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Platinum-linked green hydrogen economy has $10-trillion-a-year opportunity tag
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24th October 2022
By: Martin Creamer
Creamer Media Editor
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JOHANNESBURG (miningweekly.com) – The three letters PEM, which flag platinum-using green hydrogen and fuel cell solutions, are written all over the American green hydrogen company Plug, which is advancing into a potential $10-trillion-a-year sector.
Plug’s PEM electrolyser solutions produce carbon-free green hydrogen using renewable electricity and water, and PEM fuel cells are powering the cleanest of clean electrical mobility. (Also watch attached Creamer Media video.)
What began 15 years ago with Plug putting fuel cells into forklift trucks has grown into the provision of green hydrogen fuel, the building of green hydrogen refuelling stations, the provision of after-market service, and recognition of the importance of a green hydrogen ecosystem.
While battery electric vehicle mobility has grabbed most of the headlines, green hydrogen solutions are providing emission-free mobility in a growing number of commercial applications.
Hydrogen is really the Swiss army knife of the energy transition, Plug CEO Andy Marsh highlighted at the US company’s green hydrogen symposium covered by Mining Weekly.
Quoting Bloomberg and Goldman Sachs on hydrogen being on its way towards providing 20% of world energy, Marsh added: “It could be a $10-trillion-a-year opportunity – it's huge.”
The role of making green hydrogen economical, easy, and ubiquitous was emphasised by Plug chief strategy officer Sanjay Shrestha, amid the US’s new Inflation Reduction Act of 2022 being a gamechanger for green hydrogen generation. The Act provides financial incentives to businesses that improve energy efficiency, cut down on carbon emissions, and develop new forms of energy.
What the Act does, said Shrestha, is make green hydrogen economical compared with every single form of grey hydrogen in the market today.
Plug is working on large integrated renewable energy and green hydrogen plants, which will have capacities ranging up to the level of 1 000 t of green hydrogen a day.
It is also working with several partners on the proposed construction of a dedicated green hydrogen pipeline as well as long-duration green hydrogen storage.
“If you really think about a long-distance dedicated hydrogen pipeline with mega hydrogen sites, you are going to be able to move low-cost renewable energy from the point of generation to the demand centres.
“That will help to stabilise the electric grid and then all of a sudden you’ll see hydrogen become a solution that not only decarbonises transportation, or industrial applications, but also our electricity grid as we think about the whole climate solution going forward,” said Shrestha.
In 2023, Plug is looking at revenue of about $285-million from its merchant fuel and cryogenic equipment business and expects that revenue to approach close to $4-billion towards 2030.
“But here is, I think, the best part. Based on what we’re doing with the build out of our green hydrogen plant, even with some of the existing industrial gas contracts, we are expecting to exit 2023 with an operating break-even performance in our fuel business. That’s been a drag for us for a very long time, but that’s what we believe is going to happen as we exit 2023, and that’s going to be a big shift.
“Finally, on the overall numbers, we’re looking at a mid-20% gross margin for our merchant fuel, as well as the cryogenic business in 2023. But that number will be well above 30% beyond that as we continue to bring these plants online,” an upbeat Shrestha added.
PRODUCTION TAX CREDITS
US production tax credit (PTC) is improving the total cost of ownership for stationary and mobility power to an extent where the demand for green hydrogen is expected to be so much larger than originally envisaged, improving plant payback.
Payback of some of Plug’s first plants was eight to 12 years, but with the passing of the PTC for green hydrogen, that payback will improve by at least four to five years, and capital formation undergo major change, along the lines of the solar and wind industry where equity capital of 20% for funded projects is now commonplace.
Plug has been funding projects with 100% own equity capital but with PTC, this is expected to drop to 40%, then 30% and eventually down to 20%, the pattern of the solar and wind industry.
“So, the capital we have allocated to build the green hydrogen network can probably be used to do four to five times more than what we talked about before,” said Shrestha.
LIQUEFIED GREEN HYDROGEN
Liquefied green hydrogen is seen as being destined to play a critical role in the storage and transportation of the molecule by lowering the cost of transportation and reducing the storage footprint at point-of-use facilities.
Plug is on track to commission 200 t of green hydrogen a day by the end of 2023 taking into account a new plant being built in New York contributing to 75 t/d, its Texas plant 45 t/d, the Georgia plant increasing from 15 t/d to 45 t/d, and Tennessee from 15 t/d to 25 t/d.
Plug is also looking to have 100 t/d of generating capacity in Europe in 2026 on its journey to get to 1 000 t/d by 2028.
Regarding New York, Shrestha commented: “It’s reminiscent of the Industrial Revolution when you think about this plant in New York. As we lit up the city of Buffalo and transitioned from kerosene to electricity, that’s what we’re trying to do here, by going from diesel to green hydrogen, again leveraging hydropower from Niagara Falls, some 100 years later."
Plug GM electrolyser solutions Ole Hoefelmann explained how the company had a PEM electrolyser stack, described as the world’s best, and displayed were the 1 MW, 5 MW and the 10 MW array.
Development and infrastructure executed by Plug over the last few months has allowed the company to deliver those electrolyser stacks globally with skillsets acquired over the last year.
It has capacity to build the 1 MW solutions around the world and has also built 5 MW enclosed systems delivered to a customer site in Egypt.
“In order for us to be super successful, what we need to have is a fabricator network, the ability to be able to build electrolysers around the world,” said Hoefelmann.
The electrolysers are on platforms able to tilt 15 degrees to 18 degrees and able to resist the elements.
With partner Lhyfe of France, the company created a platformed electrolyser positioned in the middle of the ocean that is connected to a wind farm. The green hydrogen produced offshore and the energy is transported onshore in the hydrogen.
Plug has a 1.5 GW backlog in different markets, enabling it to scale up solutions considerably faster.
In Texas, a 120 MW facility being worked on with a partner is for green hydrogen for use in industrial applications.
“We’re going very fast and we have customers and partners that have the same pioneering spirit that we have,” added Hoefelmann.
Regarding Plug’s $25-billion electrolyser sales funnel, half involves green ammonia, with other solutions being around methanol and fuels.
Plug has a strong ambition for the electrolyser business. Its objective for 2026 is to have a revenue close to $1.45-billion and an installed capacity of a little over 3.5 GW and its target for 2030 is an installed capacity of 20 GW with a revenue target of $7.3-billion.
Reference plant design is built around Plug’s PEM electrolysers. The design unlocks multiple benefits by integrating modular technologies and optimising the balance of plant through standardisation and centralisation.
Plug describes itself as the leader in PEM electrolyser technology and its partner McDermott a leader in hydrogen storage and transport, with the option to produce liquefied green hydrogen.
Edited by: Creamer Media Reporter
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