Policy tipping point for green hydrogen predicted in 2022

Research and consultancy organisation Delta-EE anticipates 2022 as the tipping point year that policy support will create a viable business case for green hydrogen.

Delta-EE reports that its clean hydrogen projects database contains 115 projects with a combined potential electrolyser capacity of 2,138MW that are due to become operational in 2022 and 2023.

However, only a little over one-third (794 MW) of these projects have reached final investment decision or been awarded public funding in Europe and the UK. Thus the majority are dependent upon positive legislative indications and incentives from respective governments.

In the UK incentives such as the Hydrogen Business Model and the wider Net Zero Hydrogen Fund are expected to launch in early 2022 and 2023, while the UK Hydrogen Strategy aims for regulatory frameworks to be in place in the early 2020s.

In the EU the RED II delegated act and Hydrogen and Decarbonised Gas Package are expected to be key policy drivers.

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If the necessary policy environment is achieved, 2022 could represent a tipping point for a flurry of activity, argues Delta-EE.

Indeed, with over 6GW of announced projects now planned by the end of 2024, according to Delta-EE’s pipeline, the focus must shift to providing a policy environment that allows these projects to reach reality.

“Our research suggests that 2022 could be the year where we see the necessary policy environment develop that could drive projects in the tens or even hundreds of megawatts towards coming online,” says Dr Robert Bloom, service manager for Delta-EE’s Global Hydrogen Intelligence Service.

“Long term incentives and long term policy will allow de-risking of projects. This will give developers confidence that project finances are viable and customers can be provided with a cost-effective solution leading to the green lighting of a number of the planned projects in the UK and Europe.”

Other key findings from Delta-EE research on hydrogen include the evolving landscape of green hydrogen demand. Total green hydrogen demand within Europe is expected to rise from around 9,900t/year in 2021 to over 620,000t/year in 2026.

In 2021, demand from the industrial sector outstripped that of transport for the first time. The industrial sector is a prime target for clean hydrogen and Delta-EE predicts it will account for almost two-thirds of green hydrogen demand by 2026.

Currently, 15 industrial projects are awaiting final investment decisions or public funding, linked to potentially 894MW electrolyser capacity due to come online in 2022 and 2023.