Faced with the challenge of transitioning to the massive use of hydrogen to decarbonize the economy, governments and companies are to deal with the dual challenge of deploying new infrastructures and matching hydrogen supply and demand geographically and quantitatively.
One answer to this challenge lies in “hydrogen hubs”. These hubs, also called valleys in Europe, are relatively circumscribed geographical areas in which a local hydrogen ecosystem is developed, integrating the entire hydrogen value chain, from production to use.
The grouping of hydrogen-related activities thus allows for the joint development of supply and demand, to achieve some of the economies of scale necessary for their profitability, particularly for hydrogen production, and to limit infrastructure costs. To be viable, a hub must ensure that these characteristics are sufficiently favorable to achieve sufficient economic profitability.
Public actors such as local authorities also benefit, as these hydrogen hubs are an opportunity for the economic development of a region, in addition to the decarbonization induced by the growth of the hydrogen economy.
Hydrogen hubs can therefore be a pragmatic approach to address the issue of hydrogen adoption.
Characteristics of hydrogen hubs
While hydrogen valley projects are very different from each other, there are some common characteristics. A central point is that these projects encompass a significant part of the hydrogen value chain, from production to use for mobility, industry or energy, through storage and distribution.
The area where the hub is located must offer opportunities for hydrogen production at a competitive cost: access to water and renewable energy, or access to natural gas with the possibility of CO2 capture and storage or reuse, with CO2 storage or reuse being possible on site.
The driving forces behind hydrogen hub projects vary greatly between projects. While a few years ago public authorities were the typical initiators of these projects, nowadays the growth prospects for hydrogen are sufficiently positive for companies to take the initiative on these issues. In most cases, however, a strong collaboration between public actors and companies is observed, allowing to overcome regulatory or financial obstacles.
In practice, hydrogen valley projects fall into three categories:
those oriented towards mobility and transport at the local level, are relatively small. One example is the hydrogen hub in the Edmonton area, in the province of Alberta, Canada, those focused on industry, usually of medium size, and which remain fairly local, such as the Hydrogen Delta project on the border between Belgium and the Netherlands, which aims to green the hydrogen used as an industrial precursor, particularly in refineries, Platforms, whose vocation is to implement large volumes, oriented towards export, such as the HyEnergy project in Australia.
The investments linked to these projects vary from less than 1 million euros/dollars for mobility projects in medium-sized cities to several billion for export projects, often linked to ports of global importance.
Hydrogen hubs are an integral part of the hydrogen strategy of European countries. The discussions in Europe have highlighted the importance of these hubs for the development of the hydrogen economy.
For example, Hydrogen Valleys is a platform for exchange and reflection on hydrogen hubs, the result of a partnership between Mission Innovation (an initiative bringing together 22 countries around the world and the European Commission) and the Fuel Cells and Hydrogen Joint Undertaking (FCHJU), a partnership between the European Commission, the hydrogen industry and hydrogen research stakeholders.
Players wishing to launch a hydrogen hub project often have an interest in seeking a maximum number of partners, public or private, to share costs and reduce risk. For producers, finding customers ready to buy hydrogen, such as a transport operator or a refinery, before the project starts, is a major step.
Public actors can provide subsidies to reduce the competitive gap between low-carbon hydrogen and other options for potential customers in the short term. They can also facilitate projects by making land available, assisting in the authorization process, transitioning public transport to hydrogen, etc.
If hydrogen hubs aim to accelerate the deployment of hydrogen in the short and medium term, what about in the longer term?
One possible way forward is that, when the transition to a hydrogen economy is more advanced, small, medium and large valleys will group together in “corridors” on the scale of large economic regions, structured by pipelines that will bring together decentralized production and consumption areas. Later, a globalization of the hydrogen value chain, perhaps along the lines of natural gas today, may even emerge.
Although the hubs will individually have a moderate climate impact due to their size, their interconnection into corridors or even a global market will provide the necessary scaling to make hydrogen a significant contributor to the energy transition.