ARTICLE

The Clean Hydrogen Economy is Gaining Momentum: A Market Outlook

2024-04-11
hydrogen-(CT)

The challenge is straight-forward: Solve a problem a century in the making in the breadth of a single generation.


The nascent concept of a hydrogen economy came onto the stage around 20 years ago, on the heels of success stories surrounding renewables. Clean energy worked its way into the national conversation, a subject worthy of consideration and investment.

The challenge is straight-forward: Solve a problem a century in the making in the breadth of a single generation. It’s clear that a healthy energy mix will be required to meet ambitious global decarbonization goals, and for many of us leading the energy sector, hydrogen will be a key component in that mix. The recent COP28 climate conference included a joint call for action to produce derivatives for the shipping industry by 2030 – just the latest boost to momentum for a clean hydrogen-powered future. 

Another boost is well underway in Delta, Utah. In late November, the Intermountain Power Agency’s IPP Renewed project took delivery of its first new gas turbines capable of using up to 30% hydrogen fuel at startup, with a plan to transition up to 100% hydrogen fuel by 2045 or sooner. The turbine technology was validated by Mitsubishi Power to support what promises to be a complex but critical transition to a clean grid. 

The work in Utah is an inspiring part of a broader endeavor to create a scalable market for clean hydrogen. The power sector can lead the creation of a thriving hydrogen ecosystem by emulating the properties of hydrogen itself: 

· Be first. 
· Be collaborative. 
· Be abundant. 

As we reach key milestones, support from governments and major industry stakeholders is growing. We need to build on this momentum to accelerate the hydrogen economy. 

Be a first mover 

Because it doesn’t emit carbon when consumed, hydrogen is an attractive alternative for applications that currently rely on fossil fuels, from electricity generation to steelmaking. But while hydrogen is the first element in the periodic table, it hasn’t always been the first choice for decarbonization. 
Historically, the industry has faced two challenges. First, clean hydrogen production has been too small for many industrial-scale applications, creating a catch-22: Without the promise of sufficient supply, industries didn’t develop the technologies and build the infrastructure to drive greater demand – which created little incentive to boost supply. Second, 95% of the current hydrogen supply is made through processes that emit greenhouse gases. 

Today, unprecedented collaborations are helping shift those headwinds. One example sits next door to IPP Renewed, where in 2019 Mitsubishi Power and Magnum Development launched a joint venture to create the world’s first industrial- and utility-scale clean hydrogen hub. The first phase of the project will produce and store hydrogen that will power the advanced-class gas turbines now in place at IPP Renewed, which are expected to use up to 30% hydrogen fuel when the plant starts up in 2025. 

That use, and many others coming into view for hydrogen, was much less certain when the project started. At the time, the team at Mitsubishi Power was told we were throwing our money away on a science experiment. Since then, rapid progress has changed those attitudes. Earlier this year, Magnum Development became a Chevron U.S.A. Inc. company, through its New Energies Company. Since construction of ACES Delta Hub began in June 2022, two caverns are being solution mined nearly a mile beneath the earth, each approximately the size of the Empire State Building. More than half of the large-scale electrolyzer system equipment arrived this year.

Every step of the project seemed impossible, or at least improbable – until it was done.  

The groundbreaking facility is slated to come online in 2025, when the 220 megawatts of electrolyzers will begin converting renewable energy into green hydrogen. For perspective, less than two years ago the world’s total electrolyzer capacity was just over 280 megawatts. ACES Delta Hub nearly doubles global production of hydrogen using entirely renewable energy. 

This achievement demonstrates the power of taking an inspired idea and having the courage of conviction to transform it into action – and reality. Moving first doesn’t just mean moving early. It means having the temerity to act before we have complete answers, in the face of criticism. We need this pioneering spirit to spread throughout the industry to unlock each successive wave of innovations and solutions. 

Be collaborative to accelerate progress 

One of hydrogen’s most attractive qualities is that it naturally teams up with other atoms to create something new. Combine it with carbon, you get natural gas; with oxygen, you get water; and with nitrogen, you get ammonia. Hydrogen’s flexibility enables it to be more than a fuel. It can store renewable energy efficiently and stably over the long term — much longer than current battery technology. 

That capability is important because the amount of energy produced by wind and solar changes from day to day and season to season. For instance, in spring and early summer, parts of the U.S. produces more renewable electricity than we use. In fall and winter, we produce less. Clean hydrogen enables us to smooth out the fluctuation: using excess renewable power in peak seasons to create hydrogen, storing the gas, then using it to produce power for the grid when demand exceeds supply. 

The ACES Delta Hub benefits from some of the nation’s lowest-cost and most abundant renewable energy, but flexibility means just that – being flexible. It’s important to note that other geographies require different solutions. For example, the Pennsylvania-Ohio-West Virginia region is developing a large-scale hydrogen production facility fed by natural gas, which will use sequestration technology to minimize carbon emissions. The common denominator here: the usefulness of hydrogen. 

Be abundant through innovation at scale 

Hydrogen is the most abundant element in the universe, and we need to leverage that abundance for more clean hydrogen here on Earth. Thanks to innovative pioneers and new partnerships, we’re making progress. Increasing supply is driving new demand. According to the IEA, private companies will generate an estimated 5 million tons of low-emission hydrogen demand in the near term, and international cooperation initiatives include commitments for up to another 3 million tons of demand by 2030. Opportunities for clean hydrogen use are beginning to expand across industries, including long-haul trucking and transportation. Other hard-to-abate sectors, such as steelmaking and ammonia production, appear poised to follow.  

Abundance is not just about supplying enough clean hydrogen to meet the rising demand. It also will bring about precipitous drops in cost, which will spur growth. 

At Mitsubishi Power, we’ve invested in driving abundance by creating the world’s first integrated validation facility for hydrogen technologies at Takasago Hydrogen Park in Hyogo Prefecture, Japan. This project allows us to validate new hydrogen technologies, giving our customers and partners confidence as we develop solutions that help industries rapidly scale. This template needs to be repeated across the industry. 

Act with conviction 

It’s taken 20 years for hydrogen to emerge as one of the key solutions to this generation’s defining global challenge. We’ll need more first movers to boldly step forward and develop new ways to produce, store and transport carbon-free hydrogen for each opportunity and use case that arises. With determined and talented collaborators ready to take part in those projects, clean hydrogen will become more abundant and more economical, ultimately helping to make our future on this planet more sustainable and equitable for all.  

Hydrogen: Why Now and What For?

At Mitsubishi Power we’re in a position to innovate in decarbonization, foster new strategic
collaborations and commercialize new solutions – all of which will empower the world to reach
net zero goals in 2040 or sooner.