Questions on how to integrate hydrogen into the European energy sector

1 October, 2020

The use of hydrogen as an energy vector is not a new idea, but a few years ago it did not seem actually viable; however, in the recent period the interest around it has been skyrocketing and concrete measures are being defined to spark this new market.

Hydrogen presents several potential applications, from offering a form of storage for electricity (converting it through electrolysers) to being used as feedstock in industries, as fuel in transports, etc. effectively helping to decarbonize sectors that would otherwise be complex to tackle.

Therefore, it is particularly important to identify what are the most effective ways to integrate it into the energy system and how to exploit its potential in the context of the energy transition.

Several visions:

At the European level, some stakeholders already have quite a clear vision.

The European Commission seems particularly enthusiastic about hydrogen, seeing it as necessary to achieve the ambitious decarbonization targets set for 2030 and 2050. The Commission has presented a “Hydrogen Strategy” this summer to guide the development laying down the steps for its short- and long-term penetration and has expressed the intention to revise the TEN-E regulation to include H2. Moreover, it has manifested the interest in creating a so-called “Hydrogen Alliance”, similarly to the existing “Battery Alliance” for instance, which will probably also entail funding from the EU to boost this market.

Anyhow, the EC’s focus is mainly on Renewable Hydrogen, meaning hydrogen generated from renewable power plants, and particularly –but not exclusively- for its use to store the renewable power plants’ over-generation, as a feedstock in the heavy industry (such as in cement or steel production) and other hard-to-decarbonize sectors.

In parallel, new business models proposed by relevant stakeholders -and endorsed by the Commission itself- are springing up: a popular one foresees to install large renewable power plants in countries offering significant amounts of sun and wind throughout the year, such as North Africa or South America, and there to generate renewable H2 to be shipped to Europe. It is not clear whether this business model would imply to have a large quantities of hydrogen arriving in Europe that would be consequently used on a wide scale across all sectors.

At the same time, there are entities such as the Brussels-based association smartEn that see the integration of hydrogen as a positive fact, but that its use should be limited to some specific sectors (such as in industries, as storage and just partly in transport) whereas for buildings, vehicles and other cases it should not be considered since electrification is seen as the best choice to achieve decarbonization.

Still many aspects to clarify:

Besides the visions of the Commission, businesses and associations, the specifics of the hydrogen integration’s path in the European energy system still have to be defined. The potential benefits are clear, so the key question is not “if” to use hydrogen rather than “how” and to what extent.

Several cost-benefit analyses should probably be carried out to clearly understand whether we should look at hydrogen as a backup to be used in specific sectors and rely on electrification for all others, or if a wide-scale deployment would be better. With the same principle, the energy and economic efficiency of generating renewable H2elsewhere and ship it to Europe should be thoroughly assessed from a system perspective.

Renewables penetration, decentralization, electrification of loads and transport, and demand-side-flexibility are recognized effective ways to drive the energy transition: including hydrogen in the process is surely helpful, but has to be done appropriately.