How to Design, Build and Operate Profitable Renewable Hydrogen Projects in Europe

Renewable hydrogen is in full expansion, as the industry mobilises to meet the European Commission’s target of 6 gigawatts of electrolysers by 2024 and 40 gigawatts by 2030.

Rewards could be sizeable for companies which participate in the renewable hydrogen upswing. The European renewable hydrogen build up will require cumulative investments of up to €470 billion by 2050. European funds have kickstarted the first wave of large scale of electrolysers, creating lucrative opportunities for companies across the hydrogen value chain. However, companies wanting to cash-in on this opportunity will have to overcome a series of daunting challenges.

Firstly, there are scaling up challenges, as the biggest hydrolyser in operation is just 10 MW, a far cry from the gigawatt-scale projects being built now. Developers and operators face a steep learning curve, as they expand renewable electrolysis capacity to reduce costs thanks to economies of scale whilst avoiding technical problems that could kill their profits. Secondly, there is the challenge of sourcing large quantities of low-cost renewable electricity to power the electrolysis process, whilst dealing with the inherent variability of the lowest cost renewable energy technologies: PV and Wind. Thirdly, the industry needs to scale-up its capacity to store and transport hydrogen, as it is unlikely that all renewable hydrogen required can be produced on-site at a competitive cost. On the regulatory front, there is also a certain amount of uncertainty, given that large-scale renewable hydrogen projects are being built as the regulatory and legal framework is still evolving. Finally, there is the question of which sectors will demand large quantities of renewable hydrogen, given that some of the traditional hydrogen consuming sectors, such as oil refining, are expected to gradually decline.