Interview with Dr. Sopna Sury, COO Hydrogen at RWE Generation

SURY The crisis has shown that a country like Germany can change quickly if the goals are clear and the setting is right. Due to the need to become independent of Russian gas as quickly as possible, the country's infrastructure projects were implemented in record time. If we can approach the conversion of the industrial sector to green energy sources with the same determination, I'm confident about the future of the energy transition. After all, increasing the security of supply for green energy also means increasing climate protection. By investing in renewables and hydrogen, we can make ourselves less dependent on imports and help to combat climate change. Technologically speaking, German companies are among the global leaders in hydrogen. To get the first major hydrogen projects off the ground, we now need rapid funding commitments and a regulatory framework that unleashes our companies instead of shackling them.

SURY The approval procedures need to be faster. When weighing decisions concerning various protected interests, hydrogen projects – just like renewables – should be given priority in approval procedures because they are in the public interest. In addition, the funding instruments need simple application procedures and fast funding decisions, otherwise schedules will slip. A lot is already happening in terms of partnerships. For example, just as green power producers, electrolysis and storage operators, pipeline network operators and potential customers have come together under the umbrella of "GET H2", companies are now also coordinating their roles as part of the "H₂ercules" infrastructure initiative. The hydrogen ramp-up thrives on collaboration across all stages of the value chain.

SURY Incentives and adequate CAPEX support are needed to launch the hydrogen era. This is because the required plants and equipment are being procured long before mass production has a chance to significantly lower the manufacturing costs. Industrial users are also reliant on funding instruments – they need to compensate for the additional costs of CO2 reduction linked to the use of hydrogen as compared to conventional processes.

SURY CO2 pricing is rapidly making gray hydrogen more expensive with the result that it's now losing its edge over cleaner variants. Five euros per kilogram for green hydrogen is considered a realistic assumption for 2030 according to current studies. Significant economies of scale can be expected in terms of the price of electrolyzers. In addition, the price of green hydrogen is linked to green electricity, which is becoming cheaper as the use of renewables is expanded. Various projects being planned by other market participants, which are scheduled to start in 2025, are based on an assumed price of three euros per kilo for blue hydrogen. This suggests that green hydrogen will quickly gain competitiveness over blue hydrogen.

SURY RWE is taking a two-pronged approach to hydrogen: We are building electrolyzers wherever the funding and regulatory requirements are met – in locations where we can identify high sales potential at an early juncture. This includes, for example, northwestern Europe and increasingly also the USA, where we play an important role in the area of renewables. And since Germany will be dependent on imports of hydrogen and its derivatives in the long-term, we are developing import partnerships with producers in sun- and wind-rich countries. Our focus is on green molecules. However, given that Germany needs large quantities quickly, we will also import blue molecules. We also expect to see a growing number of hybrid tenders, whereby, for example, offshore wind farms and hydrogen generation are put out to tender "as a package". We aim to contribute our own strengths in a targeted manner within the scope of these tenders.

SURY The necessary technologies for the hydrogen economy are ready. The efficiency of PEM and pressure-alkali electrolysis for the production of hydrogen can still be improved by several percentage points. High-temperature electrolysis has even more potential for improvement. However, the biggest impact will come from scaling these technologies up into the gigawatt range. Once stacks are manufactured in large quantities, electrolyzer prices will drop as rapidly as we've seen in wind and photovoltaics over the last decade.

SURY If the goal is to reduce CO2 emissions to zero, then green hydrogen is the only alternative wherever the respective processes cannot be electrified. The switch to hydrogen must be initiated before the end of this decade. Due to the reform of the EU emissions trading system, the CO2 price is rising faster than expected. This and the increasingly stringent requirements for emissions reduction in upstream value chains (SCOPE 3) are creating incentives for automotive manufacturers, for example, to select suppliers with climate-neutral production processes. Companies that get on board with this early on will secure attractive additional revenues. In the Delegated Act on the RED II Renewable Energy Directive, the EU has clarified which electricity sources may be used to produce green hydrogen. It's likely that green hydrogen will quickly become scarce because the necessary renewable energy plants will not be built fast enough. With hydrogen imports still a long way off, domestic hydrogen production is the best option for industry for the time being. Energy-intensive companies should therefore look for domestic hydrogen suppliers ahead of time.