#8 - The simple guide to Green Hydrogen and why it's important to clean energy

And why it's on everyone's lips

Nov 28, 2021

Hello!

Every week I share and write on some of the biggest stories on the upcoming energy revolution. This is edition #8.

My aim? To cover (and help spur) growing interest and investment in cheap, clean energy. It will make our lives vastly better and stop the climate crisis.

I’m taking a tech and financial perspective. What technologies are around the corner? Where is the money coming and going? Who is doing interesting things?

Here is why I launched Energy Disrupt.

The big picture: Green Hydrogen

Green Hydrogen seems to be on everyone’s lips – in the energy world at least – right now. This week both the UK and Germany took big steps in committing to its production and use. So this is a good time for a deeper dive into how it could take us a long way towards decarbonisation.

What’s the news?

This week, the UK government awarded a £10 million contract towards developing the country's largest green hydrogen facility. It will be based at the Whitelee Windfarm in East Renfrewshire, Scotland. Wind energy from the farm will supply a factory that will produce green hydrogen. The money is for a 10 megawatt electrolyser and four tonnes of hydrogen storage. The facility plans to eventually double in capacity.

In Germany, the new coalition government committed to reaching electrolysis capacity (which creates green hydrogen) of 10 gigawatt by 2030. It also committed to the “development of a hydrogen economy on an industrial scale”.

Why is this a big deal?

Both are solid, much-needed commitments to expanding green hydrogen capacity. While other countries and companies are merely talking about it, the UK is putting its money where its mouth is. It may also have stolen a march over Germany. The Whitelee facility will help Glasgow go net-zero by 2030. It's also a test case for usage: Glasgow plans to use the green hydrogen for local buses.

What is green hydrogen?

While hydrogen is an excellent fuel and abundant on earth, it is usually found in combination with other elements (water (H2O) or methane (CH4) for example). When hydrogen is burned it combines with oxygen to just produce water. But to use it as a clean fuel it needs to be in pure form. And that has to be produced.

The problem: it takes energy to produce it. While hydrogen is a colourless gas, it has been given colours by the industry depending on how it's produced. Black or brown hydrogen is produced using coal; grey hydrogen uses natural gas; it’s called blue if natural gas is used and CO2 emissions are captured.

To produce green hydrogen, electrolysers are used to separate water into hydrogen and oxygen. There are no carbon dioxide emissions in the process.

Why not just use (clean) electricity instead of hydrogen?

Because batteries are (currently) too heavy and expensive for heavy duty use such as ships, large trucks and buses. Hydrogen fuel cells are far lighter. Toyota had long argued that hydrogen fuel-cell technology was better for cars. But as batteries became cheaper and lighter, and Tesla started gaining market-share, Toyota caved in too. Nevertheless, batteries are not seen as viable for ships and large trucks.

Moreover, some argue that hydrogen fuel is more viable for industries such as cement and steel making. But that may change too.

What is so great about green hydrogen?

Hydrogen is not just clean and powerful - it is also lightweight and already being used by some industries. It can also be transported through natural gas pipelines, after additional investment.

What is the problem with green hydrogen?

It’s expensive to produce. Green hydrogen is more expensive than clean electricity anyway because it needs the latter to produce it. But it’s also more expensive than other colours of hydrogen. Bloomberg NEF estimates that green hydrogen won’t be as cheap as grey hydrogen until 2030. But technological change can be fast; no one expected solar and wind energy to get so cheap so quickly either.

Countries are being urged to invest into green hydrogen to bring prices down. Companies are also investing heavily, hoping prices will be subsidised.

But green hydrogen’s future is still not 100% secure. Alternatives may be developed for shipping, cement and steel in the meantime. And battery prices are expected to fall further too.

Are people investing into green hydrogen?

Yes, lots. About 250 gigawatts of green hydrogen facilities are planned around the world. One of Australia’s richest mining magnates is building a big green hydrogen facility and touring the world to promote it. Governments from India and China to the US and UK have committed to it too.

European governments and companies are looking to convert natural gas (methane) pipelines to transport green hydrogen. In particular they are looking at how to make the green hydrogen in African countries, where renewable energy is cheaper.

How can I invest into green hydrogen?

I’m not offering financial advice here; that’s not the aim of this newsletter. You can however invest into Green Hydrogen, if you want to, by investing into companies that produce it.

In Britain, companies such as ITM Power*, Ceres Power, Octopus Energy and AFC Energy are all actively investing into green hydrogen. (* Disclosure: I have some shares in ITM.)

American companies: Plug Power, FuelCell Energy, Bloom Energy, Ballard Power Systems. More reading.

There are new hydrogen ETFs too: Global X Hydrogen ETF and HydrogenOne Capital. (Neither focus only on green hydrogen, yet.)

Have I missed out any important questions or significant companies? Email me back.

ENRGY Tech