Lack of Investment in Infrastructure - a Greatest Hurdle for Hydrogen Economy: DNV

The lack of investment in infrastructure is the joint-highest risk organizations face about hydrogen, and a significant majority of energy professionals i.e. around 78 per cent believe that repurposing existing infrastructure will be crucial for developing a large-scale hydrogen economy, according to DNV’s new report.

July 01, 2021. By Manu Tayal

The lack of investment in infrastructure is the joint-highest risk organizations face about hydrogen, and a significant majority of energy professionals i.e. around 78 per cent believe that repurposing existing infrastructure will be crucial for developing a large-scale hydrogen economy, according to DNV’s new report.

The report titled ‘Rising to the Challenge of a Hydrogen Economy’ draws on a survey of over 1,100 senior energy professionals on emerging hydrogen value chains, from production to consumption. It suggests that more than just ambitions, the hydrogen pledges, plans, and pilots of recent years have now evolved into concrete commitments, investments and full-scale projects.

Moreover, around 84 per cent senior energy professionals was of the view that hydrogen has the potential to be a major component of a global, low-carbon, energy system, while three quarters i.e. 73 per cent say Paris Agreement targets will not be possible without a large-scale hydrogen economy.

Explaining further, 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 decarbonized 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.”

As per the report, around 71 per cent of energy companies only began their involvement with hydrogen within the past 5 years, while 55 per cent only commenced within the past 3 years. However, 45 per cent of energy companies said hydrogen accounts for less than 1 per cent of their organization’s revenue today.

DNV further estimated that, by 2025, 44 per cent of energy companies involved in hydrogen expect it to account for over a 10th of their revenue, rising to 73 per cent of companies by 2030. This is up significantly from just 8 per cent of companies today.

On the flip side, 33 per cent of hydrogen consumers expect hydrogen to represent over a 10th of their organization’s energy and/or feedstock spending by 2025, rising to 57 per cent by 2030. This is up from just 9 per cent today, added the report.

Taking revenue earners and consumers together, around 26 per cent of energy professionals expect hydrogen to account for half of their organization’s revenue/spending by 2030.

“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,” said Engel.

The report further emphasized that profitable business opportunities are the biggest driver of involvement in hydrogen, while infrastructure and costs are two of the biggest hurdles.

Meanwhile, repurposing existing infrastructure has a key role to play, and the right regulations are deemed to be the most powerful enabler, followed by carbon pricing specifically. Around 80 per cent of energy professionals believe that the hydrogen economy needs effective carbon-pricing regulations before it can scale-up, the report mentioned.

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