A report from Det Norske Veritas (DNV), the independent expert in assurance and risk management, has shown that global energy companies are rising to the challenge of adapting to a hydrogen economy.
The report, titled Rising to the Challenge of a Hydrogen Economy, indicated that almost half (44%) of global energy companies involved in hydrogen expect it to account for more than a tenth of their revenue by 2025.
Rising to 73% of companies by 2030, this is significantly higher than the 8% of companies today.
The research draws on a survey of more than 1,100 senior energy professionals on emerging hydrogen value chains, from production to consumption.
With the pilots, plans, and pledges of yesterday finally coming to fruition in the form of investments and full-scale projects, some 84% of senior energy professionals believe that hydrogen is a potential major player within a global, low-carbon, energy system.
Three quarters (73%) of those interviewed and surveyed said Paris Agreement targets will not be possible without a large-scale hydrogen economy.
Despite this, energy professionals were still pragmatic, identifying existing infrastructure as the biggest hurdle in achieving a hydrogen-centered economy
Speaking about these challenges and how the world can adapt, Ditlev Engel, CEO of Energy Systems at DNV, said, “To meet the targets of the Paris Agreement, the world needs to transition faster to a deeply decarbonised energy system.”
“In addition to energy efficiency gains, this will require greater renewable power generation and electrification, and the scaling of technologies to remove the carbon from fossil fuels. Hydrogen will be needed to connect and enable these paths.”
The adoption of hydrogen is in its infancy and DNV’s survey revealed that, for 45% of those involved, hydrogen accounted for less than 1% of their organisation’s revenue today. Although the infrastructure to accommodate for further hydrogen adoption needs to be improved, 71% of energy companies only began their involvement with hydrogen within the last five years.
Revealing further stats, the report discovered that 33% of hydrogen consumers expect hydrogen to represent more than a tenth of their organisation’s energy and/or feedstock spending by 2025, rising to 57% by 2030.
When combining revenue earners and consumers, the research showed that a quarter (26%) of energy professionals expect hydrogen to account for half of their organisation’s revenue/spending by 2030.
Engel continued, “Hydrogen has a new status in 2021 as an important, viable and rapidly developing pillar of the energy transition. Yet ambitions and the rate of change in the hydrogen economy are demanding, and the industry needs to prepare.”
“Just a year ago, in DNV’s Heading for Hydrogen research, we said that the challenge for the hydrogen economy is not in the ambition, but in changing the timeline: from hydrogen on the horizon to hydrogen in our homes, businesses, and transport systems.”
He also mentioned the potential for business, saying that while the energy industry rises to the challenge, more and more businesses will pursue hydrogen as a profitable business opportunity.
The latter is seen as the biggest incentive for companies to become involved in hydrogen, although infrastructure and current costs are perceived as two of the biggest hurdles. 71% of those surveyed see current hydrogen ambitions as underestimations when it comes to the practical limitations of infrastructure.
With 43% believing that the majority of national and organisational hydrogen goals are realistic, it is still a general consensus that repurposing existing infrastructure has a key role to play.
80% say that regulations are an important factor, and that the hydrogen economy needs effective carbon-pricing regulations before it can scale-up.
As further work is conducted to the prove the safety case of hydrogen (specifically in hydrogen heating programmes), hydrogen safety is currently only the seventh highest risk among energy professionals.
In terms of competition between energy solutions, 80% of energy professionals see a future where, for example, hydrogen and electrification can work together in a synergetic manner. 77% take this same view when it comes to the competition between green and blue hydrogen, believing that the only way to scale the hydrogen economy is to utilise both solutions.
In terms of trade, 42% see hydrogen becoming a fully globalised market and 52% see it becoming a regional market. 41% think that hydrogen will be priced akin to oil and gas with free market forces and 43% see it becoming like electricity with a regulated or stable rate of return.