From idea to reality: Launching your green hydrogen project

Key considerations for project owners and developers, when working with green hydrogen and Power-to-X projects.

A path to decarbonisation

It’s no surprise that planning is the cornerstone of any successful project process. Yet, when you deal with emerging technologies and markets, the early-stage considerations are even more crucial to get the project off the ground without unforeseen risks and delays.

Here, I will introduce key considerations for project owners and developers, when working with green hydrogen, and Power-to-X in general, to ensure your project starts off right.

Power-to-X is a collective term for a range of technologies that convert power into various electrofuels. With use of renewable energy, Power-to-X has the potential to play a significant role in decarbonising sectors that are hard-pressed to find sustainable alternatives to fossil fuels.

The central process – the ‘to’ in Power-to-X that makes variations of ‘X’ possible – is electrolysis. Through electrolysis, electric energy is converted into hydrogen. The hydrogen can be further synthesised to different e-fuels and products, such as e-methanol and green ammonia.

Navigate an emerging market

Before starting a project, you need to decide on the end-product. If you aim to move beyond hydrogen production, for example, it should be part of the project scope from the beginning. This decision influences key parts of the project such as supply chains, risks, and site selection.

To make a qualified decision on what you want to produce and where you plan to produce it, you need a good understanding of the market. The first thing to clarify is the demand.

In an emerging market that still counts relatively few players and includes technologies that are not yet fully scaled, having close collaborations across the value chain is important. It is essential to organise fixed agreements with partners before entering the execution phase of the project. As a supplier, you need to identify off takers. As an off taker, you need supply in place.

For the next 5-10 years at least, partnerships will be the way forward for Power-to-X projects in most cases, to minimise risks and ensure a successful outcome for all involved parties.

Want to know more about Power-to-X?

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Power-to-X explained

When deciding where to place your project, there are several factors to consider.

At regional or national levels, you need to assess the market’s willingness to support the new technologies. This includes analysing national or regional strategies, regulatory landscapes, and subsidy options.

Regions and countries with tangible hydrogen and Power-to-X strategies have a vested interest in supporting projects that help realise their strategic goals. At the regional level, the EU has set high short-term ambitions related to Power-to-X, with policies to ensure 6-gigawatt (GW) electrolysis capacity in 2024. By 2030, the goal is 50 GW inside EU, plus a 40 GW capacity produced outside EU boundaries.

At the national level, Australia, Chile, UK, Germany, Norway, Portugal, and Denmark among others have developed detailed hydrogen and Power-to-X strategies. Several other countries are expected to unveil strategies soon.

Assess sites for renewable energy

Another key factor for site selection is access to renewable energy.

To produce green hydrogen, your electrolysis must use electricity supplied from renewable energy sources. Hence, you need to clarify if there is an existing supply or infrastructure to tap into, or if building a renewable energy supply is part of the project scope.

If you aim to pursue certification of green hydrogen, Power Purchase Agreements (PPA) within existing renewable energy supply might not be enough when the upcoming EU regulation takes effect. The precise requirements for EU certification are not yet issued, but projects will likely be required to achieve ‘additionality’ by expanding capacity, adding new installations for renewable generation to the grid, or count only a share of the hydrogen produced as renewable.

Looking at specific site options, the site logistics are also worth considering. To avoid expensive energy loss over long distances, electrolyser facilities should for example be close to both a power and water source. And if you plan to produce carbon containing e-fuels, you can add proximity to CO2 supply to the mix, to enable synthesis of electrofuels.

In short, site selection requires knowledge of market conditions on an international scale and a structured screening approach to ensure that you get an efficient selection process.

Avoid the pitfalls of permitting

The permitting process should not be underestimated.

In hydrogen and Power-to-X projects, the process is more complex because it involves new technologies – which means that the related regulation is also newly established. In some cases, permitting authorities are handling the permitting process for the first time and may not have a full understanding of the technologies involved. This somewhat changes the starting point of the process.

From start to completion, the permitting process may take as long as 2.5 years. To streamline the process and shorten the timeline, you need to be familiar with the regulatory landscapes and have experience with the potential pitfalls.

To give a project the best chance to move through the process without delays, it is important to start the dialogue with authorities as early as possible. By having authorities involved from the start, red flags can be identified early on. Although any change to a project will often involve financial pain, it’s much less painful to find alternative solutions (e.g., another site) earlier in the process if you discover that plan A is no longer an option.

The key to project progress

The planning phase of any project is about ensuring feasibility and managing risks. When investing in Power-to-X projects, early-stage planning is more complex, as the technologies and markets are still under development.

In my experience working with hydrogen and other Power-to-X projects, the first phases are key to ensuring smooth and timely progress. From market analysis, risk assessment and partnership formation to site selection and regulatory planning, project owners must ensure all criteria are considered from the start.