Each month we highlight a company we have researched and features on our Ethical Screening Portal, this month we look at ITM Power and the Renewable Energy - Hydrogen sector.
Sector: Renewable Energy - Hydrogen
Hydrogen is touted as a significant potential player in the renewable energy market of the future. The global hydrogen generation market was valued at $129.85m in 2021, with a compound annual growth of 6.4% forecast between 2022 and 2030. The industry faces a number of challenges, primarily the high cost of production as it is rarely available, as free hydrogen, in the natural world. Various methods are used in its production, each approach typically being given a colour descriptor which reflects the source of energy used. There are now a wide range of 'colours', the main methods are noted below:
- Blue hydrogen is produced mainly from natural gas, using steam reforming, which combines natural gas and heated water in the form of steam. This includes capturing some of the greenhouse gas emissions. Most commonly the CO2 produced is not captured (referred to as grey hydrogen)
- Black/brown hydrogen uses black coal or lignite (brown coal) in the hydrogen-making process, termed coal gasification. Oil is also still commonly used as the fuel source, the process being called partial oxidation.
- Green hydrogen is produced by electrolysis, splitting water into hydrogen and oxygen using renewable electricity in a climate neutral process. This is considerably less common than the above two methods.
Hydrogen generation is, therefore, not necessarily a clean energy source, but can be viewed as a form of energy storage. As hydrogen atoms are the smallest, seals on storage tanks and pipework must be perfect to avoid leakages, leading to challenges in transportation and storage in gas form. Therefore, liquid storage and transportation at temperatures of -258.8 °C are being suggested. The potential benefit is that much of the existing oil and gas infrastructure can be adapted for hydrogen. The high cost of production is the main factor behind the current low use of green hydrogen, totalling roughly 5% of global production. The hydrogen market is expected to grow, with some forecasts of the cost of hydrogen production falling from $6/kg in 2015 to around $2/kg by 2025.
ITM Power - Company Overview
ITM Power plc is an energy storage and clean fuel company founded in the UK in 2001. It designs, manufactures, and integrates electrolysers based on proton exchange membrane technology to produce green hydrogen using excess renewable electricity and tap water. The company works with various strategic partners, including Linde, Shell, Snam, Hyundai, and Honda. It also actively participates in industry bodies that champion sustainable power and guide policy, as well as working with schools and universities to help inspire the next generation about green hydrogen.
Green Hydrogen
ITM Power states that its mission is to help the world reach net zero through the power of green hydrogen. Its electrolysers use renewable energy and water to produce green, clean hydrogen that can be released into the gas grid, used as a clean vehicle fuel or in a host of industrial processes, with oxygen as the only by-product.
- At the start of 2021, the company moved into a 1GW per annum gigafactory in Sheffield and announced the sale of the world's largest Proton Exchange Membrane (PEM) electrolyser plant to Linde.
- The company operates a joint venture with Linde, emphasising scaling green hydrogen solutions at an industrial level. The company's ethos is to reduce the commercial cost of its electrolysers over the next three years, which will facilitate the widespread adoption of green hydrogen. Currently, high cost is cited as the primary impendent of the adoption of green hydrogen in the renewable energy market.
- Motive, ITM's joint venture with Vitol, operates seven hydrogen refuelling stations, four of which are currently open to public use and three additional ones under construction, which provides zero emissions fuel for mass transit systems.
- ITM has been awarded the Green Economy Mark for those companies and funds which derive 50% or more of their revenues from environmental solutions.
- In 2022, the company was part of the REFHYNE II consortium, which included Royal Dutch Shell, Linde, ITM Linde Electrolysis, Tecnalia, Element Energy and Concawe) that was awarded a grant from the European Climate, Infrastructure and Environment Executive Agency for developing a 100 MW electrolyser.
Green Hydrogen and the Implications for Investors
Historical methods of generating electricity and heat by burning fossil fuels significantly contribute to global emissions. Most electricity is still generated by burning coal, oil, or gas, which produces carbon dioxide and nitrous oxide. To avert the worst impacts of climate change and preserve a liveable planet, global temperature increase needs to be limited to 1.5°C above pre-industrial levels. To achieve this, emissions must be reduced by 45% by 2030 and reach net zero by 2050. Traditional approaches to renewable energy have focused on wind, solar and other renewable sources, which, as opposed to fossil fuels, emit little to no greenhouse gases or pollutants into the air.
Yet renewable energy is not without its particular problems, for example, being often reliant on weather and therefore unavailable consistently around the clock, or when short-term demand rises. Projects designed for remote regions, or where the infrastructure to transfer and store the energy is lacking, add to projects' high capital costs. Green hydrogen offers an alternative as it represents a form of energy transfer, acting as a gaseous/liquid battery. The additional benefit of green hydrogen is that whilst adapting existing natural gas infrastructure would be potentially costly, it has been estimated to be significantly less than building an entirely new hydrogen distribution network. Hydrogen can be blended into existing natural gas pipelines and used to produce green ammonia, the main constituent of fertiliser production. It is suggested by hydrogen industry bodies that green ammonia will be cost-competitive with ammonia produced conventionally (grey ammonia) by 2030.
ITM Power is helping drive products and services that improve the availability of green hydrogen in the marketplace. Its affiliations with industry partners to develop the technology and infrastructure to make green hydrogen a practical reality on a large scale could significantly contribute to decarbonising economic production.
ITM Power is a company that features on our Ethical Screening Portal. To find out more about this company, or our services please contact info@ethicalscreening.com
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