Expert Interview – "Hydrogen should be used as a raw material in the first place".

Expert Interview – March 16, 2022

Where are the biggest and best uses for green hydrogen? How mature is electrolysis technology and what are the key development opportunities? Fabian Jochem, Head of Strategy at SMA Sunbelt, reveals this and more.

Where do you personally see the biggest and best potential applications for green hydrogen?

First and foremost, people think of storing hydrogen. However, I believe that this will only become relevant when the share of renewable energies in the grid is around 80 percent. Currently, it is 45 percent in Germany. Green hydrogen that is CO2-neutral is used where we already need hydrogen today. Today's hydrogen market is immense. 2.8 percent of the world's primary energy consumption is currently used for hydrogen production. And that means that 2-3 percent of global CO2 emissions are also attributable to it. And this is where I see the use. Specifically, for example, in industry in the production of fertilizers or in the steel and oil industries.

The big advantage of hydrogen is storage, but also the ability to transport it easily. Hydrogen thus enables greater flexibility in energy supply. Do you have a concrete example of this?

Yes. Hydrogen can be used both as a raw material and as an energy carrier. For example, in the field of heavy-duty transport or air travel. These are areas where battery-based systems are not effective. Especially in air traffic they don't and in the area of passenger cars there is still a lot of discussion. Here at SMA Sunbelt, I have an example in New Zealand from the transportation sector. Here we produce hydrogen in a geothermal power plant on site via electricity that is too much in the grid. This hydrogen is converted and transported by sea to Japan. In Tokyo, part of the cab fleet runs on this hydrogen. This is a nice example of supply and demand. Japan has too little area to produce green hydrogen itself. Australia and New Zealand, on the other hand, have it. This can be compensated by the possibility of easy transport of even large quantities.

Hydrogen is quickly associated with the keyword efficiency. High losses are incurred during production, processing and transport. How can this argument be refuted?

It is true that there is a loss due to the many conversion processes. That's why hydrogen should be used as a raw material in the first place. For example, in the steel industry or in ammonia production. Nevertheless, we also have to look at the issue from a political perspective. If industry and transport are to be decarbonized, we need technologies that can do this. In the transportation sector, one possibility would be to achieve this with electromobility. However, there are areas that cannot be developed in any other way - even taking into account the loss of efficiency. Here, green hydrogen plays an important role.

What technical solutions in the hydrogen economy do you currently offer at SMA Sunbelt?

SMA has its origins in classic power electronics. We produce inverters for solar plants from the small to the large megawatt range. We are now adding the electrolyzer sector to this. To operate an electrolyzer, you need a relatively large power in the DC voltage range. This means that the alternating current from the grid must be converted into a direct voltage, which is then used to supply the current to the electrolyzer in order to produce hydrogen. This conversion is offered by SMA Sunbelt. Our task is to connect the following two areas. One is the oil and gas sector, from which the electrolyser manufacturers come, and the other is the established renewable energy sector. SMA Sunbelt sees itself here as the missing link that brings these two areas together as efficiently as possible.

To summarize, inverters are used to convert DC voltage into AC voltage. In simple terms, roof electricity into house electricity. For the electrolysers, this process is reversed.

Yes. For about 10 years, we have been further developing the classic inverter, which converts direct current from the PV system into alternating current for the grid, for battery storage. The battery converts the stored energy from direct current to alternating current. But it also takes power from the grid. There, our converter acts like a rectifier, taking the AC voltage and directing it the same for the battery. This product is the basis for the electrolyzer market.

You keep an eye on this market, even though you don't manufacture any electrolysers yourself. How mature is electrolyzer technology at the present time and what decisive development opportunities do you expect in this area, for example in terms of efficiency?

The current electrolyzer market is vanishingly small at around 500-800 megawatts. But the goal is a market that reaches 150 gigawatts by 2030. This is roughly the size range of the entire European solar market today. So the question of what needs to be done to achieve this goal is a valid one. Many issues are still at the very beginning of their development. For example, many factories where electrolysers are built lack automation and standardization. In both the electrolyzer and converter areas, these are important foundations for achieving this targeted order of magnitude.

In the case of the electrolyzer, it also depends on the technology. There are three different technologies. The PEM, the alkaline and the high temperature. A lot of research is still needed in the PEM and high-temperature areas. Less so in the alkaline sector, which is a relatively old technology. The PEM process is on the rise, and we are also building models based on PEM. Research is also still needed in the area of the materials that are used and in the area of size. We need to reach the point where it is possible to build plants up to one gigawatt. In summary, the biggest challenge for the entire green hydrogen project development, besides efficiency, is price. Green hydrogen is more expensive than gray, which is produced from gas. Hydrogen from renewables is around 4-6 euros, gray at 2 euros. But to get into the price range of gray hydrogen, the price of green hydrogen has to be divided by three.

And according to your calculations, we still have eight years for this process. Will we be able to cover this surplus electricity, which we will then hopefully have available in the grid, in Germany or will we need solar power from abroad?

This question has to be answered individually across the country. In Germany, we do not have the possibility to cover our entire hydrogen demand with renewable energies. First of all, the electricity market must reach the 100 percent mark with renewable energies. This means that we will not be able to avoid importing green hydrogen. Where exactly this is produced remains to be seen. The two most important cornerstones for hydrogen production should be met: high solar irradiation for low electricity production costs and inexpensive land. For example, in the MENA region or in Saudi Arabia, where most of our current oil is produced. But it could also be Australia, or perhaps all of them together. Similarly, we are in contact with fertilizer producers who are interested in Norway. Norway has excess hydropower capacity and relatively favorable soils. There would also be the possibility of producing hydrogen there. Or in the Atacama Desert in Chile.

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