What color will tomorrow’s hydrogen be?
Green hydrogen, which is produced by electrolysis equipment powered by zero-carbon renewable electricity, is obviously very promising. But it’s still relatively expensive. Also, Germany doesn’t have enough renewable power to produce as much green hydrogen as its hydrogen economy will be. So it makes sense to be open to other colors as well. Countries like Great Britain and the Netherlands are pursuing blue hydrogen, which is conventional grey hydrogen, except that the resulting carbon emissions are captured and stored (CCS) or used (CCU). Turquoise hydrogen, in which pyrolysis – also known as methane cracking –is used to split methane into hydrogen and solid carbon, is another option. The solid carbon is environmentally friendly and could be used, for example, in the tire industry. Pyrolysis, albeit not yet technically mature, nevertheless has potential. The only hydrogen Germany should exclude from its strategy conventional grey hydrogen.
Dr. Axel Wietfeld, head of Uniper's new Hydrogen division
When do you think it will make financial sense for companies to invest in green hydrogen?
Studies suggest that it will be between 2030 and 2040. There are several factors. The first is scale. Today’s electrolysis units are small in size and thus have relatively high in cost. Larger units would have much lower costs. Many expect investment costs for electrolysis equipment to halve over the next ten years. But the policy and regulatory environment needs to change as well. Both Berlin and Brussels are exploring promising strategies but have yet to enact legislation. Germany, for example, could waive the renewables levy on green power used for electrolysis. The transposition of the EU Renewable Energy Directive (RED II) into German law will create incentives for industrial companies to use green hydrogen. These kinds of changes are already on the horizon.
Will this create new applications for hydrogen?
Definitely. Hydrogen will of course continue to be needed for a variety of industrial processes. Going forward, we expect to see new customer segments as well, like the steel industry and ammonia production, where hydrogen will replace natural gas. E-fuels and chemical recycling will also need hydrogen. Basically, those sectors that can’t be completely electrified and still need gases will eventually convert to hydrogen. One hurdle to full electrification is that large-scale, long-term storage of electricity isn’t practical yet, only small-scale storage in things like electric car batteries. But in an energy system that consists of a growing proportion of intermittent renewables, energy storage will become increasingly important for maintaining grid stability and supply security. This is where hydrogen comes in: it can serve as a medium for storing and transporting energy.
So hydrogen will be essential for the electricity grid of the future?
Yes, I think it will. Matching supply and demand will become increasingly difficult. There will be days and weeks when countries like Germany will produce more wind and solar power than they need and will need to find ways to store it. Power-to-gas units could convert this surplus renewable electricity into green hydrogen, which is easy to store. There will of course also be days on which too little renewable electricity is produced, and it will be good to have an energy storage system to fall back on. Hydrogen is ideal for this. Hydrogen facilitates what’s called “sector integration”: combining the electricity sector with the gas and heat sectors, thereby creating a closed-loop economy.
Where does Uniper see its role in the hydrogen economy?
We intend to build, own, and operate hydrogen production facilities in Europe and, in the long term, elsewhere as well. We also plan to become increasingly active in hydrogen trading worldwide. We expect hydrogen trading to become as global as natural gas and LNG trading already are. This would be good for decarbonization and also represent an exciting opportunity for Uniper. Being one of Europe’s largest natural gas importers, traders, and marketers gives us the expertise to do the same with hydrogen. Hydrogen is already central to Uniper’s strategy but will become even more important in the future.
Which is presumably why Uniper established a Hydrogen division?
Uniper is committed to propelling decarbonization. For example, we aim for our power generation business in Europe to be climate-neutral by 2035. We’re convinced that hydrogen will play a key role in this process. Our organizational setup now reflects this conviction. The new division has 30 employees, but also draws on the wider Uniper organization for some functions. We also partner with other companies to combine our respective competencies.
What companies do you work with?
In recent months we’ve entered into cooperative agreements with General Electric and Siemens, which manufactured many of Uniper’s gas turbines. Siemens also builds electrolysis units. So we’re working with them to analyze how to optimize the entire hydrogen value chain. It may make sense, for example, to produce green hydrogen in North Africa and the Middle East and import it to Europe. We’re also looking at storing hydrogen in our natural gas storage facilities and using it as a fuel in our gas-fired power plants. So we’re currently working with our project partners to assess these assets’ hydrogen compatibility. Although we have lots of expertise ourselves as gas turbine operators, it makes sense to work with turbine manufacturers to develop new approaches and solutions, such as calculating the maximum hydrogen percentage in the turbine fuel mix.
Can the existing natural gas infrastructure be used for hydrogen? Or will new infrastructure be needed?
What need to be built are electrolysis units. Uniper already operates small-scale electrolysis units. But a scale-up is necessary. New plants are needed for blue and turquoise hydrogen as well. But much of what already exists today – like the natural gas transport system – can be used for hydrogen. Transmission system operators in Germany are already submitting plans to convert about 6,000 kilometers of their pipelines to hydrogen. Uniper is Germany’s largest natural gas storage operator. Going forward, these assets will be used for hydrogen as well. I already mentioned that gas power plants will eventually cofire hydrogen. Uniper has gas-fired power plants in several European countries. We’re already working on making them hydrogen-ready. This is one of the reasons why we’re convinced that hydrogen has so much promise. It’s simply cheaper to convert existing gas infrastructure than to keep expanding the electricity system and putting up more power lines, which often face local opposition. Hydrogen is therefore essential for propelling decarbonization in Germany and Europe. It’s important to remember that hydrogen doesn’t compete with renewables. Indeed, it can only succeed in partnership with them.