Hydrogen valleys will become more complex in the second half of this decade as levels of investment start to increase, according to a study by the EU’s Mission Innovation Hydrogen Valley Platform.

The study surveyed 36 hydrogen valleys—sometimes known as clusters—to find out how propositions were changing following the development of national and international hydrogen strategies.

Valleys aim to geographically link demand and supply for hydrogen by placing production close to end-sector uses.

"Valleys are starting to be commercially driven, already in some cases without any public funding support" Mission Innovation Hydrogen Valley Platform

The report identifies three key trends—that projects are becoming larger and more complex, that they are increasingly driven by private initiatives rather than the public sector and that they are gravitating towards key types of value chain setups.

On the first point, the study finds that total investment levels had risen significantly from €250mn ($304mn) in 2017 to €1bn in 2018 and €18bn in 2019. This is because projects are getting larger and more numerous, and also because they are starting to target energy and industrial offtakers—which have higher levels of demand—rather than the mobility sector. More than 85pc of large-scale projects beyond €500mn of investment supply the industrial sector, the report finds.

On the second point, the report finds that private entities have increasingly been taking the lead over the past two years, with 54pc of hydrogen valleys surveyed now being led by companies.

“Valleys are starting to be commercially driven, already in some cases without any public funding support,” says the report.

Three types

On the third point, the study finds valleys are now tending to group into one of three key types—small scale and mobility focused, medium scale and industry focused, and large-scale and export focused.

In the small-scale category are projects such as Germany’s Hyways for Future and Italy’s Hydrogen Valley South Tyrol, in the mid-scale category are projects such as the Basque H2 corridor and the UK HyNet cluster, and in the large-scale category are projects such as Blue Danube and Green Crane.

Most projects have an anticipated cost of green hydrogen at €6-8/kg, but those at the higher end of this bracket are projects that are already underway, and costs are likely to come down. Some 22pc of projects said they anticipate green hydrogen costs of under €4/kg.

€18bn – Investment in hydrogen valleys in 2019

With carbon prices at €50/t CO₂, such as those seen in the EU ETS, these cheaper green hydrogen projects will start to become cost-competitive with grey hydrogen.

Carbon taxation was one of the key policy issues raised by project developers, alongside permitting holdups, regulations that affect power prices and access to innovation funds.

“A clear vision of a country's future hydrogen economy as well as the global setup of conducive regulations, harmonised standards as well as transparent and efficient permitting procedures is thus highly critical for the success of Hydrogen Valleys and the sector in general,” says the report.

The study is titled Hydrogen Valleys: insights into the emerging hydrogen economies around the world.

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Author: Tom Young