Europe needs to embrace a fundamental overhaul of traditional project delivery practices to realise its 2030 ambition for 10mn tonnes of domestic renewable hydrogen.
For the third report in their “From Ambition to Reality” (FATR) series, Worley and researchers from Princeton University explored renewable hydrogen ambitions in the European Union as a case study, through which they have sought to show the steps infrastructure participants can take to make a new project delivery paradigm a reality by 2030. This paradigm is centred around five “shifts” of broadening value, enabling options, standardisation, creating partnerships, and the digital accelerant.
Hydrogen is increasingly being seen as part of the new energy ecosystem, with the EU targeting 10mn tonnes of domestic production of renewable hydrogen for 2030. This is going to call for an order-of-magnitude increase in global electrolyser manufacturing capacity, a fourfold increase in annual offshore wind capacity additions across the EU each year to 2030, a 35% increase in desalination capacity, and more than 100GW of new renewable generation being connected to the grid.
Plus, this would all have to happen in less than seven years, meaning infrastructure would have to be developed, permitted, financed and built. It is therefore clear it will take far more than just a few small, bespoke projects to satisfy ambitions. Instead, it will call for “an undertaking of such scale, speed and complexity” that can only be achieved through “the emergence of an era of hydrogen mega-projects”.
In this context, a “mega-project” would constitute one with a 3GW electrolyser and 400Ktpa production capacity, which the report referred to as “Base Hydrogen” – a conceptual base project. Europe would need around 25 of these that reach a commercial operation date (COD) of 2030 to deliver on the EU’s renewable hydrogen ambitions.
If adhering to traditional capital discipline approaches, then it would take eight years at absolute minimum for an asset of this size to reach COD. However, when considering nobody in the world has developed, designed, constructed or commissioned a renewable hydrogen production plant of such size, it can be assumed it would take “significantly longer”. All 25 base projects would have to conclude feasibility studies by the end of this year, for example, to hit 2030 CODs.
This is going to take a fundamental overhaul of traditional project delivery practices, addressing key barriers in the process, squashing capital discipline timelines though still maintaining key principles of value assurance. In the case of hydrogen, key barriers facing the industry include certainty for investors and participants across the net zero value chain, acceptance from society, and productivity, in terms of getting the pace of deployment up to the level required to deliver on targets.
Therefore, they mapped out an EU Renewable H2 Plan to ensure faster deployment and scale-up of supply-side assets, driven by initiatives such as EU-wide leading practice guidelines for the development, design, delivery and operations of large hydrogen value chain assets and agreement on terminology, value proposition and messaging on issues such as safety, costs and fugitives.
There also needs to be a coordinated value chain-wide approach to building the required workforce skills; efforts to facilitate safe sharing of information and trust building in project paths and outcomes across stakeholders; a radical shift in delivery practices to help facilitate the required scale and speed of infrastructure rollout; exploration of the productivity gain of standardisation across the hydrogen industry, including across engineering standards; and for a commodity trading platform which allows for the creation of derivatives, pricing and hydrogen Exchange-Traded Funds.
Further recommended initiatives include linking qualified value chain parties and shared infrastructure together at pre-vetted sites with expedited permitting through a coordinating entity; for governments to provide a competitive market mechanism to remove risk associated with supply chain expansion and hydrogen off-take; and for governments to masterplan, control and build the electrical grid, pipeline and digital shared and regulated infrastructure that is required ahead of the curve.
Adopting these initiatives would help reduce the timeline for the Base Hydrogen Project down to five to six years, showing significant schedule compression because of the dependencies between different components relaxing. Though regardless of policy direction, time is crucial, with the report stressing the need for a radical paradigm change to achieve the scale and speed of deployment needed – even if it makes industry participants uncomfortable, as otherwise the big expansions in infrastructure needed to deliver net zero ambitions will simply not happen.
