There seems to be a level of confusion among domestic actors about the role that hydrogen is to play in decarbonisation”, wrote a team of authors in a study published by EPG this December. According to them, in Romania, hydrogen is portrayed as a silver bullet towards a decarbonised future in sectors looking to find their place in a landscape shaped by the European Green Deal. However, the report “Clean Hydrogen in Romania – Elements of a Strategy”, argues that hydrogen’s real impact will greatly depend on the country’s economic strategy and costs of technology.
In Romania, the most promising hydrogen uses are in the industry (steel, ammonia, fertilisers, refineries, and high-value chemicals), transport (long-haul aviation, maritime shipping, HDVs and some railway segments), existing district heating systems and, potentially, long-term or seasonal energy storage beyond 2030, consider the authors. Other uses, such as gas blending or green hydrogen use in CCGTs are rather a waste of economic value, given the comparatively high costs of producing hydrogen.
As the Romanian authorities announced the intention to release a national hydrogen strategy in 2022, this will be an opportunity to make informed and comprehensive decisions regarding the future of hydrogen, including on uses, as opposed to the current patchwork of uncoordinated and poorly designed initiatives.
The study argues that clean hydrogen should be the focus of the Romanian national hydrogen strategy, based on considerations regarding carbon intensity, cost and availability. Green hydrogen (a.k.a. clean or renewable) is the most promising for delivering the goals of decarbonisation in the long term. Pink hydrogen also promises near-zero GHG emissions, but factoring in the cost aspect, green hydrogen is on a clear path to significant cost reductions that render it competitive with fossil-based hydrogen by 2030.
Today there is still a cost gap between fossil-based and clean hydrogen. However, electrolyser CAPEX is expected to decrease from €1,060/kW (PEM) to €375/kW (PEM), and as low as €100/kW (alkaline). The current cost differences between the two electrolyser types in terms of cost and performance are likely to narrow in time as innovation and widespread deployment of various technologies will boost convergence towards similar cost structures. However, the cheaper alkaline electrolysers expected to be available by 2030 will likely be supplied by Chinese manufacturers, while the European hydrogen value chain will focus more on PEM electrolysers. Either way, by 2030, producing clean hydrogen will no longer be a CAPEX intensive business. The price of renewable energy becomes the main cost component, especially at medium to high electrolyser load factors.
Coupled with the decreasing cost of renewable energy, higher carbon price and elimination of free allocation of CO 2 allowances, this will allow clean hydrogen to break even with fossil alternatives between 2028 and 2032 based on local renewable potential.
Two modelling scenarios analysed in the report, based on the Fit for 55 package proposals regarding the use of clean hydrogen in industry and transport, show that between 1,470 MW and 2,350 MW of electrolyser capacity will need to be installed in Romania by 2030. This amounts to 3.7% and 6%, respectively, of the EU electrolyser capacity by 2030 targeted in the European Commission’s Hydrogen Strategy. When factoring in the additionality principle, this will require between 3 and 4.5 GW of new renewables to be installed beside the capacities included in the current National Energy and Climate Plan.
Based on an electricity price of €50/MWh, a reasonable if not conservative assumption for Romania in 2030, given the RES potential and expected cost reductions, the resulting Levelized cost of hydrogen (LCOH) for alkaline electrolysis is between €2.21/kgH2 and €2.3/kgH2 , while for PEM electrolysis it ranges from €2.34 to €2.73/ kgH2 , depending on load factor. The LCOH can go down to as much as €1.38/kgH2 for alkaline electrolysis and €1.59/ kgH2 for PEM electrolysis in 2030 for an electricity price of €25/MWh. The only way of ensuring a stable and predictable source of low-cost electricity for the electrolysis units is long-term Power Purchase Agreements (PPAs) with multiple RES producers or wholesale purchasing of electricity that comes with Guarantees of Origin (GOs). To respect the additionality principle, a temporal and geographical connection between the electrolyser and renewable capacity would also be needed.
Before the strategy, some initiatives
A consortium of CRE, Liberty Steel, MTAG, ICSI and ADREM is looking for the EU money to develop research-innovation projects to integrate hydrogen and replace fossil fuels in industrial processes. The association also intends to carry out research projects for business development activities related to green hydrogen, green steel, renewable energy sources and energy storage amongst others. The projects will be proposed for direct funding by the European Commission through the Horizon Europe program.
Transgaz started a pilot project on hydrogen injection into transport pipelines. Within the pilot project called RO-HY Romania Hydrogen, the injection of hydrogen under laboratory conditions has already started. The concept design and execution phase was realized by Transgaz specialists and aims to determine the implications of transporting the natural gas and hydrogen blend for the NTS. The main objective of the project is to evaluate the effect of the gas blend on the performance under operating conditions of the main equipment and technical solutions used in the NTS. At the same time, the pilot installation can determine the impact of the natural gas and hydrogen blend on a gas distribution network up to the final consumer, including the reduction of greenhouse emissions by burning the natural gas and hydrogen blend. The experimental independent study aims to establish the percentage of hydrogen in the blend that can be safely transmitted through the current transmission infrastructure, the main vulnerabilities of the system in the context of using this blend, how to manage these vulnerabilities and implications that the addition of hydrogen has on the final consumers.
Also, 12 cities in Romania are testing a hydrogen bus from Solaris. For two months, the Urbino 12 hydrogen bus, produced by Solaris, will be present in twelve cities in Romania according to the following route: Cluj-Napoca, Târgu Mureș, Brașov, Sfântu Gheorghe, Iași, Galați, Constanța, Bucharest, Râmnicu Vâlcea, Craiova, Timișoara and Oradea. Solaris Bus & Coach is one of the European leaders in the production of electric vehicles for public transport. The Urbino 12 hydrogen bus will run for several days in each city on the tour, to be tested by local governments, to familiarize themselves with the latest propulsion technology and to raise awareness of the efficiency of using hydrogen as a completely clean energy source and reduction of carbon dioxide emissions. The tour of the Solaris Urbino 12 hydrogen bus is made in collaboration with Linde Gaz Romania, the partner that ensures its supply of hydrogen.
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This article first appeared in the printed edition of Energynomics Magazine, issued in December 2021.
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