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Only 20pc of hydrogen projects have reached FID

9/16/2022

Tom Young - Co-editor Hydrogen Economist

Analysis of GEI data shows Europe leads the way, but the US and China are set to see rapid growth
Just 217 of 1,066—around 20pc—low-carbon hydrogen projects being developed around the world have taken FID, according to Global Energy Infrastructure (GEI) data.

Getting projects to FID has proved difficult over the past few years, as developers struggle to secure the necessary finance and offtake agreements, despite the release of high-level state hydrogen strategies.

Of the 217 projects that have taken FID, 119 are in Europe. The EU was the first region in the world to set a hydrogen strategy with import and production targets, which were then beefed up by the RepowerEU initiative—which set a 2030 goal to produce 10mn t/yr of green hydrogen within the EU and to import a further 10mn t/yr.

But, despite some major FIDs, uncertainty around hydrogen taxonomy and proposals on additionality are hampering the development of EU projects. As a result, developers are starting to look to other markets.

Going west
Only 30 of the 217 projects to reach FID are in North America, according to the GEI data.

But tax credits for hydrogen production contained in Washington’s new Inflation Reduction Act make green hydrogen cheaper than grey in all industrial applications and will result in a raft of projects by firms substituting grey hydrogen for green in industrial applications, according to electrolyser and fuel cell manufacturer Plug Power.

Of the 31 projects that have taken FID in North America, 14 are at existing industrial sites.

China is also starting to develop its hydrogen economy, although most investment is likely to be by Chinese firms or public bodies rather than international institutional investors.

China released its hydrogen strategy in March, aiming to produce 100,000-200,000t/yr of green hydrogen by 2025.

Around 16 of projects to have reached FID globally are in China, but that number is expected to grow rapidly over the next few months.

Project deployment models based on current strategies foresee 120-212mn t/yr of hydrogen production by 2030.

Green hydrogen accounts for 175 of the 217 projects to have taken FID.