H2 stands for Hydrogen Hyped. So we think with an eye on the hard law of thermodynamics, which means that turning power into H2 and then H2 into power (to, say, propel trucks) is akin to wasting 80% of the energy. It makes (hardly any) sense only if the initial power is free at the margin which is the case of green power. Sad then that there is not enough of it to afford to lose it and that it commands current spectacular prices because of that very scarcity.
Enter the French government and its €30bn cheque to be spent on technologies that will help drive quality growth over the next nine years. €8bn appears to be committed to green energies including hydrogen, with, and this is the news, plenty of predictable power coming from nuclear power plants, old and new. Grünen can choke on the news but it makes sense.
It is a politically risky but timely move. Power is too expensive because there is no way green power will replace the fossil-originating one within an acceptable time span, i.e. before the thermometer shoots up another 3 degrees Celsius. Easy money the world over and economies taking off at the same time as a result made the point: cheap power is fossil. Try restrictions or trebled prices and the crowds take to the streets. Even a command economy such as China backtracked on its plans to give a greening up lesson to the West as it cannot deliver crowds appeasing GDP growth without coal.
Nuke power is comparably cheap, of course decarbonated, not tying up much space and optimal as a base line. It is conventional to use nuclear power to fill up hydro reservoirs at night. Switching on an electrolyser is essentially the same: a vast loss of efficiency but better than no use.
The issue is whether this will still be acceptable in 10-years time when new nuke capacity is at last available. Another one is that it ties up considerable upfront capital, thus confirms the de facto monopoly positions of the handful of nuke power providers. The temptation to rig the competitive game is huge as already happens with EDF. Then there is the minute issue of neighbouring public opinions.
Belgium, Italy, and Germany have been hard at work closing down local nuke assets. In a harmonised European energy market, it may not go down too well to have French brand new nuke plants on her side of the Ardennes border or next to the Rhine River. And if one country is alone in generating low-cost nuke power, how much of this is too be shared with reluctant neighbours.
The economics of H2 are unproven, may hardly begin to have a solution but open a way more complex political agenda if the economics of it are really nuke economics. Fascinating indeed.
For now, the plays are EDF and Fortum while the jury is out as to whether the RWE and E.ON really need to close down their last few nuke plants by 2022.
On the H2 industry side, the sudden share prices of McPhy, ITM, Nel and Ceres spoke for the renewed hopes of the H2 players.
On October 7th, our Hydrogen research team held a presentation entitled “Green H2: Hype for now”
You can download the presentation and view the replay on www.alphavalue.com.
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