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SvD Energy Summit – View on the emerging hydrogen market in the Nordics and its interplay with renewables

Nyhet – SvD Energy Summit – 2021-09-07

På SvD Energy Summit 2021 kommer Alexander Esser som är Energy Economist: Nordic Power Markets på Aurora Energy Research att berätta mer om utvecklingen av väte och dess påverkan på förnybar energi utifrån deras analyser och modellering. Vi ser fram emot denna fördjupning i ämnet och passade på att ställa några frågor till Alexander inför konferensen.

What will be the focus of your presentation at the event in October?

I will share our view on the emerging hydrogen market in the Nordics and its interplay with renewables, backed up by analyses and in-house modelling by Aurora Energy Research.

In what areas in the market do you see the application of hydrogen playing an essential role?

There is growing appetite for low-carbon hydrogen in all net zero plans across Europe. Hydrogen could play an important role in reducing emissions particularly in hard to abate activities.

Nordic demand for green or blue hydrogen is expected to grow sixfold by 2040, to 90 TWh. Demand is driven out of the (petro-)chemical, steel and transport sector, especially heavy-duty transport – all sectors that currently rely on fossil feedstock or fuels. There is a lot of uncertainty around applications in heating as well as in passenger transport, as direct electrification stands in direct competition to green those sectors. Whilst in Swedish and Finnish hydrogen is predominantly required for steel and process heat, Norway will see increasing demand from its larger petro-chemical sector.

As large industrial players like SSAB or Preem are already testing hydrogen applications to produce green steel or fuel, all eyes are on the regulator to provide the right framework and support schemes. Carbon Contracts for Difference and certification schemes that can label end-products as green are feasible policies to drive industry demand for hydrogen.

The Nordics could also become an export hub for low-carbon hydrogen, as they benefit from an abundance of green power at low prices. Here, the costs for transporting hydrogen to the continent and an emerging decentralized market are the key drivers to watch.

How big will the role of the Nordics be in producing hydrogen in the future?

The countries with more renewables and lower cost generation are best suited to benefit from the expansion of green hydrogen (applies to all Nordic countries), whilst those with a history in natural gas production may turn to blue hydrogen (applies to Norway).

To meet the growing domestic demand, the Nordics require an investment into around 20 GW of electrolyser capacity for green hydrogen production until 2040. Due to this scaling- up, costs to produce green hydrogen are expected to halve to 2.5 EUR/kg. This makes Sweden and Norway the cheapest hydrogen sources in Europe if current hydrogen tax incentives remain in place. Beyond this, green hydrogen has auxiliary benefits for the power market. Electrolysers can lift power prices during periods of high wind generation, as well as absorb wind power that would otherwise be curtailed, which improves the profitability of these assets.

Hence, Nordic hydrogen demand is expected to be fully covered by domestic production. However, a key risk is the competition with low-carbon blue hydrogen which currently comes at lower costs than green.

What are you looking forward the most to at this year’s SvD Energy Summit?

Obviously the great selection of speakers but even more the opportunity to discuss the energy transition in person. This is my first conference after 1.5 years.

Missa inte Alexanders presentation på SvD Energy Summit 2021 i oktober!

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