Hydrogen to play a key role in decarbonisation of the utilities sector

In an evident and dramatic policy shift around the world recently, several countries are now actively pursuing decarbonisation strategies, raising the profile of zero-carbon fuels. As the utilities sector goes through the energy transition, the increasing use of zero-carbon fuels such as green hydrogen is likely to be a significant factor in the quest to decarbonise.

The drive to tackle global warming through decarbonisation has picked up momentum in recent months, with net-zero targets announced by the UAE, Saudi Arabia, and Bahrain (2050), as well as China (2060), Japan, South Korea, and Canada (all 2050), and the Biden administration recommitting the US to the Paris Agreement.

The role of hydrogen in the future of the utilities sector will play an important role at the World Utilities Congress, with a dedicated spotlight session titled What will it take for hydrogen to become the low-carbon champion?

Global demand for hydrogen currently stands at around 8–10 exajoules (EJ), most of which is consumed in the chemical sector; this figure looks set to grow. The EU published its hydrogen strategy last summer aiming for six gigawatt (GW) of capacity by 2024, ramping up to 40GW by 2030. Germany, Spain, Portugal, Netherlands, Finland, Sweden, Poland, and Canada all published a national hydrogen strategy in the last year. The Hydrogen Council’s “Hydrogen for Net Zero” report shows that hydrogen can provide the lowest-cost decarbonisation solution for over a fifth of final energy demand by mid-century, while another estimate says that the world is going to need 1000GW of electrolyser capacity by 2050 to meet demand forecasts.

Currently, approximately 95% of worldwide hydrogen production comes from fossil fuels, according to the International Renewable Energy Agency (IRENA). However, hydrogen from renewable sources has the potential to play a key role as the energy industry tackles various critical challenges including how to channel large amounts of electricity from renewable sources to sectors for which decarbonisation is otherwise difficult, including industrial, transportation and niche applications.

Despite clear demand drivers and several opportunities on the horizon for hydrogen, the International Energy Agency (IEA) says demand for low-carbon hydrogen remains low, limited only to road transport and falling short of Net Zero Emissions by 2050 Scenario requirements. It says that more efforts are needed to create demand, and reduce emissions associated with hydrogen production.

Ferdinand Varga, Managing Director and Senior Partner of Boston Consulting Group, the Strategic Insights Partner of the World Utility Congress, said: “One of the most forward-looking energy supply for industries is low-carbon fuels, specifically hydrogen. Meeting the future demand for hydrogen will not be easy, as production and supply of it might require subsidisation of its production to close the gap with other forms of low–carbon fuels—and most importantly, an adequate supply of cheap renewable power. Discussion on how hydrogen will play a key role in the decarbonisation of the utility sector will help to provide a path forward on when, where, and how players should participate in it.”

The economic case for green hydrogen has improved dramatically with costs for solar and wind dropping, as well as the scale-up of electrolyser capacity and associated supply chain. With the green hydrogen project pipeline burgeoning in the last year, there will be significant demand pressure on electricity supply, where costs remain high. 

One challenge for the clean hydrogen outlook is the slow pace of renewable capacity build-up, which can provide reliable, cost-effective power for electrolysers. Another is the limited funds allocated so far for hydrogen production projects, and a third is slow demand from carbon-intensive sectors such as transport.

Christopher Hudson, President of dmg events, the organisers of the World Utilities Congress, said: “The world is rapidly transitioning towards a decarbonised energy and utilities sector, driven by net-zero commitments to fight global warming. There is a clear case for hydrogen that presents several opportunities ahead, but global leaders will need to come together to ensure sustainable growth of the sector meets with new demand to achieve the desired decarbonisation results.” 

The spotlight session titled What will it take for hydrogen to become the low-carbon champion? will be a focused interview with Gareth Wynn, Chief Communications Officer at TAQA, on the role of hydrogen in the energy transition of the utilities sector.

Hydrogen will also be discussed in global leadership panels on meeting rising power demand and opportunities for utilities as the world looks to accelerate the energy transition in the face of global warming risks and net-zero commitments.

The World Utilities Congress will take place on 9th-11th May in Abu Dhabi’s ADNEC, where more than 10,000 global utilities professionals will attend to learn details on critical topics driving the future of low carbon power and water supplies. The Congress is held under the patronage of H.H. Sheikh Khaled bin Mohammed bin Zayed Al Nahyan, member of the Executive Council and Chairman of the Abu Dhabi Executive Office, and it will be hosted by TAQA.