Final investment lags as hydrogen projects accelerate; ACME, Tata sign accord

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Opening of hydrogen filling station for trucks and cars in Berlin. (Source: Reuters/Michele Tantussi)

The number of clean hydrogen projects announced through to 2030 have accelerated in the last year but final investment decisions (FID) lag projected investments by a wide margin as the work pipeline heats up, the latest study by the Hydrogen Council and McKinsey & Co. says.

Direct investments into hydrogen projects announced through 2030 now total $320 billion, according to Hydrogen Insights May 2023, though just $29 billion have passed FID.

“The main issue here is we are in the front end build up in the pipeline funnel – this is the way things always start,” the Hydrogen Council’s Executive Director Daryl Wilson said in a written response to questions.

“There will be execution phase delays too with permitting. This is a big change machine to get up and running and it is taking time.”

Some of the delay has been due to the growing size of many of the announced projects, with 1,046 large-scale project proposals at the end of the January 2023, up by 350 since the Hydrogen Council released its last report in May 2022.

The Hydrogen Council is a CEO-led global association featuring 150 member companies from over 20 countries. 

Europe leads project proposals, with total investments making up some 35% of total global investments at $117 billion, while growth in the United States increased to $46 billion from $29 billion a year earlier, boosted by promised incentives as part of the Inflation Reduction Act (IRA), the report said.

“IRA has driven a huge announcement stage upswing in the front end of the funnel, but they only started when the gun went off with IRA exactly now one year ago,” says Wilson.

“Meanwhile the European Union has been at this for five years, added the COVID recovery surge in May 2020, and then more target up ticks and new policy incentives, all before IRA even started.”

The study notes that momentum in the industry is strong, but more needs to be done to reach net zero goals by 2050, including double the announced investments by 2030, all of which much be matured and deployed.

“This is same as the renwable energy movie: it looked slow and sleepy at first but then the bases technology (farm size, blade size, project size) all those scalable factors, plus project finance investment interest, catalysed a result far beyond what anyone could dream happened,” says Wilson.

ACME, Tata Steel sign hydrogen accord

Indian renewable energy company ACME Group has signed a land agreement with Tata Steel Special Economic Zone Limited (TSSEZL) covering 343 acres for its green hydrogen and ammonia project, the company said in a statement.

ACME will invest 270 billion rupees ($3.27 billion) to set up the clean hydrogen and ammonia project, in the Odisha state, Reuters reported.

ACME Group plans to set up a clean ammonia production facility at the Gopalpur Industrial Park (GIP) to produce nearly 1.3 million tons per year, with the ammonia produced from clean hydrogen generated from renewable power, the company said.

Ammonia at the plant will be exported to markets world wide from the existing Gopalpur port facilities, it said.

“This project will help us to offer ‘Made In India’ Green Hydrogen and Green Ammonia to domestic and international markets at competitive price,” Founder and Chairman of the ACME Group Manoj Upadhyay said.

ACME aims to produce some 10 million tons of a year of clean ammonia and hydrogen and has solar projects across 12 states and capex invested and committed of nearly $8 billion, it said.

DOE awards $34 mln for hydrogen R&D

The U.S. Department of Energy (DOE) has awarded nearly $34 million to 19 industry- and university-led research projects to advance technology solutions to make clean hydrogen, the government said in a statement.

Projects will focus on developing technologies that could help produce hydrogen at lower cost and less energy, explore ways to produce hydrogen using biomass, effluent waters from oil and natural gas development and production, and other wastes, and expand options for safe and efficient hydrogen transport and storage across the nation, it said.

The DOE’s Office of Fossil Energy and Carbon Management (FECM) has announced investments of more than $122 million in 72 projects since January 2021 to explore methods to produce clean hydrogen and improve the performance of hydrogen-fueled turbines.

“Clean hydrogen is one of our most versatile tools to slash emissions and forge a carbon-free pathway for a sustainable clean energy future,” said U.S. Secretary of Energy Jennifer M. Granholm.

“With today’s announcements, DOE is supporting the continued advancement of clean hydrogen technology making it cheaper to produce and easier to deploy, all while creating good-paying jobs in the process.”

By Reuters Events Hydrogen