Mobility

Hydrogen – Fuel of the Future?

Expectations are high and the technologies are proven – is the hydrogen economy about to take off? The players still need to network and to establish their business models.

09/2020


A functioning hydrogen economy needs a network from production and logistics to usage. Credit: Porsche Consulting/Markus Spiller

Fast-for­ward to the year 2030. The corona­virus pan­dem­ic is his­to­ry and the econ­o­my has recov­ered but many things have changed. For one, the focus is now on sus­tain­abil­i­ty. And the chem­i­cal ele­ment with atom­ic num­ber 1 – hydro­gen – has a set place in the ener­gy mix of many coun­tries in Europe, the Amer­i­c­as, and Asia. It fea­tures promi­nent­ly in trans­port, indus­try, and build­ing ser­vices, and plays indis­pens­able roles in stor­age sys­tems for green ener­gy and as a clean fuel for pub­lic trans­porta­tion. The tech­nol­o­gy was long in com­ing, with H2 only begin­ning its tri­umphal march a decade ago.

Back to the present. The signs are increas­ing that this vision is becom­ing real­i­ty. In 2020, the Euro­pean Union and Ger­many pre­sent­ed their hydro­gen road maps along with fund­ing for the com­ing decade. And the num­ber of use cases for effi­cient hydro­gen ener­gy is increas­ing, par­tic­u­lar­ly in indus­try and trans­port.

Realistic vision?

So what is still miss­ing? What needs to hap­pen to facil­i­tate the final and sus­tain­able break­through for the use of hydro­gen? One answer to this ques­tion lies in link­ing the key play­ers, which means every­one from the pro­duc­tion, stor­age, and dis­tri­b­u­tion sec­tors to man­u­fac­tur­ers of hydro­gen-pow­ered vehi­cles and plants as well as com­mer­cial and pri­vate users. At the same time, a uni­form and trans­par­ent price pol­i­cy is still lack­ing, such as a cen­tral mar­ket as exists for elec­tri­cal power. And on the tech­ni­cal side, the “green“ per­cent­age of this fuel source – amount pro­duced via elec­trol­y­sis with renew­able ener­gy – needs to increase.

When these con­di­tions are met, hydro­gen can become wide­ly estab­lished as a source of power for appli­ca­tions like fuel-cell heat­ing sys­tems and com­mer­cial vehi­cle dri­ves. The chem­i­cal indus­try would find depend­able cus­tomers for the sub­stance, which often aris­es as a prod­uct of reac­tions. And by switch­ing their blast fur­naces from coal to hydro­gen power, steel pro­duc­ers could sub­stan­tial­ly lower their costs and also reduce their envi­ron­men­tal impact thanks to lower CO2 emis­sions.

AT A GLANCE

The benefits of hydrogen

The use of hydrogen creates real win-win situations along the process chain.  
  • Energy industry: storage and need-based supply of electricity produced by wind, hydro, or solar power.
  • Infrastructure: new field of business, e.g., for ports, fuel stations, energy providers, and local suppliers.
  • Industry: ability to meet sustainability targets and reduce costs by avoiding sanctions and CO2 taxes.
  • Transport and logistics: lower CO2 and noise emissions, greater ranges due to compact storage capacities.

Japan as pioneer

Japan can serve as a model for putting hydro­gen strate­gies into prac­tice. In 2017, it set itself the goal of estab­lish­ing a glob­al sup­ply and cus­tomer chain – with 800,000 fuel-cell cars, 1,200 buses, and 10,000 fork-lift trucks in Japan alone. Util­i­ty sys­tems in some build­ings have already switched over. Since 2009, around 300,000 hydro­gen-based micro-CHP units have been installed, with this num­ber expect­ed to exceed five mil­lion by the year 2030. They pro­vide heat and power not only for house­holds but also for kon­bi­ni, the pop­u­lar con­ve­nience stores open around the clock. Their con­stant need for heat and power makes them an ideal use case for fuel cells.

The exam­ple of Japan shows that a hydro­gen econ­o­my has the poten­tial to pro­duce ener­gy on a sus­tain­able basis and meet CO2 emis­sions tar­gets. It could also encour­age many branch­es of indus­try to devel­op, install, and export the com­po­nents of this new tech­nol­o­gy. Accord­ing to a recent study by the Mechan­i­cal Engi­neer­ing Indus­try Asso­ci­a­tion (VDMA), a poten­tial mar­ket of more than €300 bil­lion a year could arise for the world­wide mechan­i­cal and plant engi­neer­ing sec­tor if com­pa­nies tar­get green tech­nolo­gies in their devel­op­ment work. That cor­re­sponds to 12–15 per­cent of the sector’s sales world­wide – the cur­rent total level of sales in Germany’s mechan­i­cal and plant engi­neer­ing sec­tor. The study notes that inno­va­tions that facil­i­tate the use of hydro­gen have a very high level of poten­tial.

The advan­tages of hydro­gen have long been known. This source of ener­gy is avail­able pri­mar­i­ly from chem­i­cal pro­duc­tion sites; nei­ther its stor­age nor dis­tri­b­u­tion poses major obsta­cles, and its “con­sumers“ such as fuel cells and adapt­ed com­bus­tion engines are also tried and test­ed. Although hydro­gen cycles have been under dis­cus­sion for more than twen­ty years now, they sim­ply have yet to gain momen­tum.

Basis established, networks missing

The cur­rent sit­u­a­tion, how­ev­er, looks primed and ready. Accord­ing to Chris­t­ian Dittmer-Peters, a part­ner at Porsche Con­sult­ing, “There are three cru­cial fac­tors: trans­paren­cy on mat­ters like the sources and avail­able amounts of hydro­gen, clear reg­u­la­tions on process­es like han­dling gases, and – impor­tant­ly – a net­work for all the rel­e­vant play­ers. Hydro­gen can only be used on a wide­spread basis if a net­work can be estab­lished with appro­pri­ate busi­ness mod­els. That includes not only the infra­struc­ture and tech­ni­cal equip­ment but also com­plete­ly new ser­vices.”

This is pre­cise­ly the stick­ing point. Dittmer-Peters describes the cur­rent con­stel­la­tion as a stand­off in which each mem­ber of the process chain is wait­ing for every­one else to make a move. “What’s need­ed right now is invest­ment in hydro­gen pro­duc­tion and dis­tri­b­u­tion, as well as in fuel sta­tions and dis­tri­b­u­tion cen­ters. A lot of com­pa­nies are ready. In order for par­tic­i­pants to com­mit them­selves and move for­ward, they have to con­nect with each other and devel­op viable long-term busi­ness mod­els.”

Duisport: H2 infrastructure for inland ports

A very wide range of play­ers is cur­rent­ly invest­ing in con­crete appli­ca­tions for hydro­gen. Duis­port, for exam­ple, is Germany’s largest inland port and Europe’s cen­tral logis­tics hub. Locat­ed at the Rhine, for the Duis­burg port hydro­gen is an impor­tant part of its sus­tain­abil­i­ty strat­e­gy, which is why it is par­tic­i­pat­ing in the RH2INE joint ven­ture (Rhine Hydro­gen Inte­gra­tion Net­work of Excel­lence). “This project aims to intro­duce hydro­gen-pow­ered barges on the Rhine-Alpine cor­ri­dor and set up a hydro­gen infra­struc­ture at ports along the Rhine by 2030,” says Erich Staake, Duisport’s CEO. The EU is invest­ing half a mil­lion euros in study­ing the tech­no­log­i­cal and reg­u­la­to­ry require­ments for hydro­gen-pow­ered ship­ping between Rot­ter­dam and Genoa.

The colors of hydrogen

Is hydrogen always hydrogen? It is a colorless gas. But the way it is produced can make a difference. A color system is used for categorization. Here are the three major types:
Green: produced from water by electrolysis using renewable energy, which makes it the only CO2-neutral form. Grey: produced from fossil fuels, which can make sense for a transitional period. Blue: initially produced as grey hydrogen, with a CCS process used to capture and store CO2.

Hydrogen for steel production

A joint project by Thyssenk­rupp Steel Europe and the RWE power com­pa­ny is sim­i­lar­ly ambi­tious. RWE is plan­ning to build an elec­trolyz­er at its Lin­gen plant in north­west­ern Ger­many to pro­duce green hydro­gen. Thyssenk­rupp, which is Germany’s largest steel pro­duc­er, will be one of the con­sumers. It plans to use hydro­gen to pro­duce crude iron at its site in Duis­burg. The 100-megawatt elec­trolyz­er will be able to pro­duce 1.7 tons of hydro­gen an hour. That means Thyssenk­rupp Steel will be able to pro­duce 50,000 tons of cli­mate-neu­tral steel a year and save the cost of car­bon taxes. This con­ver­sion, which will rep­re­sent a very sig­nif­i­cant step toward pro­tect­ing the cli­mate, is expect­ed to take place by 2022.

The project is part of the Get H2 ini­tia­tive, a joint effort by busi­ness­es and research insti­tutes to estab­lish a com­pet­i­tive hydro­gen mar­ket in Ger­many. It start­ed with the Lin­gen Project, which brought eight part­ners togeth­er from the ener­gy, indus­try, trans­port, and heat­ing sec­tors. “The key now is not only to use the tech­nol­o­gy in small-scale R&D projects but also to pre­pare it for mass pro­duc­tion in con­nec­tion with larg­er projects and an over­all approach. We want our project to make a seri­ous con­tri­bu­tion here,” says Jörg Müller, CEO of Ener­trag, one of the part­ner com­pa­nies. This exam­ple illus­trates the impor­tance of link­ing every­one involved along the H2 value chain, notes Chris­t­ian Dittmer-Peters. “When the right peo­ple from pro­duc­tion through stor­age sit down at the same table with users and find a way of work­ing togeth­er, every­one ben­e­fits.” The start has been made.

Read the next topicMoving Forward
Mobility in Flux