October 8 is World Hydrogen Day – a date picked as it shares the same sequence of numbers as the atomic weight of hydrogen: 1.008.
Hydrogen is one of the most abundant gases in the earth’s atmosphere and has the potential to be used as a clean alternative to natural gas.
Here, Bianca McMillan and Ben Rider, Associate Directors at Gravis Capital Management, discuss the investment opportunities in hydrogen and the infrastructure needed to support it.
What different types of hydrogen are there?
“There are a number of different types of hydrogen, each given a different colour,” explained Bianca. “The most common are black/brown, grey, blue and green.
“Black/brown hydrogen is the most damaging to the earth’s environment – it is produced using black or brown coal. Grey hydrogen is produced using steam methane reformation and doesn’t capture the CO2 used in the process. Blue hydrogen is the same as grey hydrogen but captures the CO2 produced using carbon capture and storage, so is better for the environment.
“Green hydrogen is the one everyone is talking about today. It’s produced using electricity from renewable energy sources, such as wind or solar and has the potential to help the transition to net zero. So when we talk about hydrogen, this is the type we are referring to.”
How developed is the UK hydrogen market?
“We’re still in the early stages when it comes to hydrogen projects and investor confidence is still quite low,” commented Ben. “This is because projects have yet to be proven, and are not economically viable without government support.”
“Hydrogen allocation rounds (HAR 1 and 2), which are government funding mechanism to support low carbon hydrogen production across the UK, are today mainly being led by large-scale industry who are investing in order to displace the fossil fuels used in their processes.
“Investors will become more confident once they have longer term proof that the government will back revenues and projects can deliver returns.”
What could boost the hydrogen market?
“The biggest challenge today is cost. Therefore policy support is key because, at the moment, hydrogen is too expensive to produce without it,” said Ben. “We also need to incentivise industry to use it. This could be driven by imposing penalties for using dirty fossil fuels, and ensuring these are maintained at a sufficiently high level.
“For hydrogen to be used more widely, and in different applications, we also need the infrastructure in place: for example, it can’t be easily transported from location to location without incurring high costs, so in early projects the consumer needs to be very close to the energy production plant.
“I also think we need to moderate expectations for uses of hydrogen. There is a lot of hype at the moment, which isn’t necessarily helpful as people could be disappointed. It’s not suitable for many everyday applications like heating houses. I very much expect that hydrogen will be used like a premium fuel going forward and used by very specific industries rather than the public.”
Are EVs of HVs best?
“The answer is both – it just depends on the size of the vehicle,” continued Bianca. “For passenger vehicles, an electric vehicle is more energy efficient than a hydrogen vehicle. This is driven by the cost and the energy efficiency of electric vehicles - you can get about 80 watts of electrical power to the vehicle from every 100 watts produced.
“With a hydrogen vehicle, this falls to about 38 watts due to the losses in generating the hydrogen and then compressing and transporting it. For larger vehicles, hydrogen could make sense given it is much lighter than a battery, refuelling times are significantly quicker, you don’t need access to the grid (you can convert petrol and diesel pumps into hydrogen pumps) so the range of a hydrogen powered vehicle is further – all attractive traits in the heavy good industry.
“HGVs represent just 1.5% of the transportation sector, but up to 20% of the emissions. Therefore hydrogen could be a key factor in decarbonising transport.”
What is Gravis doing in this sector?
“One of the disadvantages of wind and solar power is the intermittency. Sometimes not enough energy is produced while on other days there is too much. And because electricity produced by wind or solar farms is hard to store, any excess is often wasted.
“So Gravis has been actively exploring ways of using the excess energy. One such example is currently going through the HAR 2 application process. This project would harness electricity from a wind farm in Northern Ireland, by introducing an electrolyser at the site, taking electricity via a private wire, and producing hydrogen which would be used by a local industrial partner.
“We’re actively exploring other ideas in both the UK and Europe, but we’re cautious in our approach, looking at detail at the opportunities and only considering those with subsidies. Core for us is having credible partnerships. At the moment, the number of projects reaching a financial investment decision is low, but we want to be a conservative early mover in this space as we were for solar, wind and anaerobic digestion.”
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