DNV led discussions on the following themes at the World Hydrogen North America Congress 2024.
According to DNV’s annual Industry Insight survey, around ¾ of energy professionals expect their organizations to invest in low-carbon hydrogen/ammonia in 2024. This reflects an important truth - hydrogen must play a bigger role in assisting the transition to a low-carbon future faster. For hydrogen projects to get built at the pace we need, developers must navigate political uncertainty, rising costs, workforce development, supply chain disruptions, and NIMBY-ism. The first step in managing the complex risk profile of hydrogen projects is to get to a common definition of what good hydrogen looks like. This will enable us to funnel resources to good projects vs. projects that have not been properly de-risked (check out my colleague Marion Hill’s article on undisciplined capital).
The pursuit of good hydrogen is exactly why DNV was a platinum sponsor at the World Hydrogen North America Congress in May. We wanted developers, investors, and end users to take full advantage of our 160 years of experience de-risking energy projects and partnering with major energy players on Joint Industry Projects (JIPs). We are already hard at work on this: for example, we hosted a webinar on feasbility studies for hydrogen projects in North America and recently announced our role in assessing hydrogen blending for FortisBC’s and Enbridge’s existing natural gas pipeline infrastructure in British Columbia,
We brought practical guidance that helps developers progress hydrogen projects to final investment decision (FID) faster. For investors, we shared the green and red flags, they should be aware of when searching for a winning hydrogen project to invest in.
Production Challenges - Green Hydrogen Costs
Producing green hydrogen through electrolysis is an exciting prospect, but it is capital intensive and is only as good as the traceability of the electrons used to power the operations. The capital-intensive nature of renewable installations, coupled with the inefficiencies in current electrolysis technology, drives up costs, making green hydrogen less competitive compared to less sustainable alternatives like grey hydrogen, which is derived from natural gas. DNV sees that the need for robust techno-economic analyses (TEA) are becoming more important as technology innovations are introduced in a dynamic market. Amit Goyal, Regional Head, Hydrogen and Low Carbon Fuels, North America participated on the "Unlocking the H2 & H2 derivative powerhouse in North America" panel. Contact Amit if you are interested to discuss your plans in this area.
Scaling Infrastructure
Scaling up hydrogen production requires substantial investments in infrastructure, including electrolyzers, transport pipelines, and storage facilities. This scaling is critical to meet the demand across various industries like transportation, manufacturing, and power generation. The challenge lies in ensuring these infrastructures can operate efficiently at larger scales and integrate seamlessly with existing energy systems. Our bankability studies for electrolyzers have helped with early-stage financing and we believe that this will continue as financing mechanisms mature for clean hydrogen projects.
Feasibility studies are the first imperative step for brand new projects, as well as for expansion ones. Recently, DNV has held a webinar on the subject, and wrote up a case study of a project done for a leading energy customer in Canada, preparing them for expansion of their existing hydrogen assets, diversifying their operations.
Production, storage and transportation of hydrogen - High Costs and Safety Concerns
Hydrogen production and storage present unique challenges due to its low density and high flammability. Compressing, liquefying, or chemically storing hydrogen requires energy, which currently adds substantial costs and impacts the overall efficiency of hydrogen use. DNV has performed a verification study of the impact and safety risk to site workers and neighboring communities in the case of several electrolyzers needed to vent and release hydrogen into the atmosphere. We are directly involved in research and development of recommended practices and standards to bridge technical gaps, and our labs and testing sites are heping enhance the safety of new infrastructure.
Market Dynamics and Regulatory Hurdles - Inconsistent Policy Support
Clean hydrogen must be able to compete with fossil fuels. Government policies are pivotal in fostering an environment conducive to the growth of clean hydrogen. Currently, policy inconsistency across regions creates a fragmented market, complicating the investment landscape. Robust and coherent policies that support hydrogen infrastructure, an even playing field to compete with fossil fuels, and clear regulatory standards are essential to accelerate industry growth.
The competition extends to the electric battery sector, particularly in transportation, where electric vehicles (EVs) dominate the market, challenging hydrogen-fueled alternatives.
At the heart of these regulations is the need for a comprehensive lifecycle analysis (LCA) to ensure compliance and maximize incentives; DNV’s has seen an increase in demand for this kind of study for cross- boarder trading of clean fuels and our standard, DNV-SE-0654 Validation of attribute claims for low carbon and renewable hydrogen and ammonia, to enable this was published last year.
Environmental Impact - Life Cycle Emissions and CCUS (Carbon Capture, Utilization, and Storage)
While hydrogen production can be nearly emission-free, the life cycle emissions from hydrogen, especially when produced from natural gas, can undermine its environmental benefits. The focus must shift to enhancing the sustainability of the entire hydrogen supply chain, from production to end-use, to ensure it contributes effectively to decarbonization goals.
Jose Quevedo, Principal Consultant – Process Engineering, Hydrogen, Low Carbon Fuels and CCUS, presented his research on “Opportunities for carbon utilization with clean hydrogen”. Contact Jose to discuss further.
Environmental Impact - Water Usage
Hydrogen production, particularly through electrolysis, is water intensive. In regions where water scarcity is already a problem, large-scale hydrogen production could exacerbate these issues. Developing water-efficient technologies and practices is critical to mitigate potential negative impacts on local water resources.
Technological Innovations and Breakthroughs
To overcome these challenges, significant technological innovations are needed. Advances in electrolyzer designs, more efficient catalysts, and innovative storage solutions could dramatically reduce costs and improve safety profiles. The qualification of systems with low technology readiness levels (TRL) is immensely important for reliable production and cost control of clean hydrogen projects. DNVs Technology Qualification (TQ) standard, A-203, has found yet another sector of the energy industry to enable implementation of new technologies.
The clean hydrogen industry stands at a pivotal point. Addressing these hot topics through coordinated efforts between governments, industry leaders, and researchers is crucial to overcoming obstacles and capitalizing on the opportunities presented. Let’s get your projects to FID faster while doing it right and ensuring the hydrogen technology aligns with broader environmental goals, reinforcing its position as a cornerstone of a sustainable future.
