Answering the question ‘What in the world is really happening with the green hydrogen industry?’ will become a little easier next week as Rethink Energy is currently attending the World Electrolysis Congress in Dusseldorf. This week, we can at least set the scenes pending the findings from the conference.
Until the electrolysis side of the sector matures, delays will persist. Yet some are unfazed by the recent news that Europe’s HySynergy 1 green hydrogen project, slated to be one of the continent’s largest, is facing delays due to quality issues in equipment supplied by Nel.
Everfuel, the Danish developer, reported a problem with high-pressure fittings in the deoxidizer, a critical component of Nel’s electrolyzer system. This issue delayed the project’s startup, originally set for 2022, to the middle of the second quarter of 2024. Despite efforts to rectify the problem, including on-site rebuilding, approval for certification remains pending.
The HySynergy 1 project, situated at Crossbridge Energy’s oil refinery, is part of a series of 20 MW green hydrogen initiatives across Europe. Everfuel’s agreement with Nel included the delivery of the electrolyzer in December 2020 and full operation by mid-2022. However, construction delays followed by quality concerns prolonged the commissioning process.
Nel is also entangled in a legal battle with Iwatani, a Japanese industrial gas company, over alleged concealment of defects in hydrogen refueling station equipment.
This is the kind of thing that you get when you rush an industry. A few months ago, Chinese industrial giant, Sinopec, was gathering some bad press regarding issues in efficiency with its electrolyzers while US-based Plug Power acknowledge it is making a loss on every electrolyzer it ships out the door. In spite of all this, billions are still being poured into green hydrogen and derivatives deals. Ammonia, methanol and pure green hydrogen are all still gathering pace.
This is all because mistakes are supposed to happen so learning curve can kick in. In layman’s terms this is what the learning curve entails – projects fail, the industry does it better next time. Thankfully, project developers remain unfazed by recent setbacks, as proven by a new wave of announcements.
Egypt has secured agreements for seven new green hydrogen projects in the Suez Canal Economic Zone, totaling $40 billion in investment over the next decade while a $2.5 billion green hydrogen and ammonia project in northern Chile is seeking environmental approval.
The Volta project by Mejillones Ammonia Energy plans to produce 300,000 tons of ammonia annually by 2027, utilizing solar power from the Atacama Desert. Chile’s government targets a production cost below $1.50/kg by 2030, with support for green hydrogen projects through a $1 billion fund and funding for small-scale electrolysis projects.
Moreover, Norwegian fertilizer giant Yara has signed a binding agreement with Indian developer ACME Group for 100,000 tons of renewable ammonia annually from an Oman project. The project will be powered by 500 MW of solar.
The feeling among the industry is there is nothing wrong with the green hydrogen sector. But things take time and perspective is key. Governments are quick to come up with 2030 targets for GW-scale projects yet economies need the most support in the early stages of their life. Steep capacity additions curves are not realistic and the world is now feeling a sense of urgency in this context, but if those targets were set for 2040, we would be having a different conversation.