Energy carrier and commodity: how to make it happen?

19 March 2021

Low cost green hydrogen can only be produced where renewable resources are plentiful, eg North Africa. Hydrogen transport by pipeline to Europe would be much more cost effective (by roughly a factor of ten) than electricity transport by cable. Use could also be made of Europe’s existing gas grid, which can be modified to handle H2 at relatively low cost. However, for hydrogen to fulfil its fundamental, systemic, role as feedstock, energy carrier and energy commodity (rather than just an add on to the natural gas and electricity sectors), a comprehensive and coherent policy framework is needed, supporting development of a dedicated H2 infrastructure and transparent market

Hydrogen will play a crucial role in the climate neutral economies of the future, as shown in many recent scenarios and roadmaps. In a system dominated by variable renewables such as solar and wind, hydrogen links electricity with industrial heat, materials such as steel, chemical products like fertilisers, space heating, and transport fuels. Furthermore, hydrogen
can be seasonally stored and transported cost-effectively over long distances by ship or pipeline. Renewable hydrogen in combination with renewable electricity has the potential to entirely replace hydrocarbons in the long run. In the short to medium term low carbon hydrogen is necessary to ramp-up hydrogen production volumes in order to stimulate increased hydrogen demand, support the building of a dedicated hydrogen infrastructure and develop hydrogen markets.

The year 2020, has seen the emergence of hydrogen strategies in many countries and regions around the world: Japan, South Korea, Australia, Chile, Morocco, China, Russia, Saudi Arabia, Austria, France, Germany, the Netherlands, Norway, Portugal and Spain, among others.

In Europe, most importantly, on 8 July 2020 the European Commission released the Hydrogen Strategy for a Climate-neutral Europe, as part of its European Green Deal. The strategy sets out a target of 1 million t/y of hydrogen and electrolyser capacity of 6 GW by 2024, and 10 million t/y and ‘2x40 GW’ by 2030. The 2x40 GW refers to a report issued by Hydrogen Europe:

Hydrogen for a European Green Deal, a 2x40 GW initiative. This outlines a roadmap for green hydrogen production up to 2030, whereby 40 GW of electrolyser capacity is sited in the EU countries and 40 GW in neighbouring countries, with a focus on North-Africa. It recognises the importance of producing green hydrogen at locations with good solar and wind resources. Only at these good renewable resource sites can low cost green hydrogen be produced that can compete with present day fossil-based hydrogen, and in the long run even with natural gas.

Of course, electrolyser CAPEX and OPEX cost reductions are important, but electricity is the dominant cost factor (Figure 1). With a conversion efficiency of 50 kWh/kg H2, every cent per kWh electricity adds 50 cents/kg hydrogen to the total hydrogen cost.

Hydrogen exporting and importing regions

Good solar resources can be found in desert regions, especially around the tropics. Oceans and seas provide good wind resources, but good wind conditions can also be found onshore at specific locations such as the Sahara Desert, Patagonia and certain coastal areas. See Figures 2 and 3.

In Europe, the lowest cost renewable resources are hydropower in the Nordic countries and the Alps, offshore wind in the North Sea, Baltic Sea and some areas of the Mediterranean Sea, and onshore wind in selected areas. The best solar resources are in southern Europe.

Although many regions in the world can produce renewable and/or low carbon hydrogen at low cost, it is obvious that certain regions will become net exporters and other regions will become net importers of hydrogen, as shown by the World Hydrogen Council (Figure 4) and many others. And even within regions, there will be hydrogen trade, import and export.

It is evident that the European Union will become a net importer of low-cost hydrogen, not only because of its comparatively modest renewable energy resources, but also due to its relatively restricted area and high population density. The Sahara Desert is the sunniest-year-round area in the world and has also very good wind resource sites. It is a large area, 9.4 million square km, more than twice the size of the European Union, while the population density is less than 1 person per square km, compared with 117 persons per square km in the EU.

Hydrogen and pipelines vs cables and electricity

As already noted, renewable hydrogen production costs around the world are dominated by electricity costs, and therefore mainly determined by the renewable energy resources available. However, production costs are not the only factor, transport and storage costs have to be taken into account too. For base-load hydrogen delivered to a steel plant, the cost competition will typically between locally produced renewable hydrogen (from solar and wind), with local storage (eg, salt caverns) and limited pipeline transport, and imported hydrogen (via ship and pipeline or possibly by long distance pipeline only, with storage).

In both cases (local hydrogen production or import), large scale, multi GW, renewable hydrogen production will take place at the renewable production site and not at the demand site. The main reason is that hydrogen transport by pipeline is more cost effective (roughly by a factor of ten) than electricity transport by cable. Also, typically, pipeline capacities (15-20 GW) are much larger than electricity cable capacities (1-4 GW). Furthermore, pipeline hydrogen transport avoids electricity grid capacity constraints caused by integration of increasing renewable electricity production. As an example, in 2018 in Germany, an estimated € 1 billion worth of offshore wind power was curtailed in Germany due to insufficient transmission grid capacity.

So instead of transporting bulk electricity, it would be more cost efficient to transport hydrogen. In addition, hydrogen, like natural gas, can be stored over seasons and can hence serve as a dispatchable source of bulk energy, a distinctive advantage over electricity. A trans-national hydrogen gas pipeline system is therefore required, enabling transport of hydrogen from the hydrogen production locations (with good renewable resources) to the demand sites.

Large scale hydrogen storage facilities, eg, using salt caverns or possibly empty gas fields, need to be integrated into such a hydrogen transport system to enable delivery of hydrogen at the time of demand. Such a hydrogen gas pipeline system with storage facilities looks very much the same as present day natural gas pipeline systems.

Converting the gas grid and connecting to North-Africa

Europe has a well developed gas grid that can be converted to accommodate hydrogen at minimal cost. Recent studies concluded that the existing gas transmission and distribution infrastructure is suitable for hydrogen with minimal or no modifications. The European transport grid for natural gas is about 200 000 km long, with a distribution grid that is several times that in length. In addition to the natural gas grid, there are around 10 000 km of pipelines that carry other substances such as oil, kerosene, hydrogen, ethylene, nitrogen, etc.

In July 2020, a group of 11 European gas infrastructure companies presented their roadmap for realising a dedicated European Hydrogen Backbone (Figure 5). A hydrogen backbone, based on converted 36 and 48 inch gas pipelines, can transport around 8 GW and 15 GW, respectively, of hydrogen (HHV) per pipeline. They estimate that a European Hydrogen Backbone would consist of about 75% converted gas pipelines and 25% new hydrogen pipelines, with transportation costs of about 0.13 euro/kgH2/1000 km. However, using new large dedicated pipelines operating at up to 100 bar pressure could achieve transport costs even below 0.1 euro/kgH2/1000 km.

Europe currently imports natural gas from Algeria and Libya, with several pipeline connections to Spain and Italy. These pipeline connections have a capacity of more than 60 GW. For comparison, there are two electricity transmission cables, each with a capacity of 0.7 GW, between Morocco and Spain. For Africa and Europe, it would therefore be very interesting to unlock renewable energy export potential in North Africa by converting electricity into hydrogen and transporting it via pipelines, including some converted natural gas pipelines, to Europe. As an example, hydrogen transport cost for a new hydrogen pipeline, crossing the Mediterranean Sea, from Agadir in Morocco, and linking to the Ruhr area in Germany, a distance of about 3000 km, would cost around 0.3 euro/kgH2, or 0.0075 euro/kWhH2 (HHV).

However, to fully utilise the advantage of lower transport costs, at least 1 million tonnes of hydrogen per year needs to be produced and transported. A 1 or 2 GW wind or solar farm is of sufficient size for electricity because it matches the capacity of an HVDC connection. But for hydrogen production, a wind or solar park needs to be sized based on hydrogen transport pipeline capacity. A pipeline with a capacity of 10 GW operating at 4000 full load hours per year will transport about 1 million tonnes of hydrogen (40 TWh (HHV)) per year.

Finding the space for multi GW hydrogen production sites Production of 1 million tonnes of hydrogen per year needs a lot of space, space for the electricity production by solar or wind, for the electrolysers, compressors, cabling and pipelines, access roads, etc.

For solar, an area of about 500 km2 is needed, more or less fully occupied with installations and equipment. For onshore
and offshore wind the physical space that an individual wind turbine needs is not much. For a wind farm, however, the turbines need to be spaced well apart from each other, due to wake and turbulence effects. A rule of thumb is a spacing of seven times the rotor diameter. Therefore, the total area that is needed to realise a wind farm, is much larger than the area occupied by the wind turbines themselves.

Table 1 compares space requirements for producing around 1 million t/y of green hydrogen by various means.

The development of such large-scale sites for renewable hydrogen production requires governments to designate these
areas. Governments will have to select areas on the basis of a number of criteria. Major infrastructure, such as roads and communications, large-scale hydrogen transport and storage, and electricity supply, will be required.

Dedicated, integrated and coherent policy frameworks needed

The main goals of current national hydrogen strategies are focused on reducing emissions, diversifying energy supply, fostering economic growth, integrating renewables and developing hydrogen supply for export. However, today a framework to implement and integrate hydrogen in a systemic way into energy, climate, economic and geo-political policies is missing.

Hydrogen is not an add on to the natural gas system and not a part of the electricity sector either. It is not just about stimulating demand in individual sectors and production via subsidies, tax reliefs, tenders, quota, setting emissions caps, etc. Hydrogen has a systemic role to play, as feedstock, energy carrier and energy commodity. Therefore, a dedicated, integrated and coherent policy framework needs to be designed and implemented.

Such a policy framework needs to stimulate demand and production in a coherent way, and a dedicated spatial planning policy is also required. But a hydrogen policy framework needs to include also the development of a dedicated hydrogen infrastructure, including storage, together with the design and implementation of transparent hydrogen market mechanisms and last but not least an international trading, security of supply and strategic reserve policy.

Author: Prof Dr Ad van Wijk TU Delft, The Netherlands

Figure 1. Future levelised cost of H2 production vs electrolyser full load hours for various electrolyser investment costs (left) and electricity costs (right). Electrolyser efficiency, 69%; discount rate, 8%. Source IEA (
Figure 2. Solar resources (World Bank, Esmap, SolarGIS,,8.613281,3)
Figure 3. Wind speed map at 100 m (World Bank, Esmap, DTU, Vortex (
Figure 4. Hydrogen production potential across regions (source: IEA; McKinsey) ( Competitiveness_Full-Study-1.pdf)
Figure 5. Outline for a European Transnational Hydrogen Backbone (orange). The blue and purple lines show the natural gas infrastructure in Europe. ( 5e85aa53179bb450f86a4efb/1585818266517/2020-04-01_Dii_Hydrogen_Studie2020_v13_ SP.pdf)
Table 1. Space requirements for producing ˜1 million t hydrogen per year from various different renewable energy sources

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