Impatience mixes with optimism as hydrogen hopefuls vie for progress

Despite vast capacity targets for green hydrogen worldwide, industry players are still stopping short of making the large commitments needed to deliver on ambitions, delegates at the Financial Times' Hydrogen Summit in London heard June 16.

"We're all just frozen [like] rabbits in the headlights, saying, 'Who's going first?'" Paddy Padmanathan, Vice Chairman and CEO of Saudi energy developer ACWA Power Co., said at the conference. "This is not rocket science. ... It's about somebody standing up and having the courage of conviction to say, 'I'm going to build this.'"

The European Union has claimed a global pioneering role in the technological and commercial development of green hydrogen, having launched its hydrogen strategy in July 2020.

While the pipeline of announced projects in Europe has swollen to over 7.5 million tonnes of annual production by 2030, only a fraction of these have achieved a final investment decision — one example being the 2-MW H2RES pilot project being developed by Ørsted A/S in Denmark. Many developers cite uncertainty over the market framework and policy design as the missing pieces.

"You cannot only bet on the incumbents to make things happen," Pierre-Etienne Franc, CEO of hydrogen investment manager FiveT Hydrogen, said in an interview on the sidelines of the conference.

"The ones that are making this thing move are the disruptors, the entrepreneurs that are taking bold risks because they can," Franc said. "They are the ones we need to support so that the big ones move as well."

"We cannot be more ready," Jon André Løkke, CEO of Norwegian electrolyzer manufacturer Nel ASA, said during the conference. "We need to see [final investment decisions] start to flow, money start being made," the executive said, adding that the ball is in the European Commission's court.

In Europe, developers now have a good idea of the requirements for green hydrogen projects, thanks to the commission's delegated act on green hydrogen published in May. Rules around additionality — adding fresh renewables capacity to support electrolyzers — were laid out in the draft law, which is designed to avoid electrolyzers displacing green power from other parts of the system. The rules also exempt regions with a 90% share of renewables in the power mix already.

Some market insiders said the proposals would slow down cost declines and take some projects off the table due to their strict nature.

"Additionality doesn't make a project more bankable," said Jeroen Kies, head of project finance for Benelux and the Nordics at Japanese bank Sumitomo Mitsui Banking Corp. When projects need to

document an hourly correlation with renewables production, they will become administratively more burdensome, Kies said.