transportation and storage Comprehensive policies and regulations to support investements

• Reduce market uncertainty CO2 pricing

• Even with policy and scale-up measures, high CO2 emission allowanceprices for fossil production are likely to be needed

Additional revenue from by-products• Oxygen• Grid services• Waste heat

Ways to make green hydrogen feasible

Page 10: Electrolyser market outlook Green Hydrogen and Power-to-X … · 2020. 9. 3. · 03/09/2020 VTT – beyond the obvious. 300 €/kW By 2024 at least 6 GW of electrolyser capacity installed

What to do with the by-product oxygen?

03/09/2020 VTT – beyond the obvious

For 1 kg of generated hydrogen, 8 kg of oxygenis produced.

Oxygen has the largest global industrial gasmarket with estimated demand of $19.2 billion in 2017 and expected to grow to $22.7 billion in 2023.

The price for oxygen varies significantlydepending on end-use application.

Page 11: Electrolyser market outlook Green Hydrogen and Power-to-X … · 2020. 9. 3. · 03/09/2020 VTT – beyond the obvious. 300 €/kW By 2024 at least 6 GW of electrolyser capacity installed

Electrolysers can play an important role in grid balancing

03/09/2020 VTT – beyond the obvious

System-wide oversupply and limitedelectricity grid causes renewableelectricity curtailment.

Hydrogen production via electrolysiscould help to reduce curtailment.

Electrolysers can quickly ramp up and down the production. According to Energiepark Mainz report, the fastresponse times are well achievablealso in large (MW scale) systems.

https://hydrogeneurope.eu/integrate-more-renewables

Page 12: Electrolyser market outlook Green Hydrogen and Power-to-X … · 2020. 9. 3. · 03/09/2020 VTT – beyond the obvious. 300 €/kW By 2024 at least 6 GW of electrolyser capacity installed

Waste heat is not currently utilised properly

03/09/2020 VTT – beyond the obvious

Particularly interesting revenue source in Nordic countries Alkaline and PEM electrolysis systems operate around 45 – 80 °C

temperature range, usually 50 °C. Waste heat generated from theoperation could be utilized in suitable applications. Higher operationtemperatures are challenging due to material issues.

Some electrolyser manufacturers offer possibility for heat utilization in theirsystems• H-TEC Systems, heat extraction max 65 °C and return temperature 55 °C• ITM Power

Page 13: Electrolyser market outlook Green Hydrogen and Power-to-X … · 2020. 9. 3. · 03/09/2020 VTT – beyond the obvious. 300 €/kW By 2024 at least 6 GW of electrolyser capacity installed

View on recent Power-to-X projects

03/09/2020 VTT – beyond the obvious

Page 14: Electrolyser market outlook Green Hydrogen and Power-to-X … · 2020. 9. 3. · 03/09/2020 VTT – beyond the obvious. 300 €/kW By 2024 at least 6 GW of electrolyser capacity installed

03/09/2020 VTT – beyond the obvious

Installed capacity by commisioningyear and intented hydrogen use• As megawatts of electricity input

(MWe)

Year 2020 values based on publicly stated commisioningestimates in 2020

Over 600 MW could becommissioned through 2021

10 years of "warm-up" and now the racehas begun

World Energy Investment 2020, IEA, 2020

Page 15: Electrolyser market outlook Green Hydrogen and Power-to-X … · 2020. 9. 3. · 03/09/2020 VTT – beyond the obvious. 300 €/kW By 2024 at least 6 GW of electrolyser capacity installed

03/09/2020 VTT – beyond the obvious

Installed capacity by year and region• As megawatts of electricity input

(MWe)

Year 2020 values based on publicly stated commisioningestimates in 2020

Over 600 MW could becommissioned through 2021

10 years of "warm-up" and now the race has begun

World Energy Investment 2020, IEA, 2020

Page 16: Electrolyser market outlook Green Hydrogen and Power-to-X … · 2020. 9. 3. · 03/09/2020 VTT – beyond the obvious. 300 €/kW By 2024 at least 6 GW of electrolyser capacity installed

03/09/2020 VTT – beyond the obvious

Number of projects by electrolyser technology (IRENA 2019).

Average size of project (MW)

10 years of "warm-up" and now the race has begun

https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2019/Sep/IRENA_Hydrogen_2019.pdf

Page 17: Electrolyser market outlook Green Hydrogen and Power-to-X … · 2020. 9. 3. · 03/09/2020 VTT – beyond the obvious. 300 €/kW By 2024 at least 6 GW of electrolyser capacity installed

03/09/2020 VTT – beyond the obvious

Alkaline PEM SOEC

Electrical efficiency(%, LHV) 63 – 70 56 – 63 74 – 811

Stack lifetime (h) 50 000 – 90 000 30 000 – 90 000 10 000 – 30 000

Operating pressure(bar) 1 – 30 30 – 80 1

Operating temperature (°C) 60 – 80 50 – 80 650 – 1 000

CAPEX(M€2019/MWH2out)2 0.9 – 1.8 1.6 – 3.0 2.1 – 3.8

Electrolyser technology options

1 Electrical efficiency does not include steam generation energy2 Average for 2020 from (Jan Cihlar et al. 2020)

Page 18: Electrolyser market outlook Green Hydrogen and Power-to-X … · 2020. 9. 3. · 03/09/2020 VTT – beyond the obvious. 300 €/kW By 2024 at least 6 GW of electrolyser capacity installed

Alkaline electrolyser system cost projections

03/09/2020 VTT – beyond the obvious

CAPEX decrease of alkalineelectrolysis will benefit fromdeveloping and increasingmanufacturing volumes

https://www.agora-energiewende.de/fileadmin2/Blog/2019/Electrolysis_manufacturing_Europe/2019-11-08_Background_paper_Hydrogen_cost.pdf

Page 19: Electrolyser market outlook Green Hydrogen and Power-to-X … · 2020. 9. 3. · 03/09/2020 VTT – beyond the obvious. 300 €/kW By 2024 at least 6 GW of electrolyser capacity installed

PEM electrolyser system cost projections

03/09/2020 VTT – beyond the obvious

PEM electolysers can benefitfrom steep learning curve and like alkaline technology, fromdeveloping and increasingmanufacturing volumes

ITM POWER Graham Cooley, World energy council 19.5.2020 presentation

Page 20: Electrolyser market outlook Green Hydrogen and Power-to-X … · 2020. 9. 3. · 03/09/2020 VTT – beyond the obvious. 300 €/kW By 2024 at least 6 GW of electrolyser capacity installed

Electrolyser manufacturing capacity is increasing

03/09/2020 VTT – beyond the obvious

Water electrolysis technology productionis currently positioned in Europe and in North America

China is competing with cheapersystems

Also Japan and South Korea havestrong commitment to implementhydrogen technologies in theireconomies

https://fuelcellmaterials.com/tokyo-2020-the-first-hydrogen-olympic-games/

Page 21: Electrolyser market outlook Green Hydrogen and Power-to-X … · 2020. 9. 3. · 03/09/2020 VTT – beyond the obvious. 300 €/kW By 2024 at least 6 GW of electrolyser capacity installed

Electrolyser products from differentmanufaturers

03/09/2020 VTT – beyond the obvious

Green Hydrogen for a European Green Deal A 2x40 GW Initiative

Company Technology

NEL1 Alkaline (PEM)

McPhy Alkaline

ThyssenKrupp Alkaline

Hydrogenics (Cummins) Alkaline/PEM

ITM Power2 PEM

AREVA H2Gen3 PEM

Siemens PEM

Giner ELX (Plug Power) PEM

Sunfire SOEC

1 Production capacity 360 MW/year, potential to grow to 1 GW/year2 Production capacity of 300 MW/year and 1 GW/year by 20243 Production capacity of 30 electrolysers/year

Page 22: Electrolyser market outlook Green Hydrogen and Power-to-X … · 2020. 9. 3. · 03/09/2020 VTT – beyond the obvious. 300 €/kW By 2024 at least 6 GW of electrolyser capacity installed

Project examples 1/7

03/09/2020 VTT – beyond the obvious

Bécancour Green Hydrogen plant, 20 MW, Canada• Construction of 20 MW PEM electrolyser plant has started in Air Liquide’s

Bécancour plant site. The electrolyser is planned to be in commercial use bythe end of 2020 with hydrogen output of 3 000 tn/year.

• Project will reduce CO2 emissions by 27 000 tn/year Refhyne, 10 MW, Germany

• Shell and ITM Power will build 10 MW PEM electrolysis plant at Rhinelandrefinery for processing and upgrading the products.

• Project’s total investment is estimated to be €20 million including integration to the refinery and the plant is scheduled to be in operation in 2020

• Refinery currently uses annually 180 000 tn of hydrogen which is produced by steam methane reforming. New plant will produce hydrogen 1 300 tn/year

Page 23: Electrolyser market outlook Green Hydrogen and Power-to-X … · 2020. 9. 3. · 03/09/2020 VTT – beyond the obvious. 300 €/kW By 2024 at least 6 GW of electrolyser capacity installed

Nikola Corporation purchased from Nel Hydrogen Inc.• 85 MW alkaline electrolysers (40 tnH2/day) with order value of $30 million• Hydrogen for five large-scale hydrogen fueling stations (8 tn/day)

Fukushima Hydrogen Energy Research Field, Japan • Solar energy powered 10 MW electrolysis system, (Toshiba, 2020)• Balancing power grid adjusting hydrogen production• Hydrogen will be mainly transported via tube trailers for mobility and industrial

use

Project examples 2/7

03/09/2020 VTT – beyond the obvious

Page 24: Electrolyser market outlook Green Hydrogen and Power-to-X … · 2020. 9. 3. · 03/09/2020 VTT – beyond the obvious. 300 €/kW By 2024 at least 6 GW of electrolyser capacity installed

HySynergy, Fredericia, Denmark• Partnership between Everfuel and Shell to establish PtX plant with approximate

cost of €20 million• First phase consists of building an electrolyser capacity of 20 MW by 2022-2023• Possibility to expand facility capacity to 1 GW

Yara Pilbara renewable ammonia feasibility study, Australia• Feasibility study to investigate opportunity for multi-megawatt green hydrogen

production (50 – 60 MW)• Plant’s ammonia production capacity is 840 000 tn/year (5 % of global ammonia

market) and facility uses currently steam methane reforming process for hydrogen

• The investigated electrolysis capacity would produce enough hydrogen for 28 000 tn/year ammonia production and operation would start earliest in 2021

Project examples 3/7

03/09/2020 VTT – beyond the obvious

Page 25: Electrolyser market outlook Green Hydrogen and Power-to-X … · 2020. 9. 3. · 03/09/2020 VTT – beyond the obvious. 300 €/kW By 2024 at least 6 GW of electrolyser capacity installed

Project examples 4/7

03/09/2020 VTT – beyond the obvious

Nordic Blue Crude, Norway• Industrial scale Power-to-Liquid project aims to build ”E-Fuel 1” plant in

Herøya industrial park with capacity of 10 million liters of synthetichydrocarbons by 2022. Expansion potential to 100 million liters.

• Product mix consists of kerosene, diesel, wax and naphtha• Electrolyser planned to be SOEC type

Hydrogen Hub Mo., Norway• Aim to study a 2 – 4 tn/day capacity electrolyser to replace fossil fuels in

Celsa’s steel production process• Electrolysis facility would also have capacity to produce hydrogen for other

companies in the industrial park

Page 26: Electrolyser market outlook Green Hydrogen and Power-to-X … · 2020. 9. 3. · 03/09/2020 VTT – beyond the obvious. 300 €/kW By 2024 at least 6 GW of electrolyser capacity installed

Project examples 5/7

03/09/2020 VTT – beyond the obvious

Nouryon and Gasunie, 20 MW, the Netherlands• 30 bar high pressure alkaline electrolysis with hydrogen production

capacity of 3 000 tn/year• Hydrogen for biomethanol production to reduce CO2 emissions by up

to 27 000 tn/year Hybrit, Sweden/Finland

• Massive project to decarbonise steel industry. 10 % CO2 reduction in Sweden and 7 % in Finland

• First pilot stage alkaline electrolysis hydrogen production capacity 4.5 MW to operate 2021 - 2024

• Demonstration phase in 2025, electrolyser capacity around 400 MW

Page 27: Electrolyser market outlook Green Hydrogen and Power-to-X … · 2020. 9. 3. · 03/09/2020 VTT – beyond the obvious. 300 €/kW By 2024 at least 6 GW of electrolyser capacity installed

Project examples 6/7

03/09/2020 VTT – beyond the obvious

Multiplhy, The Netherlands• First high temperature electrolysis project (SOEC) in MW-scale (2.6 MW) for

industrial refining process• Hydrogen production 60 kg/h, with 20% higher efficiency than conventional low-

temperature electrolyser

GRINHY2.0, Germany • Sunfire’s 720 kW SOEC for low CO2 steel production• Expected operation time 13 000 hours by 2022 with at least 100 tons of green

hydrogen produced from renewable energy

Page 28: Electrolyser market outlook Green Hydrogen and Power-to-X … · 2020. 9. 3. · 03/09/2020 VTT – beyond the obvious. 300 €/kW By 2024 at least 6 GW of electrolyser capacity installed

Project examples 7/7

03/09/2020 VTT – beyond the obvious

$5 billion renewable hydrogen to ammonia project, Saudi Arabia• Air Products signed a $5 billion agreement with ACWA Power and NEOM to

build renewable hydrogen based ammonia prodcution facility.• Green ammonia is exported to global markets.• 4 GW of renewable energy (solar, wind) is converted to 650 tonnes of

hydrogen/day with Thyssenkrupp’s high-efficiency alkaline water electrolysis.• The green ammonia for global market exportion should be on produced in 2025.

5 MW PEM electrolyzer, Washington, USA • Cummins Inc. will provide 5 MW electrolyser to produce green H2• Electrolzer is powered by hydrelectricity and is expected to be operational by

2021.

Page 29: Electrolyser market outlook Green Hydrogen and Power-to-X … · 2020. 9. 3. · 03/09/2020 VTT – beyond the obvious. 300 €/kW By 2024 at least 6 GW of electrolyser capacity installed

Future cost of green hydrogen? Expert-views range from evangelical to

very cautious

Differences arise from differentexpectations related to• Improvements in electrolysis technology• Reduction in the cost of renewable electricity• Value of by-products (heat and oxygen)

Cost of electricity (€/MWh) is the key, butnot only, factor to determine the economics• Capacity factors play major role!

3.9.2020 VTT – beyond the obvious

Page 30: Electrolyser market outlook Green Hydrogen and Power-to-X … · 2020. 9. 3. · 03/09/2020 VTT – beyond the obvious. 300 €/kW By 2024 at least 6 GW of electrolyser capacity installed

2 is used for oil refining then this is tax-free!

a 35 MW H2 tehon ylittyessä, koska pienemmät laitokset eivät kuulu päästökauppaan

2 is used for oil refining then this is tax-free!

1.92 2.56 2.94 3.01 3.78 €/kgCommon variables Electolyser I variables Electolyser II variables

Economic lifetime, a 20 years Spot electricity 30 30 €/MWhWACC 7 % Transm.&tax 15 15 €/MWh

CO2 emission allowance, €/t 25 €/t Capacity 10 10 MWH2 (LHV)CO2 transp&storage, €/t 40 €/t Efficiency 67 % 67 % LHV

Spot electricity price, €/MWh 30 €/MWh CAPEX 900 900 €/kWe (@9MWe)Electricity transm. & net tax, €/MWh 15 €/MWh Full load hours 8000 4000 h/a

Natural gas, €/MWh 27.5 €/MWh Heat 0 0 €/MWhNatural gas tax, €/MWh 20.7 €/MWh Oxygen 0 0 €/t

Full load hours, h/a 8000 h/a

58

7788 90

113

-20

0

20

40

60

80

100

120

SMR(300 MW)

SMR w/ CCS(300 MW)

Small-scale SMR(10 MW)

Electrolysis I(10 MW)

Electrolysis II(10 MW)

H 2pr

oduc

tion

cost

, €/M

Wh L

HV

CO2

Electricity

Fuel (+tax)

Other O&M

CAPEX

O2

Heat

TOTAL

03/09/2020 VTT – beyond the obvious

Future cost of green hydrogen?

Page 31: Electrolyser market outlook Green Hydrogen and Power-to-X … · 2020. 9. 3. · 03/09/2020 VTT – beyond the obvious. 300 €/kW By 2024 at least 6 GW of electrolyser capacity installed

2 is used for oil refining then this is tax-free!

a 35 MW H2 tehon ylittyessä, koska pienemmät laitokset eivät kuulu päästökauppaan

2 is used for oil refining then this is tax-free!

1.92 2.56 2.94 3.01 2.75 €/kgCommon variables Electolyser I variables Electolyser II variables

Economic lifetime, a 20 years Spot electricity 30 30 €/MWhWACC 7 % Transm.&tax 15 15 €/MWh

CO2 emission allowance, €/t 25 €/t Capacity 10 10 MWH2 (LHV)CO2 transp&storage, €/t 40 €/t Efficiency 67 % 67 % LHV

Spot electricity price, €/MWh 30 €/MWh CAPEX 900 300 €/kWe (@9MWe)Electricity transm. & net tax, €/MWh 15 €/MWh Full load hours 8000 4000 h/a

Natural gas, €/MWh 27.5 €/MWh Heat 0 0 €/MWhNatural gas tax, €/MWh 20.7 €/MWh Oxygen 0 0 €/t

Full load hours, h/a 8000 h/a

58

7788 90

83

-20

0

20

40

60

80

100

120

SMR(300 MW)

SMR w/ CCS(300 MW)

Small-scale SMR(10 MW)

Electrolysis I(10 MW)

Electrolysis II(10 MW)

H 2pr

oduc

tion

cost

, €/M

Wh L

HV

CO2

Electricity

Fuel (+tax)

Other O&M

CAPEX

O2

Heat

TOTAL

03/09/2020 VTT – beyond the obvious

Future cost of green hydrogen?

Page 32: Electrolyser market outlook Green Hydrogen and Power-to-X … · 2020. 9. 3. · 03/09/2020 VTT – beyond the obvious. 300 €/kW By 2024 at least 6 GW of electrolyser capacity installed

2 is used for oil refining then this is tax-free!

a 35 MW H2 tehon ylittyessä, koska pienemmät laitokset eivät kuulu päästökauppaan

2 is used for oil refining then this is tax-free!

1.92 2.56 2.94 3.01 2.12 €/kgCommon variables Electolyser I variables Electolyser II variables

Economic lifetime, a 20 years Spot electricity 30 30 €/MWhWACC 7 % Transm.&tax 15 15 €/MWh

CO2 emission allowance, €/t 25 €/t Capacity 10 10 MWH2 (LHV)CO2 transp&storage, €/t 40 €/t Efficiency 67 % 67 % LHV

Spot electricity price, €/MWh 30 €/MWh CAPEX 900 300 €/kWe (@9MWe)Electricity transm. & net tax, €/MWh 15 €/MWh Full load hours 8000 4000 h/a

Natural gas, €/MWh 27.5 €/MWh Heat 0 30 €/MWhNatural gas tax, €/MWh 20.7 €/MWh Oxygen 0 30 €/t

Full load hours, h/a 8000 h/a

58

7788 90

64

-20

0

20

40

60

80

100

120

SMR(300 MW)

SMR w/ CCS(300 MW)

Small-scale SMR(10 MW)

Electrolysis I(10 MW)

Electrolysis II(10 MW)

H 2pr

oduc

tion

cost

, €/M

Wh L

HV

CO2

Electricity

Fuel (+tax)

Other O&M

CAPEX

O2

Heat

TOTAL

03/09/2020 VTT – beyond the obvious

Future cost of green hydrogen?

Page 33: Electrolyser market outlook Green Hydrogen and Power-to-X … · 2020. 9. 3. · 03/09/2020 VTT – beyond the obvious. 300 €/kW By 2024 at least 6 GW of electrolyser capacity installed

2 is used for oil refining then this is tax-free!

a 35 MW H2 tehon ylittyessä, koska pienemmät laitokset eivät kuulu päästökauppaan

2 is used for oil refining then this is tax-free!

1.92 2.56 2.94 3.01 1.86 €/kgCommon variables Electolyser I variables Electolyser II variables

Economic lifetime, a 20 years Spot electricity 30 30 €/MWhWACC 7 % Transm.&tax 15 15 €/MWh

CO2 emission allowance, €/t 25 €/t Capacity 10 10 MWH2 (LHV)CO2 transp&storage, €/t 40 €/t Efficiency 67 % 67 % LHV

Spot electricity price, €/MWh 30 €/MWh CAPEX 900 300 €/kWe (@9MWe)Electricity transm. & net tax, €/MWh 15 €/MWh Full load hours 8000 8000 h/a

Natural gas, €/MWh 27.5 €/MWh Heat 0 30 €/MWhNatural gas tax, €/MWh 20.7 €/MWh Oxygen 0 30 €/t

Full load hours, h/a 8000 h/a

58

7788 90

56

-20

0

20

40

60

80

100

120

SMR(300 MW)

SMR w/ CCS(300 MW)

Small-scale SMR(10 MW)

Electrolysis I(10 MW)

Electrolysis II(10 MW)

H 2pr

oduc

tion

cost

, €/M

Wh L

HV

CO2

Electricity

Fuel (+tax)

Other O&M

CAPEX

O2

Heat

TOTAL

03/09/2020 VTT – beyond the obvious

Future cost of green hydrogen?

Page 34: Electrolyser market outlook Green Hydrogen and Power-to-X … · 2020. 9. 3. · 03/09/2020 VTT – beyond the obvious. 300 €/kW By 2024 at least 6 GW of electrolyser capacity installed

2 is used for oil refining then this is tax-free!

a 35 MW H2 tehon ylittyessä, koska pienemmät laitokset eivät kuulu päästökauppaan

2 is used for oil refining then this is tax-free!

2.14 2.59 2.94 3.01 2.12 €/kgCommon variables Electolyser I variables Electolyser II variables

Economic lifetime, a 20 years Spot electricity 30 30 €/MWhWACC 7 % Transm.&tax 15 15 €/MWh

CO2 emission allowance, €/t 50 €/t Capacity 10 10 MWH2 (LHV)CO2 transp&storage, €/t 40 €/t Efficiency 67 % 67 % LHV

Spot electricity price, €/MWh 30 €/MWh CAPEX 900 300 €/kWe (@9MWe)Electricity transm. & net tax, €/MWh 15 €/MWh Full load hours 8000 4000 h/a

Natural gas, €/MWh 27.5 €/MWh Heat 0 30 €/MWhNatural gas tax, €/MWh 20.7 €/MWh Oxygen 0 30 €/t

Full load hours, h/a 8000 h/a

6478

88 90

64

-20

0

20

40

60

80

100

120

SMR(300 MW)

SMR w/ CCS(300 MW)

Small-scale SMR(10 MW)

Electrolysis I(10 MW)

Electrolysis II(10 MW)

H 2pr

oduc

tion

cost

, €/M

Wh L

HV

CO2

Electricity

Fuel (+tax)

Other O&M

CAPEX

O2

Heat

TOTAL

03/09/2020 VTT – beyond the obvious

Future cost of green hydrogen?

Page 35: Electrolyser market outlook Green Hydrogen and Power-to-X … · 2020. 9. 3. · 03/09/2020 VTT – beyond the obvious. 300 €/kW By 2024 at least 6 GW of electrolyser capacity installed

Hydrogen strategies and scale-up to GW-size hydrogen plants

03/09/2020 VTT – beyond the obvious

Page 36: Electrolyser market outlook Green Hydrogen and Power-to-X … · 2020. 9. 3. · 03/09/2020 VTT – beyond the obvious. 300 €/kW By 2024 at least 6 GW of electrolyser capacity installed

Alkaline water electrolysis plants were in used to produce hydrogen already in the 20th century in very large scale (Godula-Jopek 2015)• 1927 hydro-power supplied 125 MW electrolysis in Rjukan, Norway• 1947 hydro-power supplied 135 MW electrolysis in Glomfjord, Norway• 1970 Aswan Electrolyser 165 MW in Egypt (Sasaki et al. 2016)

Less expensive hydrogen production method, petroleum reforming, took over in 1980s and many water electrolysis manufacturers wereforced to stop production.

Historical aspect on water electrolysis

03/09/2020 VTT – beyond the obvious

https://mb.cision.com/Public/115/9915549/bbdc5ebd4ed5a48c.pdf

Page 37: Electrolyser market outlook Green Hydrogen and Power-to-X … · 2020. 9. 3. · 03/09/2020 VTT – beyond the obvious. 300 €/kW By 2024 at least 6 GW of electrolyser capacity installed

Roles and interests in hydrogen utilisation vary in different countries• Europe 1) 2020 – 2024: 6 GW electrolyser capacity 2) 2025 – 2030: 40 GW

electrolyser capacity 3) 2030 – 2050: H2 technologies reach maturity• Germany will kickstart the electrolyser capacity with the targets of 5 GW by

2030, 10 GW 2035, 15 GW 2040. €7 billion support for the strategy.• Australia’s key element in National hydrogen strategy is mentioned to be

hydrogen hubs for large-scale demand and exports to Asian markets.• Japan is commited to pioneer the world’s first ”Hydrogen Society”. The

country leads the way in fuel-cell vehicle development with carmanufacturers as Toyota and Honda.

• The Netherlands strategy on hydrogen targets to build 500 MW capacity by2025 and 3 – 4 GW by 2030.

National hydrogen strategies

03/09/2020 VTT – beyond the obvious

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Roles and interests in hydrogen utilisation vary in different countries• Portugal has a 2 GW production capacity target for 2030• China fuel-cell targets 5 000 by 2020 and 1 million by 2030• South Korea 6.2 million FC-vehicles and 1 200 refilling stations by 2040• United Kingdom focuses to decarbonise heat in buildings. 90 %

of customers are connected to gas network and conversion of 12 million homes to hydrogen could be done by 2050.

• Chile has enormous potential for solar energy production (Atacama desert) and has plans to be exporter of the hydrogen to Japan and South Korea.

• Norway hydrogen production (high temperature) from hydropower and wind. Storage and uses in transport, particularly in maritime.

• Several countries in Africa, Denmark, France, Austria, Saudi-Arabia, etc. Finland: VTT is currently conducting H2 roadmap for Finland as a

Business Finland assignment

National hydrogen strategies

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Project Location Year Capacity Application

The Murchison Renewable Hydrogen Project Australia 20191 5 GW For own use and export

to Asia (Japan/Korea)

NorthH2 TheNetherlands

2030-2040

3 - 4 GW 203010 GW 2040 For industrial customers

H2-Hub Australia 20252 3 GW

Copenhagen decarbonising Copenhagen, Denmark 20303 1.3 GW E-fuels for transport

Hyport Duqm Oman 20214 0.25 – 0.5 GW (first stage)

For chemical industry in Oman and H2 and itsderivatives to Europe

Early stage plans for GW-scalePower-to-X plants

1 A comprehensive communications and stakeholder engagement process is being planned to commence for November 2019

4 The final investment decision can be expected in 2021.

2 Initial operations beginning in 20253 First phase includes the electrolyser (10 MW) and is ready by 2023. In second phase H2 is combined with CO2. Fully expanded plant by 2030.

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EU with North Africa and Ukraine can together build worldleading industry for renewable hydrogen production• Europe and Ukraine have good renewable energy resources,

existing gas infrastructure and Europe has also leading industryfor electrolyser manufacturing.

• North Africa has vast renewable energy sources 40 GW electrolysis capacity in the EU by 2030 and 40 GW

electrolysis capacity in North Africa and Ukraine• Total investments would be €25 – 30 billion• 140 000 – 170 000 jobs would be created• 82 million ton of CO2 emissions would be avoided

Green Hydrogen for European Green DealA 2x40 GW Initiative

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Green Hydrogen for a European Green Deal A 2x40 GW Initiative, Hydrogen Europe, 2020

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Electricity demand for scaled uphydrogen production

1 Different estimations for hydrogen’s share of total final energy use in 20502 Electrolyser system efficiency 70 %

Source IRENA Hydrogen Council BloombergNEFH2 share1 6 % (6 600 TWh) 18 % (20 000 TWh) 7 % (7 500 TWh)

24 % (27 500 TWh)Electricitydemand2

9 500 TWh 28 600 TWh 10 700 TWh39 300 TWh

Total electricity production in the world 27 000 TWh (2018), IRENA Total renewable electricity 6 586 TWh (2018), IEA

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Bundesnetzaentur, 2019 CSIRO, 2018 Godula-Jopek, Agata, Hydrogen Production: by Electrolysis, 2015 Hydrogen Council, 2020 Hydrogen Economy Outlook - Key messages, BloombergNEF, 2020 Hydrogen Europe, 2020. Green Hydrogen for a European Green Deal A 2x40 GW Initiative IRENA, 2019 Post Covid-19 and the hydrogen sector, Hydrogen Europe, 2020 Reuters, 2019 Sasaki et al. 2016 The future of Hydrogen, IEA, 2019 Toshiba, 2020 Vermeulen, U. (2017). Turning a hydrogen economy into reality. Presentation at 28th

meeting Steering committee IPHE, the Hague. World Energy Investment 2020, IEA, 2020

Key references

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1 MW electrolyser 200 Nm3/h H218 kg/h H2

55 kWh of electricity 1 kg H28 kg O210 kg demineralized H2O

1 kgH2

11.1 Nm3

33.3 kWh (LHV) 39.4 kWh (HHV)3.77 dm3 of gasoline

Appendix: Hydrogen and electrolyser math

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Mikko [email protected]+358 40 683 4502

Janne Kä[email protected]+358 40 751 0053

beccu.fidecarbonate.fi

www.vtt.fi