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Choosing hydrogen for business: the biggest challenges

Russia’s invasion of Ukraine has highlighted not only the need for European countries to decrease their dependence on Russian fossil fuels imports. It also made clear that the most efficient way to create energy-independent States is to scale up the deployment of renewable sources and hydrogen technologies.

In 2020, when the European Commission published its hydrogen strategy, it had the ambitious target of reaching 40 gigawatts (GW) of electrolysers within the EU Member States and an additional 40 GW from neighbouring countries (such as Ukraine). Now, following the REPowerEU plan, on top of the 5.6 million tonnes (Mt) of hydrogen foreseen by 2030, the EU is aiming at 15 Mt to replace 25-50 billion cubic metres (bcm) per year of imported Russian gas by 2030.

Where should the first hydrogen deliveries come from?

Surely Ukraine had (and still has) a huge potential, especially in converting its gas pipeline infrastructure. But also other countries from Central and Eastern Europe are emerging on the new hydrogen map, although the European Network of Gas Transmission System Operators (ENTSOG) “together with the value chain stakeholders” is trying to understand “where the first hydrogen deliveries could come from, within and from outside the EU.”

For Jurgita Šilinskaitė-Venslovienė, head of LNG commerce at Lithuania’s operator of the LNG terminal, Klaipėdos nafta, hydrogen might become a game-changer in ensuring the security of supply.

“It will reshape the power of countries, as some of them, that have scarce or no fossil resources, now have a possibility to become producers of energy,” she tells CEENERGYNEWS, ahead of the 2nd Global Hydrogen and CCS Forum that will take place in Milan on 28-29 April and where Mrs Šilinskaitė-Venslovienė will be one of the speakers. “Countries with abundant resources to produce cheap hydrogen can either export hydrogen in large quantities or use it to attract downstream industries like iron and steel.”

Indeed, also ENTSOG recognises the vital role of hydrogen in progressing decarbonisation of the gas sector and hard to abate industries (for example, heating, transportation and maritime).

“Hydrogen contributes to energy system integration, as it allows for storing energy (when there is an excess of the wind/solar-based electricity in the system) and allows for flexibly in managing that storage,” ENTSOG states, ahead of the Milan Forum, which Sara Piskor, Director of Strategy, Policy and Communications at ENTSOG will speak at. “In the current crisis situation and based on the goals set to alleviate EU dependency on Russian suppliers, any hydrogen quantities made available at industrial scale will speed up the energy transition to clean energy and reduce the dependency levels. Hydrogen and gas security of supplies will need to be managed in the European transmission systems for the safe operations of their users.”

Obstacles remain and need to be addressed

Still, there are many challenges. The most mentioned one is related to having a clear and defined regulatory framework. For ENTSOG, a clear regulatory framework and predictability for investors are needed. Clarity on who can invest and on what terms is currently missing and is also required.

“The adaptation of the grids is cost-effective and can bring overall societal benefits (we are undertaking the technical assessments needed in this regard also),” the Association continues. “Once the points above are clarified [geographically speaking], the hydrogen planning and integration into gas and electricity system is an obvious task for both gas and electricity TSOs.”

Indeed, as reminded by Mrs Šilinskaitė-Venslovienė, hydrogen can be injected into the natural gas grid by blending it or even by replacing it.

“There are about 3 million kilometres of natural gas pipelines, 400 billion cubic metres (bcm) underground storage and a well-developed LNG supply chain globally,” she mentions. “Blending 3 per cent of hydrogen into the 3,900 bcm of natural gas global demand would generate a need for about 12 Mt of hydrogen.”

However, various obstacles remain and need to be considered. Among those, Klaipėdos nafta’s head of LNG commerce mentions “hydrogen energy density, which is approximately one-third of natural gas (therefore less energy is transported to the end-users); flammability; embrittlement of pipeline, leakage and abilities of end-users to accept.”

“Legal framework, regulatory aspects and standardisation are still under development,” Mrs Šilinskaitė-Venslovienė concludes. “Though the biggest challenge is the economic rationale: it is important to have legal and/or financial incentives to choose this alternative for business.”

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