Unlike fossil fuels which release CO2 to the atmosphere, the waste product of ‘burning’ hydrogen is water. However, making hydrogen takes energy. If that energy comes from renewable sources, for example through electrolysis of water using renewable electricity, then the hydrogen made is called green hydrogen, as very little CO2 is emitted in the process.
The efficiency of such ‘power-to-gas’ is 65-70% today. However, the efficiency of turning hydrogen to electricity or so called ‘gas-to-power’ is up to 50%. So the round-trip efficiency, electricity to hydrogen then back to electricity, is 30-35%. Transportation and liquefaction of hydrogen further require energy, making the overall efficiency even lower.1 However, considering fossil fuel to electricity efficiency is around 33-45%,2 and as technology improves, hydrogen has the potential to be an alternative to fossil fuels. There are many companies in this space, and in North America, Plug Power (www.plugpower.com) is adopting a vertically integrated business model, while Ballard Power Systems focuses on fuel cells for mid-to-heavy duty transportation sector (www.ballard.com).
Given solar and wind power have an intermittency issue and nuclear power has a bad wrap, hydrogen and solar/wind are complementary to each other. The EU issued ‘Hydrogen Strategy for a Climate Neutral Europe’ in August 2020, positioning hydrogen to play a significant role in replacing fossil fuels.3
For hydrogen to do that, several things need to happen. First the technology needs further efficiency improvement. Second, needed accompanying infrastructure needs to be developed such as fueling stations for hydrogen vehicles. Scaling of businesses and their facilities need to happen. And all these require capital. There are signs that all these are beginning to happen. For example, Enegix, a global renewable energy developer, signed an MOU with a local government in Brazil to invest $5.4B to develop a hydrogen production facility using solar and wind energy – the largest of such projects. The project is tied to another project of electricity generation. 4