Matti Rautkivi, director of strategy and business development at Wärtsilä Energy Business, explains why the Finnish company is backing several innovators in the field of hydrogen-based fuels - and why the UK government should do so as well.
The challenge to decarbonise energy systems is faced by governments around the world. In many countries in Europe, we have solved the renewable energy issues around green electricity storage and generation, so our focus must now shift to decarbonising heat and industry. We believe there is a solution the UK is in an ideal position to pioneer - green hydrogen and green hydrogen-based fuels.
Current discussions around the "hydrogen economy" often centre on the idea of replacing the natural gas (methane) in our gas transmission networks with pure hydrogen, or a mixture of hydrogen and methane. The hydrogen would be extracted from fossil fuels, with the CO₂ captured and stored.
That discussion also typically acknowledges the complications of transporting a highly explosive gas around the transmission network where there is also a risk of corroding steel pipes - a phenomenon known as embrittlement.
But at Wärtsilä, our view of the hydrogen economy is based around green hydrogen, produced by electrolysers powered by cheap, excess renewable electricity. This green hydrogen can be combined with waste carbon dioxide, and the two gases are converted into synthetic renewable CO₂-neutral methane that can be pushed into the existing gas network, with no need to develop a hydrogen pipeline infrastructure. The CO₂ can be captured from the air, from heavily-populated buildings (such as offices or schools) or directly from combustion sources.
Whichever party wins power in the UK's upcoming general election, they must enable the installation of additional renewable capacity, develop the market for green hydrogen-based fuels and encourage sector coupling.
Matti Rautkivi, director, Wärtsilä Energy Business
Germany has identified hydrogen as the key technology to achieve carbon neutrality and plans to become the world leader in its development. The German government has announced that 20 new research laboratories will receive a total of €100m a year to test new hydrogen and hydrogen-based technologies for industrial-scale applications. Recently, German power companies RWE and Innogy announced a feasibility study to build a hydrogen plant of up to 100 MW on the site of RWE's Eemshaven power station in the Netherlands.
Germany's interest in hydrogen and synthetic fuel technology can be linked to its heavy manufacturing sector and the car industry; the latter has been exploring synthetic fuels at the same time as it has advanced electric vehicles and charging.
But the UK also has advantages in this field, including a more flexible electricity transmission network and higher adoption of renewable electricity. Renewables are already providing as much as 40 percent of the UK's electricity generation, a proportion that looks set to grow significantly over the coming years.
The UK has huge wind and solar resources, in fact in 2018 we saw more than 100 negative-price half hours caused by excess renewables, and these occurrences will be increasingly common as the amount of renewables on the grid increases.
In May last year the UK announced a £20m funding pot to enable the development of hydrogen technology, but much of that has been focused on initiatives for producing hydrogen out of natural gas using Carbon Capture and Storage (CCS). A wider approach will be needed if the UK is to build on its advantages.
Excess renewable power is the key to unlocking green hydrogen, as it can be used to split water molecules into hydrogen and oxygen using electrolysers.
The hydrogen then has a vast number of uses. Green hydrogen-based fuels such as synthetic methane can be stored for long-term energy storage to help our flexibility needs, or used to power gas plants or as a replacement for fossil fuels in transport, heating and industry.
In fact, a "hydrogen-based economy" need not actually involve much pure hydrogen. Perhaps 10% of the total would be pure hydrogen for use in industrial applications. For the rest, it would be more economical to use the existing infrastructure and convert hydrogen to synthetic methane.
For industrial applications, the pure hydrogen might be fossil-fuel based at first, to start to reduce emissions, and then we can gradually eliminate fossil-fuel based hydrogen.
To develop the market, it's likely that transport fuels, for use in road transport and shipping, will be the first to use synthetic hydrogen-based methane, or methanol, as people are willing to pay a premium for green fuels.
However, the price premium is likely to disappear quickly. To produce green hydrogen, Bloomberg NEF recently projected an 80 percent drop in costs by 2040-2050 as the industry scales up, opening the way for its widespread use as a carbon-free fuel.
At Wärtsilä, we have estimated that fossil-fuel based hydrogen can currently be produced for $1.90 per kg. Green hydrogen, depending on the country it's produced in, might be available today at a price between $2.40 per kg and $5 per kg. By 2030, however, when we have harnessed economies of scale, green hydrogen could be price competitive with fossil-fuel based hydrogen.
Looking further ahead to 2050, when we have seen further decreases in price for wind and solar electricity, green hydrogen will definitely become cheaper than fossil-fuel based hydrogen.
To help in the development of hydrogen-based fuels and sector coupling, we developed the Wärtsilä SparkUp Challenge back in 2017. Our eventual winner was Carbon Recycling International (CRI), based in Iceland, which has become a world leader in the utilization of CO₂ to produce synthetic fuels. It is using cheap excess electricity and an electrolyser to produce hydrogen, then combines it with CO₂ to produce synthetic methanol for multiple use cases including road transportation.
We have also provided EUR 500,000 in seed funding to a Finnish company called Soletair Power, which has developed a unique concept to improve air quality in buildings by capturing carbon dioxide (CO2) and combining it with green hydrogen to produce a synthetic renewable fuel (see graphic).
In September, we signed a cooperation agreement with a Finnish company called Q Power. Its patented biological methanisation technology produces biomethane from hydrogen and carbon dioxide.
Finally, we are also working with a utility company in Nebraska, USA, which is looking to convert excess hydrogen into synthetic methanol by combining it with CO₂.
Whichever party wins power in the UK's upcoming general election, they must enable the installation of additional renewable capacity, develop the market for green hydrogen-based fuels and encourage sector coupling. By taking those steps, they will help to lay the groundwork for net-zero ahead of COP 26 in Glasgow next year.
The UK has a huge opportunity to develop into one of the leading players in the development of green hydrogen, but the long-term planning must start now to have an impact by 2050.