January 17, 2022 • Paul Rodden • Season: 2022 • Episode: 82
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In episode 082, The Financial Times talks about hydrogens influence on energy geopolitics, and ThyssenKrupp with big news and hydrogen, all of this on today's hydrogen podcast.
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The Financial Times talks about hydrogens influence on energy geopolitics, and ThyssenKrupp with big news and hydrogen, all of this on today's hydrogen podcast.
So the big questions in the energy industry today are, how is hydrogen the primary driving force behind the evolution of energy? Where is capital being deployed for hydrogen projects globally? And where are the best investment opportunities for early adopters recognize the importance of hydrogen? I will address the critical issues and give you the information you need to deploy capital. Those are the questions that will unlock the potential of hydrogen, and this podcast will give you the answers. My name is Paul Rodden, and welcome to hydrogen podcast.
In an article in the Financial Times on January 14, Leslie Hook writes hydrogen power forecast to bring new dimension to energy politics, she writes, Europe's gas crisis could speed the transition to clean energy and the adoption of green hydrogen as a viable alternative to oil and gas. This is according to the International Renewable Energy Agency, or Irena, in a quote from Francesco La Camera, Director General of Irina, price volatility has been a feature of the oil and gas system. Moving to the new energy system where hydrogen plays a significant role brings us less volatility. The development of green hydrogen made from water and using renewable electricity has become a policy priority for many countries as they prepare to cut emissions to net zero by 2050.
An Irena report published on Saturday forecasts that geopolitics of oil and gas and which producer countries have the power to influence prices would wane as new fuels including hydrogen become more dominant. It concluded that quote, a new cartography of energy politics and a revamped hydrogen diplomacy would emerge as production ramped up around the world. According to Elizabeth Press, Irina's director of planning. Hopefully, the geopolitics of energy in 2050 will be less important than they are now. Because people will have less dependency on small markets that can really influence global energy markets in an unpredictable way that we have today. La Camera said, the green energy hydrogen market was already growing a bit faster than we had foreseen a couple of months ago, pointing to recent deals in Germany, Uruguay and Brazil.
Irena estimates that hydrogen could provide 12% of the world's energy needs by 2050 if global emissions were cut significantly, to limit warming to 1.5 degrees Celsius, but the market would develop in a more quote, regional than global direction, La Camera predicted, noting that many countries would be able to produce the manufactured gas. As a result, profits were unlikely to reach the levels that are traditionally enjoyed by oil and gas producers. Big energy consumers, including the US, China, the EU, Japan, India and South Korea have already made hydrogen a major component of their energy plans, about $65 billion has already been earmarked for hydrogen production in the next decade, with Germany, France and Japan set to be the biggest investors. Although the gas is difficult to transport, it can be converted into ammonia for long distance shipping or transported through existing natural gas pipelines.
A handful of hydrogen derived ammonia shipments were sold to Japan last year from Saudi Arabia and the United Arab Emirates. Irina an Abu Dhabi based group with more than 160 member countries conducted a survey and found that Australia China, Saudi Arabia, Morocco and the US are best placed to become leading hydrogen producers due to supportive policies, and the availability of renewable power. Hydrocarbon producers could also switch to manufacturing hydrogen as an alternative to oil and gas. Saudi Arabia which is seeking to diversify away from its reliance on oil and gas, said this week it aims to become the world's cheapest green hydrogen producer. There are two main methods of hydrogen manufacture green hydrogen, which is produced using renewable electricity and water and blue hydrogen which is made from natural gas.
To reach climate goals. Blue hydrogen must be combined with carbon capture to limit the impact of associated carbon dioxide and methane emissions. The recent surge in gas prices has made the economics of green hydrogen look relatively attractive compared with blue hydrogen, which requires natural gas to produce. The IRENA report expects to green hydrogen or reach price parity with blue hydrogen by 2030. In many countries, although other studies suggest nearer to 2040 At present, the cost of electrolyzers the machines needed to produce green hydrogen makes it expensive to produce. Again, according to press, what is happening right now really emphasizes the need for faster transition. It shows that we need a different energy mix that will make it safer, secure and more diverse.
Okay, so just another facet to think about when we talk about hydrogen, and that's geopolitics, which countries are currently leading production, which countries are currently leading acquisitions, and how that mix could change in the next 30 years. But the interesting thought piece around this article, is that because hydrogen can be made from so many different sources, and can also be created at the site of utilization There could be a very distinct leveling of the playing field in the future of the global energy market. Next, a couple of interesting bits of news from Thyssen Krupp the first in a press release on January 10.
Thyssen Krupp to install a 200 megawatt green hydrogen facility for Shell in the Port of Rotterdam. Thyssen Krupp Uhde chlorine Engineers has signed a supply contract with Shell for a large scale project hydrogen Holland in the Port of Rotterdam, the Netherlands. Under the contract Thyssen Krupp chlorine engineers will engineer procure and fabricate a 200 megawatt electrolysis plant based on their large scale 20 megawatt alkaline water electrolysis module. First construction work for the electrolyzers will likely begin in the spring of 2022 shells fid to build the Holland hydrogen one is expected in 2022, after which the intended start of production will be in 2024. According to Dr. Christoph Noeres, head of green hydrogen at Thyssen Krupp engineers, we are looking forward to support building a major hydrogen hub in Central Europe and to contribute to Europe's transition to green energy. With our large scale standard module size, we will further strengthen Shell's hydrogen strategy.
Our partnership perfectly combines our engineering excellence with shells competence of a large global energy player. The center of the hydrogen Holland one hydrogen project facility will be a hall covering two hectares the size of three football fields. Green hydrogen will be produced for industry and transport sector, with electricity coming from the offshore wind farm Hollandse Kust. By means of guarantees of origin, the hydrogen can be transported through a pipeline with a length of about 40 kilometers that will run from the plant to shells energy and chemicals Park Rotterdam. Net Zero is a number one priority for the plant.
Reusable construction materials will be applied wherever possible and solar panels will be incorporated in the outside walls of the plant. The factory will begin to open selected visitors once fully operational. Green hydrogen is a main pillar of the energy transition towards sustainable decarbonisation. By 2025 countries representing over 80% of the global GDP are expected to enter the hydrogen economy with a dedicated hydrogen strategy as a global technology leader for green hydrogen Thyssen Krupp chlorine engineers enables its customers to transform into net zero and create a carbon free industry. Okay, so finally some good news regarding the development of hydrogen facilities in Rotterdam. Now the Netherlands and Rotterdam in particular have been a hotbed for hydrogen development historically, but with fid for this project, expected in 2022. We'll know very soon whether or not this project has legs.
And lastly, in an article from Reuters, Christoph Steitz and Tom Käckenhoff write, betting on a hydrogen hype ThyssenKrupp eyes $687 million and IPO cash. Thyssen Krupps electrolysis businesses, aiming for proceeds of up to 600 million euros or $687 million by selling new shares and a possible IPO this year, betting on the $130 billion hydrogen sector it supplies. Thyssen Krupp plans to keep a majority in the business, which is being rebranded as Thyssen Krupp Nucera, following any IPO and claims to maintain the current shareholding ratio with its Italian co owner De Nora this in a quote from Volkmar Dinstuhl, who leads the conglomerates multi tracks division, this implies a free float of up to 25% Nucera's electrolysis technology uses power to split water into oxygen and hydrogen and co2 heavy sectors including steelmaking, refining and fertilizers to decarbonize using green hydrogen hydrogen production, a market precedent research says was worth $130 billion in 2020 is benefiting from Europe's efforts to become a world leader in this technology, which could play a big role and attempts to cut emissions and decarbonize economies.
The 500 to 600 million in potential IPO proceeds could correspond to a stake sale of roughly 10 to 20%, based on a valuation range of 3 billion to 6 billion euros that analysts have put on the division, which could be listed in the spring ThyssenKrupp Nucera is the world's top supplier of chlor alkali membrane technologies needed to produce hydrogen competing with Japan's Asahi Kasei, China's Blue Star Beijing chemical machinery and Britain's chemicals group ENEOS. It is also active in alkaline water electrolysis, a key requirement for the generation of hydrogen produced via renewable electricity pitting it against Norway's Nel, ASA, UK's ITM power, and France's McPhy Energy SAS, according to Denis Krude CEO of Thyssen Krupp Nucera, demand is huge, we want to use that opportunity. We are a technology leader for electrolysis and have been in the business for decades. So far, green hydrogen has been far more expensive than versions produced using hydrocarbons, including the dominant gray hydrogen that relies on natural gas, but rising gas prices has started to change the economics in the fiscal year to end September Thyssen Krupp Nucera posted earnings before interest in tax of 27 million euros.
While sales came in at 319 million, a level expected to triple to 900 million to a billion by 2025 and 26. Potential proceeds from selling the new shares do not factor in the sale of existing stakes by current owners Thyssen Krupp De Nora, which owned Thyssen Krupp Nucera and a 66/34, split, Thyssen Krupp, which first floated, the idea of an IPO of its hydrogen business in May of last year, declined to say how much it would sell as part of a secondary offering. In case of an IPO. Again, according to Krude, the market has enormous potential, adding Nucera would invest 200 million to 300 million by 2024-25, of which 150 million to 200 million will be spent on strategic moves including partnerships, production and smaller deals.
Thyssen Krupp, which makes everything from steel and submarines to car parts and fertilizer plants sees an IPO as the preferred option for Nucera, but has not made a final decision. Okay, so interesting news from Thyssen Krupp, and this could mark one of the largest IPOs for a hydrogen company and opened the door for both smaller players to do an IPO or multinational conglomerates to spin off their hydrogen division and its own IPO. Either way, this is big news for hydrogen investors.
Alright, that's it for me, everyone. If you have any questions, comments or concerns about today's episode, come and visit me on my website at thehydrogenpodcast.com, or you can always email me at firstname.lastname@example.org. I would really love to hear from you. And as always, take care. Stay safe. I'll talk to you later.
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