February 10, 2022 • Paul Rodden • Season: 2022 • Episode: 89
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In episode 089, Bloomberg Nef announces their 10 predictions for 2022. I’ll review each one and give my thoughts on it on today’s hydrogen podcast.
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Bloomberg Nef announces their 10 predictions for 2022. I’ll review each one and give my thoughts on it 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 who 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 the hydrogen podcast. Okay, so on January 21 of 2022 Bloomberg Nef announces 10 predictions for hydrogen for this year. The intro to the prediction states if 2021 was a defining year for clean hydrogen, hold on to your hats for 2022 electrolyzer sales are projected to quadruple this year, driven by the Chinese US and European markets and clean hydrogen demand from industry is set to exceed use in cars several times over.
Meanwhile, capitalizing on investor enthusiasm a flurry of hydrogen companies will go public this year and more than 20 countries are expected to release a national hydrogen strategy. And so their Prediction number one electrolyzer sales will quadruple with China being the largest market electrolyzer manufacturers delivered 458 megawatts in 2021. And BNEF expects shipments to at least quadruple in 2022 to between 1.8 and 2.5 gigawatts, China will account for 62 to 66% of total demand driven by state owned enterprises keen to show compliance with national decarbonisation goals. Okay, so my take on Prediction number one, I do think electrolyzer sales will have massive growth this year, especially in China. The big question that remains though, is if supply can match this demand, and so far, all predictions are showing that supply won’t meet demand. And so because of that, I don’t think that this two and a half gigawatt estimation is going to be reached this year. Prediction number two, the US will see many hydrogen project announcements, but action will lag. The US is expected to be the second largest electrolyzer market this year behind China. us developers will rush to announce projects in 2022 as the government readies a multibillion dollar investment in hydrogen as part of the infrastructure investment and jobs act. But with actual funding spread over the next five years construction is likely to lag.
Okay, so my take on this is that this is just about a guarantee. I do believe that there will be a lot of projects announced this year. But I would imagine one of the biggest reasons we’re not going to see construction this year, especially on the larger projects will be due to the implementation of new technologies in the pre construction stage. Like digital twins. Those models take a lot of time to set up. But in the long run, they do save time and reduce costly errors and redundancies in these projects. Number three new subsidies will spur a boom in the European hydrogen market. European developers have been waiting for policy support and regulations before moving forward with their plan. Announced projects will finally start construction in 2022. As a wave of European Union funding is released and national subsidy programs begin. Okay, so Europe has been primed for the hydrogen revolution for several years now. And so now that regulations and subsidies are being announced, all these projects that have been on the backburner can now move forward. Now which projects will start first is a big question, but my guess it will be a mix of renewable hydrogen and pipeline network development.
Number four, a flurry of hydrogen companies will go public in 2022. Taking advantage of heightened investor interest, at least four hydrogen companies intend to go public in 2022. These include Italian electrolysis, equipment manufacturer industry Dinorah, which is eyeing an initial public offering in the Milan Stock Exchange and hydrogen based synthetic fuel maker Ecombustible Energy, which aims to go public via a merger with a special purpose acquisition company in the United States. Okay, so I can definitely see this happening this year. IPO announcements for energy companies have been down for the last several years, but because investor interest is so hot right now in clean energy. And a lot of these companies have moved from pre revenue into post money valuation, the next logical step will be to go public.
And so it’s also just good timing that the IPO market is heating up. Number five hydrogen strategies will be adopted by 22 countries in 2022. The number of countries with hydrogen strategy doubled in 2021 from 13 to 26. This year 22 more could follow. Well, not all roadmaps are equal the strategies from the US, Brazil, India and China could redraw the world’s hydrogen map once released, if followed by policies to boost clean hydrogen use and promising sectors. Okay, so several countries have announced that they will be releasing hydrogen strategies this year. It’s going to be very interesting to see how the geopolitics play out as not always Hydrogen generating technologies play equally in every country. Some countries have a lot of sun some a lot of wind, some neither and some both. Some have vast hydrocarbon reserves.
Now if these countries take from the US playbook and focus most on carbon intensity rather than technology, I think that will set the stage for a very promising hydrogen future. Number six net zero will drive hydrogen demand more than carbon pricing. Carbon pricing will be key for clean hydrogen demand to grow. So goes the mantra repeated by industry participants, policymakers and even Bloomberg Nef. While true in the long run national and corporate netzero goals will drive more clean hydrogen demand in 2022, then carbon pricing hydrogen projects will be built to show compliance with emission reduction targets as low prices and free allocations dent the impact of carbon pricing schemes. Okay, so we’re beginning to see this more and more in industry. As investors pressure these groups harder and harder to reach net zero goals that will drive decarbonisation efforts more and more than carbon pricing will in the short term. And efforts from companies like Project Canary can help with this number seven heavy industry will dominate clean hydrogen demand. Heavy Industry is likely to be a dominant in use for hydrogen as the world strives for net zero by 2050. 5 sectors including steel, ammonia, methanol, chemicals, and oil refining will use more clean hydrogen in 2022 than all the world’s 51,000 hydrogen cars combined.
Okay, so heavy industry really is the low hanging fruit for hydrogen utilization. Now for these five sectors that they mentioned. I would also throw in aluminum and glass because like steel, both of those use intense heat for their product and the others ammonia, methanol chemicals and oil refining have always needed hydrogen and after those sectors, I would imagine the next heavy use target for hydrogen will be things like data centers, manufacturing facilities, and heavy cargo transportation. Number eight green ammonia announcements will rise. Ammonia will help companies to transport large volumes of green molecules across borders well before hydrogen pipelines become viable. The supply chain for shipping ammonia is already established, and this can easily be leveraged for hydrogen exports. Bloomberg Nef expects more green ammonia project announcements in 2022 as firms take advantage of this relative maturity.
And we’ve already seen several announcements being made regarding green ammonia transportation, Canada has announced it will be shipping green ammonia to Europe, the United States has an excellent ammonia pipeline network. And there are several companies throughout Europe who are already investing in green hydrogen production and exportation. And the thing is, while, ammonia is a great carrier for hydrogen, It also has a market of its own being a fertilizer feedstock. So it only makes sense to leverage that global infrastructure for ammonia for hydrogen distribution. Number nine policy will keep blue hydrogen on life support. As the price of electrolyzers rapidly declines. Green hydrogen from renewables will be cheaper to make than blue hydrogen, which is produced from natural gas with carbon capture and storage across the world by 2030. Blue hydrogen project developers will increasingly need subsidies to stay viable. Okay, now, this really isn’t a 2022 prediction, but a future prediction into the 2030s. Now if you’ve listened to my podcast, you know how irritated I get by the blue versus green argument.
That being said, there are some things to keep in mind, economies of scale, and software introductions will decrease the cost of green hydrogen, but who knows what technological developments will happen to also drive down the cost of blue. And as you also know, I despise using colors when it comes to defining hydrogen. That there are several methods of making hydrogen from hydrocarbons that aren’t necessarily steam methane reforming with carbon capture, utilization and storage. Another factor to take into account are feedstock costs. Right now, natural gas is at a premium, while water is relatively inexpensive. Alright, and number 10. Alkaline electrolyzers will increase their market share over other technologies. The two most established technologies to make green hydrogen are alkaline and proton exchange membrane electrolysis. Bloomberg, Nef expects alkaline products to hold an ever greater share of the global electrolyzer market in 2022 than it did in 2020 and 2021, accounting for 75 to 78% of shipments.
This is because alkaline electrolysis is cheaper and better suited to large scale projects, more of which are set to start construction in 2022. Okay, so why alkaline electrolyzers over P E M. electrolyzers? Well, the answer to that is in the type of projects under construction this year, pe M electrolyzers are great when they’re utilized with renewable electricity. But right now they’re also vastly more expensive than alkaline electrolyzers. And since the projects that are still Starting up this year like to have a steady electrical flow. Alkaline electrolyzers are the better solution right now.
Alright, that’s it for me everyone. If you have any questions, comments or concerns about today’s episode, come and visit me at my website at thehydrogenpodcast.com. Or you can always email me at email@example.com. 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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