According to Global Wind Energy Council’s (GWEC’s) “Global Wind Report 2021”, 2020 saw global new wind power installations surpass 90 GW, a 53% growth compared to 2019, bringing total installed capacity to 743 GW, a growth of 14% compared to last year. New installations in the onshore wind market reached 86.9 GW, while the offshore wind market reached 6.1 GW, making 2020 the highest and the second highest year in history for new wind installations for both onshore and offshore.
Growth of installations in China, Asia Pacific continues to take the lead in global wind power development with its share of the global market increasing by 8.5% last year. Driven by a record year of installations in the US, North America (18.4%) replaced Europe (15.9%) as the second largest regional market for new installations. Latin America remains the fourth largest regional market (5.0%) in 2020, followed by Africa & Middle East (0.9%).
The world’s top five markets in 2020 for new installations were China, the US, Brazil, Netherlands and Germany. These five markets combined made up 80.6% of global installations last year, collectively more than 10% greater than 2019. In terms of cumulative installations, the top five markets as of the end of 2020 remained unchanged. Those markets are: China, the US, Germany, India and Spain, which together accounted for 73% of the world’s total wind power installations.
Power-to-X, green hydrogen and links with wind energy
Future clean energy systems call for large-scale integration of wind and renewable power, enabled by technological solutions for flexibility, storage at varying durations and responsive management of demand and supply. Power-to-X is set to become one of the breakthrough solutions which will dispatch green power to different end-use sectors to reduce their dependency on fossil fuels, from heating to manufacturing.
Like many innovative solutions, while technically proven, widespread deployment of Power-to- X must be backed by strong government policies and investment, uptake of new business models by end-users and power grid reinforcement which puts flexibility at the core of generation, transmission and distribution systems. IRENA’s Deeper Decarbonisation Perspective, which outlines a path to carbon neutrality before 2060, calls for US$38 trillion in cumulative investment from 2016-2050 for renewable energy (three times the volume of investment under planned policies) and US$27 trillion for electrification, storage and grid infrastructure (double the volume of investment under planned policies).
Concurrent to the transformation of infrastructure to enable grid interconnectivity and sector coupling, the production of green hydrogen as a key storage solution will need to be economically viable. With hydrogen playing a prominent role in national energy strategies, from Germany to Australia to Chile to South Korea, it is no longer meaningful to dismiss it as over-hyped. But it is worth examining the political and economic constraints of Power-to-X and green hydrogen to understand the degree to which they can accelerate the shift to carbon neutrality, and whether we are indeed headed towards the age of the “hydrogen economy”.
Innovation for multiple end-uses
Power-to-X is a promising and innovative storage solution for wind for a myriad of uses. Stored electricity can be electrolysed into hydrogen to be used as feedstock, to produce bulk chemicals like methanol or ammonia for industrial processes (Power-to-Gas or Power-to-Chemicals) or combined with captured CO2 to make carbon-neutral liquid fuels such as crude, gasoline, diesel and aviation fuels (Power-to-Liquid Fuels). Stored green power can generate heat through heat pumps or electric boilers for houses and factories (Power-to-Heat), or contained in underground formations such as salt domes and fed back to the gas grid or transformed into electricity when needed (Power-to-Heat and Power-to-Power).
According to the IEA, the power sector accounts for nearly 40% of CO2 emissions worldwide, and this share is declining due to the expansion of renewable generation; transport and industry make up nearly half of remaining global emissions, with buildings comprising around 10%. Each sector and end-use requires targeted solutions. Energy carriers and chemical products provide significant versatility in renewable energy storage, transport and subsequent conversion to end-use products.
The sector-coupling approach of Power-to-X is a critical response to the “hard-to-electrify” sectors, such as aviation, maritime shipping, steel production and chemicals manufacturing.
Government ambition is in place for green hydrogen to take off
Despite several false starts for hydrogen over the last few decades, 2020 saw several governments integrate hydrogen into pandemic recovery plans and long-term climate strategies. By the end of 2020, at least 33 countries had published or were preparing national hydrogen strategies, including the European Commission’s Europe-wide hydrogen strategy targeting 40 GW of electrolyser capacity for green hydrogen by 2030.
Some have hailed the dawn of the “hydrogen economy” – a system-wide application of hydrogen as a storage solution with Power-to-X deploying it to heat homes, create gasses for industrial use and power airplanes and ships. In this scenario, hydrogen is transported via new and existing pipelines and transport channels, exported to different markets and used to make fertiliser, fuel, steam, power and more. Given the commercial constraints of large-scale deployment and the urgency of the climate challenge, it is likely that hydrogen will need to work alongside wide-scale electrification to offer a diversified approach to sector decarbonisation, depending on the energy yield and storage option required. Where wind, sunshine and other sustainable energy sources can be harnessed for affordable green power and exported via interconnectors, this will be the cost-effective solution for the power, heating and cooling in buildings, short-distance transport and certain industrial sectors.
Hydrogen-specific targets send positive signals for a future cost reduction pathway. Now, concrete policies and regulation are needed to bring hydrogen to commercial scale, which will reinforce large-scale deployment of renewables and increase balancing capabilities for grids reliant on large shares of renewable power. As costs for electrolysers decline, they can also be used to produce hydrogen with curtailed generation that might otherwise be wasted during particularly windy or sunny periods when renewable supply exceeds demand on the grid.
Production must ensure that net zero is achieved
While much has been made of hydrogen’s applications, the key is production: Hydrogen is a clean burning gas which emits only water at the point of combustion. The emissions challenge is related to production: Conversion of fossil fuels with heat or steam is currently the primary method of production, but this process emits CO2 and creates so-called “grey hydrogen”. Most hydrogen production today is grey, based on methane and coal, and emits 830 million tonnes of CO2 annually, according to Carbon Brief.
“Blue hydrogen” pairs this process with carbon capture and storage (CCS) technologies which are currently capital-intensive. “Green hydrogen” is produced via electrolysis, fed by green power sourced from an adjacent renewable asset or on the grid. Expansion and investment of enabling infrastructure for hydrogen must emphasise green production, with support from blue production – this is not only an imperative to meet carbon neutrality goals, but also reflects the economics of declining costs for renewable power, electrolysers and CCS. Driven by R&D and economies of scale in manufacturing facilities, cost reduction and learning rates could make electrolysers 40% cheaper and green hydrogen costcompetitive as soon as 2030, according to IRENA.
A natural match: Wind-to-Hydrogen
Of all renewable energies, offshore wind and wind/solar hybrid projects have the highest potential to improve the economics of green hydrogen projects due to cost competitiveness and scalability. Onshore wind became one of the cheapest new sources of electricity in 2020, while offshore wind has delivered incredible global LCOE reduction of more than 67% over the last 8 years, according to BNEF, and costs will decline by another third by 2030.
GW-scale wind projects at falling costs, paired with hydrogen, highlight the opportunity to achieve commercial viability by the end of the decade. The pipeline is certainly growing: 2020 saw 50 GW of green hydrogen projects announced for development, out of a total 80 GW in the global pipeline. The costs for transporting hydrogen through gas infrastructure from offshore sites could also be as, if not more, cost-effective then transporting power through cabling, especially in areas farther out to sea.
The massive NortH2 project (Equinor, Gasunie, Groningen Seaports, RWE, Shell Nederland, with backing from the Groningen provincial authority) off the coast of the Netherlands aims to generate 4 GW of green hydrogen from offshore wind by 2030 and more than 10 GW by 2040, with a feasibility study due by end of 2021. Green hydrogen innovation is also on the rise: At the top of 2021, Siemens Gamesa announced joint funding with Siemens Energy to develop an electrolysis system integrated into its 14 MW offshore wind turbine for a scalable offshore wind-to-hydrogen solution, with a full-scale demonstration targeted by 2026. A 20 MW green hydrogen facility is also being deployed for a steel pipe facility in Italy, while a 700 MW electrolysis project called Westküste100 brings together end-users including a cement manufacturer, with plans to produce synthetic green fuels for the aviation sector.
On the other side of the world, the massive 15 GW hybrid wind/solar Asian Renewable Energy Hub in Western Australia is expected to deliver first power by 2027. This will scale up to 26 GW of renewable power with green hydrogen and ammonia production for domestic use and export. In Hebei Province, China, a 200 MW onshore wind farm that will use electrolysis to produce 10 MW of green hydrogen is due to be commissioned in 2021. The unprecedented momentum for green hydrogen worldwide coupled with the improving economics of Power-to-X could provide a much-needed boost to global decarbonisation efforts. This transition will not happen overnight. Renewable plant capex, hydrogen capex (electrolysis, compression and balance-ofplant) and production incentives will be sensitive variables for increasing economic viability.
However, technological understanding, urgency and willingness to invest are increasingly aligned across government, industry, financial backers and end-users. This moment is reminiscent of the renewable energy revolution of the 2000s, which exceeded expectations in terms of cost and growth. Today, with broader commitment from the public and private sectors and a precedence of large-scale innovations, there are strong reasons to be optimistic about Wind-to-X via green hydrogen.
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