Challenges remain
However, several challenges must be overcome before it can be established as a real alternative to fossil fuels. At the moment, the high cost of this gas compared to the fuels it seeks to replace is one of the biggest obstacles. Gómez Sarasola stresses that financing for projects of this kind is conditioned by the high value of the so-called ‘green premium’, or the higher price consumers are willing to pay for a sustainable, but more expensive alternative compared to a cheaper, more polluting one. “Many green hydrogen production projects do not get off the ground due to a lack of buyers willing to assume this ‘green premium’ over gray hydrogen,” he warned.
Gómez Sarasola (Stegra): “Green hydrogen holds the key to the decarbonization of the shipping and steel sectors”
Rafael Cossent, a researcher at the Institute of Technological Research (IIT) of the ICAI School of Engineering at Comillas Pontifical University, is one of Spain’s leading experts in hydrogen. He currently co-directs the Chair of Hydrogen Studies at ICAI-ICADE, a prestigious educational institution linked to the University. The expert explains that the investments related to green hydrogen are high because they often entail also making adjustments to the equipment so they can use this fuel. “New engines, furnaces, and burners for industry are needed… It means developing supply structures and creating new facilities.”
Reducing investment costs is a priority, but the same applies to operating costs, this expert noted. “Cheaper electricity is needed, as well as reducing consumption per kilogram generated, improving the efficiency of electrolysis and enhancing plant design to optimize processes.”
Another issue that must be addressed is how to get this fuel to consumers. “Transportation in trucks is already a reality for small volumes and short distances, but establishing a large-scale open hydrogen network has to deal with uncertainty surrounding the development of sufficient demand”, Cossent argued.
Franz Bechtold (Lhyfe): “The massive adoption of renewable energy and government aid will both be key elements”
Franz Bechtold of Lhyfe, a pioneering business group that opened the world’s first green hydrogen production plant directly connected to a wind farm in 2021, pointed to other factors that are hindering the change. “The lack of infrastructure is blocking many projects and raising the final production cost of others.” The same goes for the absence of “clear administrative guidelines regarding what will occur in the future in terms of both emission taxes and other medium-term aid,” he warned.
Momentum in Europe
Despite these obstacles, the potential of this technology to decarbonize heavy industry means that green hydrogen projects are on the rise. Lhyfe, which is present in 11 European countries, is also developing projects in the Iberian Peninsula, such as the Vallmoll plant (Tarragona), and intends to weave a renewable hydrogen network throughout the country. Besides, Gómez Sarasola from Stegra confirms the potential of the Iberian Peninsula for the deployment of this technology: “Spain and Portugal are the only countries, apart from northern Scandinavia, that have the capacity to produce renewable electricity in large volumes and at a competitive price. The electricity grids of the two countries are expected to have 80-85% renewable energy by 2030,” he argues.
The European Hydrogen Bank —an initiative created by the European Union with the aim of promoting the renewable hydrogen market through subsidies for companies to cover the cost difference between renewable hydrogen and fossil fuels— recently completed a pilot auction for €720 million, benefiting seven projects: three in Spain, two in Portugal and the remaining two in Norway and France.
For Betchtold, “the massive adoption of renewable energy and government aid will both be key elements in order to make hydrogen one of the most viable solutions to reduce greenhouse gas emissions.” Another factor that could accelerate this time frame, Gómez Sarasola added, is “reinforcing grid interconnections between generation plants and consumption projects.”
