Thirty assorted companies have announced the hitherto confidential ‘HyDeal Ambition’ initiative – one of the very largest green hydrogen consortiums seen to date. It will produce green hydrogen in Spain with a targeted 2030 scale of 3.6 million tons of annual output, coming from 67 GW of electrolyzers powered by 95 GW of solar power.
By 2030, the consortium – which includes the likes of SNAM, Mcphy and Naturgy – expects the retail price for green hydrogen, including transmission and storage costs, to have fallen to €1.5 per kilogram, which will be at cost parity with today’s natural gas.
The initiative’s first phase will activate in 2022, running off a 10 GW solar portfolio within Spain, which is also where the first deliveries will be made. But as the scheme develops over the decade, deliveries will be extended to south-west France, then east France, and then finally to Germany.
Aside from consultancies and infrastructure funds, the involved companies are an even mix of solar developers, electrolyzer manufacturers, gas TSOs from all three nations, and energy companies such as Naturgy. One of the involved companies is SNAM, a large Italian infrastructure firm – so it wouldn’t be surprising to see HyDeal extend its ambitions to northern Italy in the future.
To understand the true scale of this development, and what 3.6 million tons of hydrogen a year means, we have to note that burning hydrogen generates 33.3 kWh per kilogram, whereas petrol and diesel generate only around 12 kWh per kilogram. Spain consumed 50 million tons of oil products each year prior to the pandemic – so 3.6 million tons of hydrogen, in terms of energy output, would be equivalent to a 20% of Spain’s oil consumption.
Consumption fell during the pandemic, but can be expected to revive somewhat before the energy transition this decade drives it down permanently. While Spain does have a petrochemical industry (Eni for instance), its economy is no more energy intensive than the rest of Western Europe, and a similar comparison could have been made with Germany, which consumes about twice as much oil. The HyDeal Initiative itself made a comparison to France, stating that their 3.6 million 2030 goal would be equivalent to a month and a half of France’s oil use.
The spokesman for the initiative, Thierry Lepercq, called HyDeal Ambition a “complete industrial ecosystem” which has been planned over the course of “two years of research, analysis, modelling, feasibility studies and contract design”.
Lepercq himself joined the solar industry in 2006, heading a company which developed 3 GW of solar projects before being acquired by Engie, at which time he joined Engine’s Executive committee for research. He’s since shifted his focus to green hydrogen by founding Soladvent, a strategic analysis group which exists to foster precisely this kind of green hydrogen planning.
The consortium’s electrolyzer manufacturer McPhy Energy has been involved in the nascent industry since 2008, making it one of Europe’s most established manufacturers. The EPC company, Vinci Construction, is also involved in Schlumberger’s GW-scale electrolyzer factory which was announced in January.
The first 10 GW tranche, which is to begin work in 2022 and will involve only some of the initiative’s members, is one of the biggest in the world and one of most important. There are a few larger projects planned in Australia and the Netherlands, but these have a more remote timeframe to enter construction or commissioning – in the latter part of the 2020s.
Left unspoken with the two big figures from HyDeal Ambition – 95 GW solar power and 67 GW electrolysis – is how to firm the intermittent solar power. A 1 GW electrolyzer installation is two or three times more expensive than a 1 GW power station of whatever variety, so when you’re using solar or wind, which are intermittent, you want to build more generation capacity than electrolyzer, and then fill in the gaps with energy storage, trading with the grid, or whatever else. Chinese green hydrogen projects commonly adopt a mixture of solar, wind, batteries, and concentrated solar thermal energy storage, as well as backup gas generators.
In Spain, the most likely option is simply battery energy storage, but the country also has the right conditions for concentrated solar thermal storage, so that technology may stage a comeback in tandem with Spanish hydrogen in the 2030s, if it can lower its costs with new designs.
Of the multi-GW hydrogen complexes announces worldwide, only Beijing Jingneng’s 5 GW project in Inner Mongolia claims it will come online earlier than this 10 GW project, though its original 2021 deadline was announced prior to Coronavirus.
Another comparison would be to the seven-company, 25-GW, 2026-target ‘Green Hydrogen Initiative’ announced in December by ACWA Power, Iberdrola, CWP Renewables, Envision, Orsted, and Yara – a lot of big names, and Italy’s SNAM was also involved in that one.
In global terms, this reinforces Europe’s already large lead in the green hydrogen industry – but it shifts some of the emphasis from the North Sea and its offshore wind, which will remain the biggest source of Green Hydrogen, to Spain and to solar power.