Year of Hydrogen !9 Jan 2023 17:43
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Siemens Gamesa's pioneering wind-to-green H2 project in Brande, Denmark.Photo: SGRE
It's H2-go | Why 2023 will be green hydrogen's global lift-off year
Subsidy schemes kicking in this year in key economies will all but guarantee profitability for projects that will need huge new sources of renewable power, writes Leigh Collins
3 January 2023 10:47 GMT UPDATED 3 January 2023 11:17 GMT
By Leigh Collins
The next 12 months will transform the global green hydrogen industry from a much-discussed idea to large-scale reality, with a wave of government subsidy schemes entering into force that will virtually guarantee profitability for renewable H2 projects which will in turn need huge amounts of clean power to operate.
The most significant support programme will almost certainly be the US hydrogen tax credits — unveiled in last year’s Inflation Reduction Act — which would pay producers up to $3 per kilogram of green H2. But Contracts for Difference (CfD) subsidy programmes from the EU and UK are also due to begin this year, along with Germany’s H2Global scheme, which will provide financial support for clean hydrogen (and its derivatives) imported from outside the EU.
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In addition, Canada said it will unveil a hydrogen tax credit scheme in the spring of 2023; Oman will unveil the winners of its first green hydrogen tender in March, and its second in December; India is expected to unveil a new subsidy programme in the coming months; Norway has agreed in principle to introduce a CfD scheme this year; while China is set to significantly expand its green H2 output in 2023.
Very little, if any, government cash is expected to enter producers’ bank accounts this year due to the simple fact that money will be paid out for H2 production or usage rather than project construction — and projects may take many months or years to become operational.
On top of this, most of the subsidy schemes are yet to be finalised and it is not clear exactly when they will be.
However, many large-scale green hydrogen projects will almost certainly reach final investment decisions this year on the back of the subsidies, with construction beginning by the end of 2023 — with billions of dollars flowing to businesses, including contractors, advisors and manufacturers of electrolysis equipment, wind turbines and solar panels.
And let’s not forget that despite all the talk about clean hydrogen in recent years, only 270MW of green H2 projects are currently in operation, despite a staggering 957GW having been announced according to UK analyst Aurora Energy Research.
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So where do all the different green hydrogen subsidy schemes stand today?
US H2 tax credits
The Inflation Reduct
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