Engineering services firm Worley is involved with more than 120 hydrogen developments worldwide, including Shell’s Hydrogen One project in the Port of Rotterdam, BP and Orsted’s project to build a 60MW electrolyser at BP’s Lingen refinery in Germany, and the Liquid Wind project in northern Sweden. The firm is also involved in more than 800 wind projects and over 370 solar projects.

Hydrogen Economist spoke to Dr Hans Dieter Hermes, vice president of clean hydrogen at the firm, about the particular challenges of hydrogen projects.

Tell us broadly about the challenges of developing hydrogen projects?

Hermes: If you look at the forecasts for hydrogen demand and compare them with the projects that we have in the pipeline, there is currently ten times more demand forecast than there is supply. And there is a long value chain involved in hydrogen projects with a number of different partners, so the development of the hydrogen market will need to be faster and more disruptive than that of the renewables market. That means we cannot do projects as we did them before—we must be faster.

120 – Number of hydrogen projects Worley is working on

To enable that speed, we have developed a model to modularise a project and help optimise the planning. Because what you want to concentrate on is the decision-making: How much renewable energy do you need? How much electricity do you want to store in batteries? How much water treatment and water storage do you need? How much hydrogen do you need to store?

These are the difficult decisions, and we have developed this model that helps to support a better overview of a project to enable them.

What is different about developing hydrogen projects compared with other large-scale energy projects?

Hermes: It is really different from oil and gas projects. There are more players involved from different industries. The large projects have a construction time of 5-10 years. When you start the project there is a different best-available technology than when you commission it. That is a huge driver to work on the modularisation and automation of project planning. The good news is that, even with a number of different players, the technical and economic optimisation is the same for everyone, although you sometimes need to work harder for everyone to gain the same view of the risk profile in a large, complex project.

Can you see the hydrogen economy developing over the next few years to meet the levels of demand being required by governments?

Hermes: There is this market momentum that has been created by a common-sense approach between industry, government and society to implement measures to decarbonise and develop hydrogen—that is good. If you look back at electrolyser development over last 20 years, [every] ten years electrolyser size grew tenfold. And what we expect to see in the coming years is electrolysers that use up to 20pc less electricity to produce the same amount of hydrogen. This will have a huge impact because it changes the energy balance and the cost balance of the value chain.

“We must implement trading platforms to enable a hydrogen price”

We will also see a lot of development in terms of companies being closer to producers or project developers to bring costs down. The other positive development is the market for hydrogen. High demand from Europe [will] cause a massive amount of supply from other regions with high levels of solar and wind, which will naturally start to create a market.

How should policy evolve to enable all this?

Hermes: The first phase that we saw of providing large grants to projects—this was good for starters but cannot continue. It is important now to have a regulatory framework that incentivises investments, and then—driven by the levelised cost of hydrogen—the best technology will come into play automatically. Only in a very few cases would I suggest continuing to fund technology developments directly.

The other thing which is important is that we need better emissions limits and market pricing for carbon, as well as a removal of the levies and taxes on green electricity.

We must also implement trading platforms to enable a hydrogen price. Today we know how much it costs to make hydrogen—but there is no market price. One idea is contract for difference trading platforms where a government-based exchange buys hydrogen products for a fixed price, removing the price risk, and then sells the hydrogen on. This would de-risk projects and enable them to receive financing.

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Author: Tom Young