With Government Support Hydrogen Prices Becoming More Competitive

2020 has been a cracking year for renewables.

Last year renewable energy took over as the largest source of electricity in the European Union with a 38% share, higher than the 37% from fossil fuels.

When you look at the energy sector, things are changing fast…much faster than I ever thought possible.

Closer to home, the Clean Energy Regulator (CER) is estimating there was 7GW of new renewable capacity installed in Australia, a record above the 6.3GW installed in 2019.

Much of that came from rooftop solar installations, which grew by a whopping 39% year-on-year in Australia, according to SunWiz, setting a 3,000MW record in installations, the largest ever.

And rooftop installations are very much set to keep growing around Australia.

Three Ways to Invest in the Renewable Energy Boom

CER forecasts investment in rooftop solar will stay strong over the next four years, with an average 3.2GW added each year. As they said:

If realised, this investment would effectively double rooftop solar capacity, to 26 GW, by the end of 2024 and dramatically change the energy landscape in Australia.

But solar installations aren’t the only thing that’s picked up pace in the last year.

Here is Renew Economy:

The number of battery storage and hydrogen electrolyser projects in Australia soared in 2020, with the capacity pipeline now rivalling that of solar PV and wind energy as developers bet on a rapid transition to a renewables-dominated grid.

New data released by the energy consultants Rystad Energy shows that 19.2GW of battery storage and hydrogen electrolysers (which can also offer storage capabilities) were added to the project pipeline in Australia last year.

This number beats utility scale solar, which added 17.5GW of new projects, and came in just behind wind energy (21GW). In total, there is a pipeline of 225GW or renewable and storage projects jockeying for a position on the grid.

Hydrogen gas is very common. It doesn’t weigh much, it’s flammable but doesn’t produce any greenhouse gases when it burns.

Now, not all hydrogen is created equal.

There’s grey, the most common one, created from fossil fuels. In fact, global hydrogen production produces as many emissions as both the UK and Indonesia put together.

Then there is blue, which includes some form of fossil fuel and carbon capture to prevent emissions from going into the air.

But the one that’s getting all the attention is green hydrogen, which is produced through electrolysis using renewable energy. The Hydrogen price is becoming more competitive as renewable energy goes cheaper. But hydrogen is attractive because when renewables produce too much energy, hydrogen can store that cheap excess energy.

It’s an international competition. Countries like Canada, Chile, Norway, Japan, and Germany among others are looking at hydrogen to decarbonise sectors.

The International Renewable Energy, which keeps a tab on hydrogen, so far has 450 global hydrogen projects, and climbing.

Here in Australia, the government is looking at ‘fast-tracking’ projects in renewable hydrogen with an eye to get the price at a low $2 a kilo to increase competitiveness. The government estimates the hydrogen industry could be an $11 billion a year industry in 2050.

Energy Minister Angus Taylor recently said:

Getting costs down will be key to establishing Australia as a world leader in the hydrogen sector through both domestic uses, such as blending hydrogen into local gas networks and heavy-vehicle transport use, to exporting Australian-made hydrogen to our key trading partners, like Japan and Korea.

The future is looking bright for hydrogen and more are jumping in.

Fortescue Metals Group Ltd [ASX:FMG], one of the largest iron ore producers, is looking to become a massive player here through their subsidiary, Fortescue Future Industries (FFI). They’ve just named ex-prime minister Malcolm Turnbull as head of FFI.

And, with high iron ore prices boosting profits Fortescue is looking to invest some of those into renewables. They’ve promised to send 10% of their yearly profits into FFI, which could translate into $1 billion per year, and are planning to build 1,000GW in renewable capacity to supply green energy and hydrogen from projects around the world.

Recently, gold and copper miner Province Resources Ltd [ASX:PRL] has also expanded into green energy. The company signed an agreement to get shares in Ozexco that has seven exploration licences in the Gascoyne region in Western Australia, prospective for salt, potash, and mineral sands, and they hold the site for HyEnergy Project, a green hydrogen project.

Shares spiked a whopping 600% to 14 cents.

There’s a lot of excitement on the future of hydrogen. And we’ll have plenty of opportunities in this unstoppable global race to net zero.

Best,

Selva Freigedo,
For Money Morning

P.S: Energy expert Selva Freigedo reveals three ways you can capitalise on the $95 trillion renewable energy boom. Download your free report now.


Selva Freigedo is an analyst at Money Morning. She has a background in financial economics, but what makes Selva´s experiences different to many are the places she has lived and worked. Born in Argentina, she has also lived in Brazil, the US, Spain, and now Australia. She has seen up close many of the economic phenomena that worry Fat Tail Investment Research readers, like hyperinflation, bank bail-ins and governments burdened with so much debt it cannot possibly be repaid.

Every week, she goes through each article, research note and recommendation produced by our experts around the world to give you information on how to build and protect your wealth. Selva packages the week’s best ideas into one easy to read report: Port Phillip Insider Extra.


Money Morning Australia