(Edinburgh / Great Britain) – Plans announced worldwide to build capacity for the production of low-carbon hydrogen reached a cumulative total of 71,4 million tonnes per year (Mt/a) at the end of last year. In 2022 alone, hydrogen production installations were reported to be around 26 million tons. This was three million tons less than in the previous year. This is the conclusion reached by the analyst firm Wood Mackenzie in its latest report “Q4 2022 Global Hydrogen Market Tracker”.
Last year, companies announced plans to build nearly 26 million tons of hydrogen production capacity. © Wood Mackenzie Lens Hydrogen
Accordingly, the expansion of the global hydrogen pipeline slowed down over the course of the year. While in the first quarter of 2022 there were projects with a volume of twelve million tonnes, in the fourth quarter the numbers fell to just 19 new projects with a cumulative size of less than one million tonnes.
Companies want to secure their project pipeline
The US led the way in project announcements in 2022 with 7,17 Mt/y. Influenced by the global climate change conference COP27, which took place in Sharm El-Sheikh last November, and with a view to export opportunities to Europe, Egypt was in second place. Investors announced a production volume of 5,62 Mt/a for the country; 70 percent of this goes to the production of green ammonia.
The year 2022 was marked by the energy crisis and a series of political announcements from the EU, USA and Great Britain to promote hydrogen production, says Flor Lucia De la Cruz, Senior Research Analyst, Hydrogen and Emerging Technologies at Wood Mackenzie. One reason announcements slowed over the course of the year was that “developers focused on de-risking existing project pipelines.”
Construction begins for megawatt-class electrolysers
At the same time, last year companies began building previously announced electrolyzers. In July, Shell made the final investment decision to install what is currently Europe's largest green hydrogen plant. The location is the Tweede Maasvlakte in the port of Rotterdam. The "Holland Hydrogen I“The electrolyser with an output of 200 megawatts is scheduled to start operations in 2025. Shell puts the annual yield at 60 tons.
Rendering of the Shell electrolyser on Rotterdam's Maasvlakte. © Shell
The electricity used to produce the energy source then comes from the Hollandse Kust (Nord) offshore wind farm, which is partly owned by the energy company. According to the information, the green hydrogen will supply the Shell Energy and Chemicals Park Rotterdam via the HyTransPort pipeline. In the refinery, the gas replaces some of the gray hydrogen used there and makes the production of petroleum products such as gasoline, diesel and paraffin “partially carbon-free”.
Since 2019, Europe, Great Britain, the USA and Australia in particular have announced the construction of factories for electrolysers. In 2022, there were numerous announcements for Africa during the COP27 world climate conference in Egypt. © Wood Mackenzie “Q4 2022 Global Hydrogen Market Tracker” Report
Competitor BP made headlines last year when the company announced its entry into the $70 billion Asian Renewable Energy Hub (AREH) in Pilbara in the Australian state of Western Australia. In December, the group acquired 40,5 percent of this project and became the largest shareholder. The consortium also includes Intercontinental Energy (26.4 percent), CWP Global (17.8 percent) and Macquarie Capital and Macquarie's Green Investment Group (15.3 percent). When completed, around 26 million tons of green hydrogen or nine million tons of green ammonia will be produced there annually with an electrolyzer output of 1,6 gigawatts.
The first megaprojects were also announced in the USA, including the “Hydrogen City” with a production capacity of three million tons of hydrogen per year. The Southern California Gas Company, a utility company based in Los Angeles, California, wants to use the “Angeles Link” to build electrolysis capacity of up to 20 gigawatts. The electricity for this comes from PV and wind farms, some to be built and some existing, with an installed capacity of up to 35 gigawatts.
Boom in production figures for electrolysers
On the other side of the value chain, electrolyzer manufacturers have reported new records, says Wood Mac. While in 2021 this upstream sector was still considered a bottleneck in the development of a global hydrogen economy, the capacities for electrolyzer factories announced in 2022 increased to 106 gigawatts. Of this, 45 gigawatts came from the fourth quarter of 2022 alone - an increase of 72 percent compared to the previous quarter -, certainly not least driven by the pressure from COP27 in Egypt, which offered a large world stage for climate projects of all kinds.
Wood Mac predicts that by the end of this decade, the supply of electrolyzer power could significantly exceed demand. © Wood Mackenzie Lens Hydrogen
DSE Technology from Tübingen didn't miss out on this either. The consortium of 22 European technology companies aims to implement the “Green Hydrogen Africa Initiative” in order to become a “world-leading provider” and create solutions for, among other things, energy, water treatment and electrolysis.
According to the plans, electrolyzer capacity of 2030 gigawatts will be built in Namibia in several phases by 30. This includes both PEM and alkaline electrolysers. The plans are “very ambitious,” according to Wood Mac analysts. But the analysts still lacked concrete details, which currently makes the project “a highly speculative matter”.
Overcapacity expected
“A year ago, electrolyzer manufacturing capacity looked like a bottleneck,” says De la Cruz. However, the original equipment manufacturers reacted so quickly that there is “a significant risk of overcapacity” by 2025, especially if the announced projects to produce the gas do not make progress. The suppliers needed time to train workers and procure machines and materials.
Wood Mackenzie, headquartered in Edinburgh, UK, has been part of the US venture capitalist Veritas Capital, a $40 billion asset manager and investor in technology companies, since February this year.
Photos
Location of Shell's planned 200 megawatt electrolyser on the Maasvlakte in the port of Rotterdam. © Shell
