How it actually gets built
Edwin Koot: Should we aggregate demand through consortia, or convince one government to lead?
Thierry Lepercq: Seven years ago, the Chief of Staff of the European Commission asked me what Europe’s biggest advantage in hydrogen was. I said it’s not the resource, because solar and wind are far better in North Africa and elsewhere. It’s not technology either. I told him we have a weapon of mass construction: the local utility, the German- or European-style. It brings people together and signs 20-year contracts for water, energy, whatever. On the basis of those contracts, backed by the trust of hundreds of thousands or millions of people, you can raise money and build. Something less risky costs less. That’s what made solar bankable.
So what we need is not to wait for Brussels or Berlin or Paris. Ports, local governments, and groups of companies should say, “We’re in charge. It’s our responsibility as stewards of our region to have a plan.” And it should start with one or two hubs that show the way. There was a first person on Everest, and then lots of people followed. That is where we are.
I’d also say begging for subsidies is a dead end. We were very happy with feed-in tariffs in the early years. But very soon we realized it was a poison. It was showering money on tons of people, and sometimes it brought corruption. You want something frugal, because frugality brings out the best in people.
Where will those first projects happen, and what will the supply look like?
Probably outside Europe, where the resource is. You’re better off producing hydrogen in Oman, Morocco, or Gujarat, where you have solar, space, and, in most cases, desalinated water. If you can produce at €1 to 1.50 per kilogram, and today it’s a little over €2, then shipping it as ammonia and cracking it in Europe gives you a landed cost around €2.50 to €3. Wind in Scandinavia and solar in Spain can land in the same range, so it’s a combination. Gray hydrogen is around €2 today, and long-term natural gas equates to about €1 per kilogram of hydrogen. This is not a gap of 1 to 10.
With dozens of suppliers plus your own production, nobody can close a strait and cut you off. You can fix prices for 20 years, and that’s a life changer for industry. It might even bring power-intensive industry back to Europe.
And the timeline?
The forecasts from a few years ago, 20 million tons of green hydrogen by 2030, were put together with no rationale. We’re going to land at a fraction of that, after tens of billions spent to get a miserable result. I wouldn’t make a new forecast for 2030. But if we get those first two or three market-driven projects, like our Chile project in 2013, then I believe we’re on track by 2040 for hydrogen to take over from oil and gas. Once you reach the tipping point, everything turns upside down.
