The notion that the energy market can switch from natural gas to green hydrogen is “completely unrealistic,” according to Uniper CEO Michael Lewis.
Speaking at the Gas, LNG and Future of Energy conference in London, he said, “The cost of green hydrogen is extremely expensive, around eight to 10 times the cost of natural gas. So that’s not an option if we want to keep Europe as an industrial powerhouse.” He described the current market changes as a “necessary recalibration”.
Echoing sentiments throughout the two-day conference, Lewis said natural gas has huge advantages as it is abundant, affordable and flexible.
He went on to describe the Iberian blackout, which happened earlier this year, as a “good wake up call” as it underlined the importance of supply security, and expressed challenges with electricity prices in Germany, which are around two-and-a-half times other industrialised nations.
The EU has made it clear it wants to exit Russian gas by 2027 which will mean new contracts, reducing spot purchases and improved traceability, he added. “That means we have to diversify our gas sources,” he said. “We were too reliant on Russia in the past – we will never make that mistake again, diversity is our mantra.”
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On the key issue of heat decarbonisation, he said the market is “way off” the rates needed, but sustainability moves do continue.
“Last year we closed the last coal-fired power station in the UK and we have plans to phase out coal in Germany,” he said. “The only caveat is some of them in our portfolio need to stay open as they are deemed critical [by the government]. But we need to try out different things, and CCS is one of them.”
Despite his lukewarm comments on green hydrogen, the CEO said the company was exploring pilot projects in hydrogen storage. “We have to try out and experiment various technologies to see what works and what has the potential to deliver at the right price. There was a little bit of overoptimism with hydrogen – but it doesn’t mean it’s gone away. We just need to be pragmatic about how quickly we can ramp it up.”
