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Looking for a niche while contributing to a hydrogen economy – interview with Arkadiusz Sekściński, VP of PGNiG Management Board

Polish Oil and Gas Company (PGNiG), the leader of the natural gas market in Poland has announced its Hydrogen-Clean Fuel for the Future Program (HCF4F) in May, designed to enable the production of clean or low-carbon hydrogen, as well as distribution and storage of hydrogen and also applications in industrial energy.

CEENERGYNEWS spoke with Arkadiusz Sekściński, Vice-President of the Management Board of PGNiG for Development about the plan for the next 2-3 years to create a coherent chain of hydrogen competencies that will allow to meet the challenges of the European Green Deal.

“The Program is aimed at gaining experience in the entire chain value, however areas of production, distribution and storage of hydrogen have been identified as key and strategic for the development of PGNiG’s competencies,” Mr Sekściński explains.

PGNiG Hydrogen
Courtesy of PGNiG.

In particular, he lists three complementary projects. First, the InGrid-Power-to-Gas project, scheduled to come on stream in 2022 which foresees the conversion of electricity from renewable energy sources into hydrogen and blending it with natural gas, later to be injected into the gas system.

“In one of our local company branches (PGNiG Odolanów Branch in central Poland) we are building an installation which will allow us to test the impact of various mixtures of natural gas and hydrogen on gas system infrastructures (pipelines, gas receivers, gas meters and other),” Arkadiusz Sekściński points out. “This will let us develop appropriate proportions of the blend, which in the future could be injected into our distribution network.”

PGNiG intends to use electricity generated by photovoltaic panels for the purpose of the project, which is considered a pioneering and innovative activity on a country scale. Indeed, hydrogen produced by water electrolysis currently accounts for less than 0.1 per cent of global hydrogen production.

“Potentially, this share could be increased if excess renewable electricity is available at low cost,” Mr Sekściński adds. “The effect of electricity overproduction associated with highly favourable conditions for electricity production in wind and photovoltaic farms can already be seen in many European countries.”

The second program under development by PGNiG is the H2020-large-scale hydrogen storage in caverns.

“To complete the entire value chain it needs to consider hydrogen storage, which is especially important for green hydrogen from unstable energy sources,” underlines Mr Sekściński. “PGNiG’s subsidiary, Gas Storage Poland, has been responsible for natural gas storage for many years. We start with a demo installation consisting of 5 megawatts (MW) electrolyser and one salt cavern with a volume of 20,000 cubic metres in 2024. The commercial installation is planned to consist of the salt caverns with a volume of 200,000 cubic metres in 2027, for the storage of green hydrogen from 100 MW electrolysers. The installation will be located in Kosakowo, close to the Baltic Sea coast, to take advantage of the energy produced by offshore wind farms. The aim of the project is to provide secure, cost-effective, large-scale energy storage in form of hydrogen to ensure the development of volatile RES sources and transition to a zero-carbon economy.”

“The construction of a cavernous hydrogen storage system will accelerate the development of European underground storage technologies and improve the energy security of Central and Eastern Europe, guaranteeing an uninterrupted supply of the energy carrier in the event of climate restrictions, reduced import capacity or depletion of own resources.”

Indeed, according to Poland’s Energy Policy outlook until 2040 over 11 gigawatts (GW) of electricity from offshore wind farms is planned in Poland, of which 5.9 GW by 2030. Quite an ambitious which follows the European Hydrogen Strategy unveiled last year. However, for Mr Sekściński, in order to take full advantage of the ongoing technological development, it is necessary to implement an appropriate legal and regulatory framework.

“At the European Union level, it is already possible to identify acts, strategies and legislative initiatives that will be of key importance for the development of the hydrogen economy,” he says. “At the same time, representatives of the Ministry of Climate and key companies from the energy and transport sector also signed a Letter of intent to establish a partnership for building a hydrogen economy and to conclude a sectoral hydrogen agreement. The hydrogen issue gained momentum and thus the work on the Polish Hydrogen Strategy started. Publication of the strategy document is scheduled for the third quarter of this year.”

Finally, the third project is the establishment of the New Fuel Lab within the PGNiG Capital Group’s Central Measurement and Research Laboratory. It will be the first laboratory in Poland to study hydrogen and its mixtures as fuel.

“As part of the gas market development, the concept of introducing hydrogen, but also another alternative fuels such as biomethane into the gas network has emerged as potentially very useful new entry points in the gas system,” PGNiG Vice President explains. “The addition of specified amounts of hydrogen or biomethane to high-methane gas will affect the quality of the gas fuel transported through the network. The concept of the New Fuel Lab project was created to meet the expectations regarding the quality of new gaseous fuels. The project aims at expanding the laboratory facilities so that in the future it will have analytical capabilities for composition testing chemicals of various alternative fuels used in the gas and transportation industry. Reliable confirmation of the desired purity grade product requires the use of a number of highly advanced analytical instruments.”

“As the number and importance of hydrogen vehicles increases, the possibility of testing will become an increasing market demand for all contaminants in hydrogen at very low concentration levels. Undoubtedly, without access to such analytical services, the development of zero-emission transportation and the development of the so-called zero-emission hydrogen economy is possible.”

Innovation is definitely important when it comes to hydrogen and new technologies and PGNiG sees not only a huge potential in startups, but it is also closely cooperating with an innovative startup environment.

“One of the challenges in developing hydrogen projects by startups is that they may not have access to infrastructure related to hydrogen,” notes Mr Sekściński. “Our model of cooperation with young innovative teams is based on accelerating their innovative projects and allowing them to be pilot tested in the real environment, mainly on our infrastructure. We have had many successful implementations of projects developed together with startups. We believe there is also space to work with them on new hydrogen technologies.”

In the meantime, PGNiG is due to be merged with the Orlen Group and earlier in May, Poland’s Ministry of State Assets, PKN ORLEN, PGNiG and Grupa LOTOS signed a four-party agreement providing for a merger formula to guarantee the stable financial condition of the new strong company. Mr Sekściński believes that there will be many synergies to explore following the merger.

“I believe this will be communicated when the right time comes as the merger itself will be quite a process,” he comments. “What PGNiG can bring into a new multi-energy company is our unique knowledge and vast experience in the field of natural gas, but also in new business areas relating to biogas and hydrogen. In the case of the latter, as mentioned before, we intend to focus on projects involving the storage and distribution of hydrogen. The creation of a multi-energy enterprise certainly gives a good chance of getting involved in the entire hydrogen value chain, and the effective use of specific competencies should accelerate the implementation of research concepts to investment projects.”

Mr Sekściński goes on saying that further projects are under consideration, allowing hydrogen in the heating and power sector (cogeneration, combustion and so on. Separately, projects of efficient and environmentally safe CO2 sequestration in PGNIG’s underground deposits are considered.

“To reduce CO2 emissions formed during reforming allows us to start the production of hydrogen from natural gas,” he says. “The reforming process is one of the cheapest and well-proven methods and it is also the subject of our research and development projects. Blue hydrogen, whose production costs are cheaper than green hydrogen (4-6 US dollars/kilogram of green H2 versus 2,4 US dollars/kilogram of blue H2 from gas with CCS) could enable at the early stage the scale-up of the hydrogen market and subsequently its wide application in transport, industry, residential and commercial heating and power generation.”

“PGNiG intends to promote, support and accelerate the deployment of hydrogen because we clearly see its potential for the development of our company,” he concludes. “PGNiG’s activities largely focus on large-scale storage and distribution of this gas. It will be difficult to discuss the building of a hydrogen economy without it.”

Mr Sekściński believes Poland to be one of the leaders when it comes to the production of hydrogen.

“We hold 3rd position in Europe and 5th in the world,” he highlights. “Nevertheless hydrogen is produced mainly by fuel and chemical industry. But it is a byproduct of coal or natural gas processing, so carbon emissions have to be considered. This is why I mentioned the significance of capturing and storing CO2. However, the production of hydrogen that is already taking place in Poland is the fundament that we can build on when developing green hydrogen projects or developing CCS projects. I am not sure there will be a fast track for green energy production on a large scale and PGNiG can find its niche not only in the field of production but also in storage and others.”

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