5 min read

#29 - The hydrogen rocky path to success

#29 - The hydrogen rocky path to success

šŸ’” One idea: The hydrogen rocky path to success

šŸ“ˆ One data figure: A $1.5T market in 2050

āœØ One success: HiiROC, rocking turquoise hydrogen


šŸ’” The hydrogen rocky path to success

How many times in the past 20 years have we heard that hydrogen was the next big thing? Far too many, and it's not here yet. The hydrogen value chain is intricate and the route to success still long and arduous, requiring significant technological progress and substantial investments. Let's explore the roadblocks and the latest and greatest in the hydrogen industry.

First and foremost, it is essential to remember that hydrogen (H2) is not a source of energy but only an energy carrier. Depending on how it is produced, hydrogen comes in three colours:

  • Grey hydrogen is produced from natural gas, usually methane (CH4), releasing carbon emissions through steam reforming: CH4 + H2O -> H2 + CO2. This is the cheapest solution, at about $1.5 per kg, and represents almost the entirety of today's production.
  • Blue hydrogen also uses natural gas but incorporates carbon capture utilisation and storage (CCUS) technology to reduce the climate impact. This method comes at a higher cost, around $2.5 per kg.
  • Green hydrogen is generated through water electrolysis using renewable energy, producing no or little emissions: H2O -> H2 + O2. This solution remains too expensive for now, at $2.5 to $5 per kg, and represents less than 1% of global production.
Building pipelines to export hydrogen from Scotland (source)

Many challenges still remain at different stages of the value chain before hydrogen really takes off.

Industrial equipment

Hydrogen projects are capex intensive. Major improvements are needed to lower the cost of components and operations, as well as to increase efficiency. This includes CCUS technology to produce blue hydrogen.

Production

Grey hydrogen production is already competitive at scale but not compatible with climate targets. Decreasing CCUS cost should facilitate the production of blue hydrogen, replacing grey hydrogen by the end of the decade. After 2030, green hydrogen should take the lead, when its cost drops below that of grey and blue hydrogen.

Storage

This one is a huge hurdle. Liquid hydrogen requires ultra-low cooling to be stored safely, at āˆ’253 Ā°C, which is obviously costly. At ambient temperature, hydrogen is gaseous and requires high-pressure solutions for efficient storage and transport.

Transport

Some countries (such as Morocco, Spain, Australia, and Chile) have resources for producing cheap and abundant renewable electricity, while others (such as Germany, the Netherlands or Japan) need to decarbonise their heavy industry. The need for efficient transport is paramount. The main challenge here is cost and safety.

Hydrogen has a very low volumetric energy density under atmospheric pressure. In the realm of high-pressure transportation, whether by road, rail, or maritime means, the development of suitable technology remains ongoing. Liquefaction is an option but poses economic and technical challenges too. Additionally, obstacles persist in the last-mile delivery, including the handling of high-pressure tanks and the establishment of filling stations.

For large quantities and long distances, using pipelines to transport hydrogen is a practical and cost-effective solution. Nevertheless, such infrastructure is not available everywhere, even if existing gas pipelines can be repurposed with minimal modifications.

Demand

There will be no growth in the hydrogen market without stimulation from increasing demand. The main use cases for hydrogen are in the energy, material and mobility sectors.

Hydrogen could be used for heating and cooling large buildings, notably in the public sector. CO2-intensive and hard-to-electrify industrial sectors such as steel or aluminium are poised to require large quantities of hydrogen as feedstock to meet net-zero targets. Finally, economies of scale favour applications of hydrogen in heavier vehicles such as trains, ships and heavy-goods trucks, but the technology is still immature today.

Air Liquide recently opened (2023) the first high-pressure hydrogen station for long-haul trucks in Europe (source)

To move the needle before it's too late, encouraging collaboration among different parts of the industry is vital. Long-term off-take agreements can reduce investment risks and partnerships between governments can help move hydrogen between countries more efficiently. Moreover, a carbon tax of $50 to $100 per ton would make hydrogen price-competitive by 2030. In short, an entire ecosystem is yet to be born, which will unlikely happen without strong leadership from policymakers.

šŸ“ˆ A $1.5T market in 2050

According to various studies, the global hydrogen generation market size was valued at $150 billion in 2022 and is expected to expand at a mild CAGR of 9% from 2023 to 2030, while green technology, modern infrastructure and relevant policy frameworks are being implemented.

After 2030, green hydrogen should really speed up adoption. According to a report published by Deloitte (2023), clean hydrogen will represent 85% of the market in 2050, approaching $1,500 billion.

Clean hydrogen market size, 2030 to 2050 (Deloitte)

China and India are expected to dominate the global generation of clean hydrogen, while US producers can benefit from the strong tailwinds of the Reduction Inflation Act. Europe is having a great start but will eventually fall behind.

āœØ HiiROC, rocking turquoise hydrogen

Hydrogen comes in many colours, and this one is the next big thing (maybe). Turquoise hydrogen is created through the pyrolysis of methane, which is split into solid carbon and hydrogen in a reactor. This process does not produce gaseous CO2 as a byproduct but produces solid carbon instead: CH4 -> H2 + C. The process is considered carbon neutral if renewable energy powers the reactor. Cherry on the cake, the solid carbon byproduct has applications in the manufacture of various materials and is a soil enhancer for the farming sector.

HiiROC, a British start-up founded in 2019, is developing a Thermal Plasma Electrolysis technology, protected by a patent. The technology is highly modular and could be installed directly next to industrial customers' sites, bypassing storage and transport hurdles. Clever! Given the low cost of the technology, HiiROC could very well unleash the full potential of hydrogen in the UK and the world.

HiiROC founders: Ate Wiekamp (CSO), Simon Morris (CCO)and Tim Davies (CEO)

The company raised a promising Ā£26 million Series B round in 2022, with the notable participation of the London-listed HydrogenOne Capital Growth, and is now very well positioned to move to commercialisation, full gas ahead!


Enjoyed this edition? Please forward this to colleagues and friends!

Thank you for reading!
ā€” Colin Rebel
LinkedIn / Twitter