Ørsted was one of the first movers, knowing about the challenges to integrate more #renewables into existing grids. Since they took #FID in December 2022, they experienced a lack of interest in long-term off-take at realistic prices and commercial scale. This matches with Hydrogen Europe’s observation about the risk for off-takers which is not clearly taken care of, e.g. due to insufficient regulatory incentives. Yet, without a predictable volume of off-take demand, it is not possible to create value through scale bringing costs down which is typical for large-scale developers like Ørsted.
Whereas the FIDs taken over the last weeks especially in concern projects in the refinery sector, the Ørsted project in North Sweden is about the production of green fuels for the shipping industry. Currently, the targets set for the obligatory use of e-methanol in EU #maritime fleets are not stringent enough to create a sufficient degree of demand. In short: Everything but refinery projects are still way too risk exposed in order to endeavour on novel decarbonising technologies which so much have been discussed in the context of the Green Deal. Yet, rules are too complex, market making mechanisms are not underpinned by the relevant funding level and infrastructure is scheduled but not fast enough.
The lessons learned from Ørsted fit very much into the analysis of the European Court of Auditors, which was welcomed by Hydrogen Europe as a manual for the upcoming European Commission to fix the shortcomings immediately during the first 100 days in office.
The focus should be on timeline adaptation of three main areas:
off-takers: Need speedy implementation at member state level and for EU secondary legislation. Incentives on EU level need to be maintained (or even strengthened) which is crucial to ensure effective market signals at this critical point in time for the green and clean fuel industry.
funding schemes: EU needs to allocate the necessary funding to a handful of well-funded, streamlined, and targeted schemes that are simple to apply for and easy to evaluate. Early visibility and continuity on upcoming funding rounds should be made available to industry, so that project development timelines can be planned accordingly.
infrastructure: #Hydrogen production at large-scale requires massive amounts of renewables input, and for gaseous hydrogen, access to pipeline infrastructure to transport the hydrogen to off-takers is crucial. Expectability of infrastructure construction and/or retrofitting needs to become clearer and more transparent.
Hydrogen Europe will continue to work on improving the conditions. We are encouraged by the amount of FIDs taken only in the month of July adding up to 1 GW #electrolyser capacity to be built by 2030. But we also understand how many more projects could have been issued if the underlying legislation and funding would correspond to the needs of an Industrial #EUGreenDeal.
Jorgo Chatzimarkakis
