More than 1.5GW of green hydrogen projects will be built in Europe by the end of 2023 on the back of government incentive schemes that will be launched this year, according to UK-based energy analyst Delta-EE.
“It looks like 2023 will be the real take-off for the green hydrogen sector in Europe — but the important decisions will be made in 2022, and this is the year that really counts,” writes Robert Bloom, service manager for Delta-EE’s Global Hydrogen Intelligence Service, in a new white paper entitled 2022 — The Year to Bridge the Gap Between Ambition and Reality for Green Hydrogen in Europe.
He believes that the EU’s target of having 6GW of renewable H2 production in place by the end of 2024 is a “realistic expectation [that] is likely to be met”.
“We think 2022 will be the year we see targeted policy, funding and incentives become clearer. Thus, enabling this year to become the launching pad for Europe’s green hydrogen industry, and to bring the 6GW by 2024 target within reach,” Bloom writes.
In particular, he points to Germany, the UK and the Netherlands as the countries that will be first to launch new subsidy schemes for green hydrogen that will enable developers to make projects profitable and sign off on final investment decisions (FIDs).
Bloom tells Recharge that he expects the UK to announce a Contracts for Difference-style programme this year, in which developers would sell green or blue hydrogen at the same price as grey H2, with the government paying them a top-up to cover their extra costs and make a small profit.
Having said that, he adds: “We might not see a hydrogen business model [in the UK] by the end of 2022, knowing how delayed the hydrogen strategy was, but the important players, the kind of big players, they're going to know how that consultation is going. They're going to have some insight into what that business model is gonna look like. And all of these things start to build confidence, start to build momentum into trying to achieve that ramp-up rate in 2023.
“And we’re starting to see a similar thing in Germany as well, with the new ‘traffic-light’ coalition — they’ve said they might be releasing an Easter legislative package, some more targeted incentives for production and perhaps some quotas for end use in public procurement where electrification isn't viable and to try and get some lead markets in there as well.”
The Dutch government, he points out, launched a €35bn climate and transition fund in January, which makes €15bn available for decarbonising industry with “new energy carriers”, but is yet to clarify how this funding would be dished out.
And while the European Commission is not planning to unveil any specific funding schemes itself, its stated targets — including the installation of 40GW by 2030, and for 50% of hydrogen used by industry to be renewable by the same date — will push national governments to act.
“We think 2022 is going to be the year that countries start to look at that and go, ‘right, how are we actually gonna bring that into our legislation? How are we gonna actually implement some of these and get the ball running to hit some of these targets?’” Bloom tells Recharge.
Delta-EE expects to see green hydrogen projects commissioned in Europe this year in the “tens of megawatts” range — adding up to a cumulative 481MW (compared to 118MW at the end of last year), with developments in the “hundreds of megawatts” in 2023, bringing installed capacity to 1.65GW. That would be an increase of more than 1GW next year alone.
This figure will rise to 4.25GW in 2024, based on announced projects, but Bloom predicts that 2.2GW of yet-to-be-announced projects would also come on line by then — exceeding the EU’s 6GW goal.
“Given the likelihood of positive announcements on national subsidies for green hydrogen this year, we think that meeting the 6GW target by 2024 is likely,” he writes.
