Clean hydrogen: Top three trends

In this episode, Jon explores the leading trends in the clean hydrogen. With growing attention on this emerging area, Jon is joined by LCP Delta experts Nerea Martinez Hipolito and Brendan Murphy, who share their views on the leading trends and what we'll see in the next few years.

Episode transcript

[00:00:00] – Jon Slowe

Welcome to Talking New Energy, a podcast from LCP Delta - the new energy experts. In the podcast, we'll be exploring how the energy transition is unfolding across Europe through conversations with guests from the leading edge of the transition.

Hello and welcome to the episode. Today we're looking at the world of clean hydrogen. Now, some things in the energy transition generate a lot of debate, a lot of passion, and even a lot of emotion. And one of those is the extent of the role that clean hydrogen will have in the energy transition. What we're going to do today is look at how hydrogen is emerging as playing a role in the energy transition. We'll steer away a bit from the extremes of the debate and bring to life some of the key trends we're seeing in the hydrogen market at the moment. Because undoubtedly hydrogen will have a role and an important role to play in the transition as we go forward. To do this, I'm joined by a couple of colleagues from LCP Delta. Nerea Martinez Hipolito. Hi, Nerea.

 

[00:01:16] – Nerea Martinez Hipolito

Hi, John, nice to be here.

 

[00:01:18] – Jon Slowe

Thanks for joining. And Brendan Murphy. Hi, Brendan.

 

[00:01:21] – Brendan Murphy

Hi, Jon. Good to be here.

 

[00:01:25] – Jon Slowe

So, I thought a nice way to structure the conversation would be to pull out the three main trends that you're seeing through the work you're doing with the energy sector on clean hydrogen. What are the top three trends that you'd identify as clean hydrogen starts to emerge? So, let's dive in there. Brendan, do you want to get us started with what the three trends are and then we'll take them one by one?

 

[00:01:57] – Brendan Murphy

Sure. Thanks, Jon. I mean, in a way, it feels like we've been talking about hydrogen as a serious solution in the energy transition for quite a few years now. And for a couple of those years, we've said this is a really important year for hydrogen, but it really does feel like this year is one of those years.

 

[00:02:17] – Jon Slowe

Is that a bit like Groundhog Day? Is it saying that you're on year because the cans being kicked down the road? Or is every year just seeing new developments, new milestones, new important steps forward?

 

[00:02:30] – Brendan Murphy

No, I think there were a few regions in the world of call them hotspots where hydrogen started to gain traction in the political world, started to get some attention from some sort of champions. We had one in the UK, Kwasi Kwarteng really pushed it up the agenda. But this year we've seen really big movements in the EU, we've seen the IRA Act in the US. We've seen other countries really going heavy on hydrogen, and some of the developing countries seeing the societal and economic transformative effect that hydrogen could have with them. So, I think that's where we are right now.

 

[00:03:11] – Jon Slowe

Okay, so not Groundhog Day as in things have been delayed. Groundhog Day as in every year there are big steps forward and we're seeing the flywheel starting to turn, the momentum starting to gather.

 

[00:03:25] – Brendan Murphy

Well, I think you're starting to see that intersection between the realisation that the need to bring down carbon emissions and to reduce our reliance on old energy and the need to find new energy to replace that. And if you think about the 2050 date, that is the globally accepted sort of cut off point for one and a half, two degrees maximum change, that only gives us 27 years to find solutions. And for hydrogen, it's still a very new technology. There are still lots of problems to solve there. If you think about how long it took for the gas market, the natural gas market, to evolve and become the global market that it is, hydrogen has a third of that time, and it's still got lots of questions. Around some of those really simple and not simple but.

 

[00:04:17] – Jon Slowe

Somewhat some of the mental.

 

[00:04:21] – Brendan Murphy

Establish some of the really baseline things to enable it to become what it could be.

 

[00:04:25] – Jon Slowe

Yeah, okay, so anyway, I've distracted you from your three trends.

 

[00:04:31] – Brendan Murphy

So, the one, two, three really is we're seeing a huge ramp up in the pipeline, project pipeline of green hydrogen projects because of all the reasons we've just discussed there about the uncertainty around some of the key parts for hydrogen to be a major factor, the final investment decisions have been delayed quite often. Repeatedly the venture capitalists have seen the potential that hydrogen has, but your sort of standard project finance, lenders and banks for now are still staying away from projects, but we expect that to change next year.

 

[00:05:08] – Jon Slowe

Okay, so growing pipeline, but some of that pipeline is struggling to get over that final investment decision line at the moment.

 

[00:05:15] – Brendan Murphy

Yeah, that's right.

Secondly, as sort of alluded to in the opening remarks, it's a global race, it's a very common element. It's got many applications across the global economy. And what we're seeing in the market is a race to either basically competing over IP or volumes. So, countries, you could roughly group these as importers and exporters. So, the exporters are looking to win the race over volume and importers are looking to win the race through IP and through quickly transitioning their domestic economies to hydrogen where they can maintain global competitiveness.

 

[00:06:07] – Jon Slowe

Okay, I've got a question that will save from hacking it not for now, but just around the degree to which it will be an import export market and the degree to which hydrogen will be generated locally and used locally within a country. But let's come back to that when we look at that second point about that global race.

 

[00:06:29] – Brendan Murphy

Third point then really is I suppose naturally the focus to begin with was around production, how to enable the production of the fuel. I think that's been ticked off and covered quite well in those hydrogen hotspots and other places. And I think now the focus is moving to how to risk offtakers and actually the application of the fuel.

 

[00:06:57] – Jon Slowe

Who will use it for what.

 

[00:06:58] – Brendan Murphy

Exactly and how it will get there. So, the supporting infrastructure, how do we pipe it there, how do we ship it there, how much do we need to store and how much can we rely on? Old models like the gas model sort of have a liquid and deep commodity, globally traded commodity.

 

[00:07:17] – Jon Slowe

Yeah. Okay, so to summarise the three points, a growing pipeline of green hydrogen projects, but getting a little bit stuck to get over the line in some cases. Secondly, a global race to develop hydrogen, both from the exporter perspective and the importer perspective, around volumes and around IP. Thirdly, focus on production is of in train ticked off to some degree, but the focus now is very much on offtake applications. Where will the demand be? Who use the hydrogen first and for what?

 

[00:07:57] – Brendan Murphy

I suppose one final point which encapsulates it all really, is that hydrogen as a technology, hydrogen production, hydrogen use is not new. It's just new in a net zero framework. So that's the key challenge really, is trying to fit that existing IP into a different policy framework to achieve a different outcome.

 

[00:08:21] – Jon Slowe

Yes, hydrogen is used extensively in refineries around the world and so that has been going on for decades. Most of that is just not clean hydrogen. Okay, well, let's look at each point in turn. So, hydrogen pipeline. Nerea, can you give us a feel for what that pipeline looks like, either on a country basis or European basis? Help our listeners understand how much is in the pipeline or how much you're at different stages of the pipeline?

 

[00:09:03] – Nerea Martinez Hipolito

Yeah, sure. So, within the Hydrogen Research Service, we track green hydrogen projects across Europe. And what we're seeing on high base is that the pipeline is growing by 100 times over the next five years. So, in 2022, we reached around 200 installed capacity across Europe for electrolysers. But that pipeline is sitting currently around 24 gigawatts for 2027. So that's a really big ramp up and a big challenge. But what we're seeing by tracking that data is that a lot of the projects in the short term are actually being pushed back. So already for this year, we're expecting over two gigawatts to be installed. We've seen that now expectation drop to around 1.5 gigawatts, and that's already halfway through the year. Just because a lot of these projects are struggling to get final investment decision, they're relying on public support schemes which are still being drafted. The regulations and the standards for hydrogen are still being discussed and debated. So, all of these factors are bringing a lot of uncertainty and making that pipeline get pushed back. And there's a target across Europe for 2024 that's around six gigawatts of capacity. And as we see it at the moment, we're going to miss that target despite the very ambitious pipeline that there is building up.

 

[00:10:26] – Jon Slowe

Yeah, okay. I think those are fascinating numbers. 200 MW in 2022. 200 MW, that's a big number in some ways. But in terms of the European energy sector, it's a dot on the landscape, isn't it?

 

[00:10:40] – Nerea Martinez Hipolito

It is, and it's really impressive also when you look at the scale of individual projects. So, looking at last year, your average electrolyser was around 4 MW, with 220 megawatts being deployed by Iberdrola and Everfuel. Those are the largest across Europe. But when we look five years out, your average project is around 350 MW. Each project, that really brings down to ground the learnings that have to go ahead to enable that scale up. And that's what's going to help draw down the cost and scale up the market.

 

[00:11:15] – Jon Slowe

And how much that's due to the electrolyser supply chain, because most of this pipeline, am I right in understanding it would be green hydrogen from electrolysers rather than other sources of clean or cleaner hydrogen?

 

[00:11:33] – Nerea Martinez Hipolito

Correct, yeah. It comes down to the regulatory environment that the support schemes, the certainty, the offtakers that Brendan was discussing. So, in the hydrogen economy, you can't develop large production projects without knowing who your offtaker is going to be or what infrastructure is going to be available. So, it's kind of that ever-quoted chicken and egg dilemma, right? The investment on production, it's dependent on the other factors of the project. And not so much kind of the supply chain for electrolysers is more that the manufacturers need firm orders in order to also scale up. So that we've seen a few of the electrolyser manufacturers wanting to build out larger manufacturing plants, but these decisions are also underpinned by their orders not being confirmed. So, it's kind of everyone has to take a step at the same time, otherwise it just doesn't work.

 

[00:12:32] – Jon Slowe

And what do you both think about that? It feels like it's a mixture of confidence, standards, firm offtake needed in terms of who's going to buy the hydrogen, bringing that all together to move the pipeline forward. How quickly is that going to happen? How much of that 24 gigawatts do you think in 2027 will be in place, or do you think actually to get all that in place? To see 24 gigawatts in 2027 is going to be really tough because there's still so many bits of the jigsaw to come together to push projects over the line.

 

[00:13:13] – Brendan Murphy

So, I suppose one of the interesting challenges for hydrogen is it's so applicable in so many parts of the economy, which means it's replacing so many other types of energy sources, each with their own price and their own characteristics and their own kit. Which means that each sector of the economy and each set of companies operating in that space require slightly different business model or have different procurement strategies and have different risk profiles and have different risks associated with their sectors. So, the greatest challenge for policymakers, really, is trying not to create a planned economy, a controlled outcome, if you like, and allow the market to decide what the most efficient, cost-effective route to market is for hydrogen, for so many different types and so many different parts of the economy. So, the answer to your question is no one could really be sure. I sometimes compare it to if you like technological innovation. So, if you think about the mobile phone or another sort of consumer product and different manufacturers producing the same thing, and everyone at the start is just learning how the thing works and how the technology works. And then over the course of time, we learn, and we make learnings, and we realise which innovations work, both from a technical point, technological point of view, but also from a business model point of view and from a procurement point of view. And then if those are discovered quickly enough, then you can unlock the potential much more quickly. But it's a very complicated picture.

 

[00:15:18] – Jon Slowe

Yeah. And ultimately, I think the money flowing into that 24 gigawatts of pipeline, the investors, the people providing the finance need to be comfortable with the risks and sounds like this quite a lot more need to be done with that.

 

[00:15:34] – Nerea Martinez Hipolito

Yeah. And I wanted to just add there, Jon, that pipeline keeps growing. So that number is what we're seeing today. But announcements keep spurring. It's a dynamic market and ambition is definitely stepping up. We're seeing it over this year. When Europe launched repower EU, a lot of countries doubled their ambitions for electrolytes over the next decade. So, this is what we're seeing today. But the ambition is definitely there, is getting the investment in the short term to unlock those and start learning from projects that are on the ground.

 

[00:16:10] – Jon Slowe

So, keeping your database HYbase up-to-date Nerera, is now quite a challenge then?

 

[00:16:15] – Nerea Martinez Hipolito

It is definitely expanding very quickly.

 

[00:16:21] – Jon Slowe

Okay, let's move on to the second point, which was the global race for hydrogen. Looking at that, both from exporters and importers, who's going to unpack that a bit more?

 

[00:16:36] – Nerea Martinez Hipolito

I can start on that. I mean, Brendan alluded to it in the introduction, but I think the market has been really underpinned in Europe by the announcement of the US IRA at the end of last summer.

 

[00:16:51] – Jon Slowe

IRA for listeners that don't know it.

 

[00:16:53] – Nerea Martinez Hipolito

Yeah. So basically, on the hydrogen front, the US was offering up to $3 per kilogramme subsidy tax incentive for clean hydrogen, depending on the carbon intensity of the hydrogen, essentially. But the market responded to this, saying, this is a very simple and well understood tool, whereas in Europe there's been a lot of debate of how to best support clean hydrogen, what clean hydrogen should be subsidised. So, it has brought a new note across the globe of the need for a simple support mechanism that allows to speed up the market. And we're seeing kind of responses to this across Europe. So, with the European Hydrogen Bank offering 3 billion investment towards hydrogen, but we're also seeing collaboration. So earlier this week, the President of EU Commission, Ursula von der Leyen and she's been across Latin America, announcement and announcing new deals for green hydrogen investment with Chile, with Brazil, just really emphasising the importance of that collaboration across Europe and export markets across the world. It's not a task that one single market can do on its own, but every market is trying to position itself to be able to collaborate and export into this new global market that's emerging.

 

[00:18:23] – Jon Slowe

I'm trying to get an image in my head of is it a race between the US and Europe, for example? Is a race a wrong analogy in that it's actually the US and Europe can support each other and build global confidence. Is there a fixed amount of money and focus that's going to go either more to the US or Europe at the moment? How much is either or how much is the and in the next years?

 

[00:18:52] – Brendan Murphy

Well… (excuse me). So, on the investment question, I suppose quite often it gets characterised as a race, which implies that there's a winner and a loser. In reality, really, what happens is perhaps one area or one region wins a bit more because ultimately everybody will win out of this process if we're successful. So, for now, what we were talking about there with the Inflation Reduction Act is that it's more simply understood because it's a tax credit. It doesn't have any sort of complicated policy framework like a CFD contract for difference type arrangement. It's more easy industry. So, for now, there is a slightly more attractive look to the US. But in reality, the EU and the UK and other places will always be investable. It's a reliable place to put your capital, and I suppose it depends on which race you're in. So, if you're sitting in places like Namibia and South Africa and Mozambique and Chile, the potential for hydrogen is transformative. It could have the same impact that the discovery of oil and gas did in the Middle East, for example. If you take Namibia, if they realise their hydrogen ambitions, it will more than double the country's GDP. I can't remember the time frames, not a very long-time frame. And that could have enormous benefits, much wider than the net zero and climate benefits that we're thinking about primarily in Europe.

 

[00:20:56] – Jon Slowe

Yeah, okay. Yeah. There's probably a lot more we could go into on the different I think I like the way you described it, Brennan, of the different races. And it's not a matter of someone winning and losing, it's winning more. And I think what I'm hearing from you both is that the US is doing a good job of winning more in these early stages, but ultimately there's a huge amount of effort going on. Lots of countries to develop the exports, to develop applications in the import markets and so on.

 

[00:21:33] – Nerea Martinez Hipolito

Yeah. And I want to stress that Europe is still kind of really at the forefront of this. I think that the US just kind of shocked the world with this announcement. But that's why it's so important that we really get kicked off on those early projects, because that's what's going to be the competitive advantage learning by doing.

 

[00:21:54] – Jon Slowe

Okay, third point was looking at beyond producing hydrogen naturally, everyone well, the analogy maybe with renewable electricity is this huge focus on producing renewable electricity. Everyone knows where renewable electricity will go. It will go displace, dirty electricity, going to the grid, no shortage of applications and use and electrification of heat and transport. Hydrogen is different. We don't have a hydrogen grid sitting, waiting and ready. So, where that hydrogen is going to be used becomes much more critical. And there's not widespread applications for hydrogen across different parts of the economy yet. Brendan, talk us through a bit about the offtake for hydrogen. Lots of focus on producing it but talk us through some of the trends you're seeing, some of the discussion in the market, the industry questions about what happens once it's produced.

 

[00:22:57] – Brendan Murphy

Sure… (excuse me). Well, I suppose it's easiest to really describe the challenges you just laid out by using real life examples from conversations that we've been having with players in the market and clients. Most recently, we were working on a project in the UK with the power producers, the gas turbine operators in this country who currently burn natural gas to produce power. Very important part of the power system to provide that flexible generation. In this country, in the UK, we have a target to decarbonise that sector by 2035, which is really just around the corner.

 

[00:23:50] – Jon Slowe

No time at all, yeah.

 

[00:23:58] – Brendan Murphy

Yeah, no time at all. And so, they need to find an alternative fuel. And hydrogen, green hydrogen...

 

[00:24:00] – Jon Slowe

Alternative fuel, particularly for that flexible generation because we'll have more and more renewables. But that role for that flexible generation definitely won't go away and may increase.

 

[00:24:12] – Brendan Murphy

Exactly. And there's an expectation, which is probably correctly founded expectation, that large parts of the economy will be electrified and the demand for power will grow. Enormously parts of that power will be provided by renewable energy, but by its very nature, that is intermittent. So, we will need some type of flexible generation. And the best shot we have right now is green hydrogen in CCHTs (Combined Cycle Hydrogen Turbines). Now, that's fine on paper, but in reality, as you alluded to, how do you get the stuff? The single biggest risk that we've been factoring into our modelling is around fuel availability and how you mitigate that risk. And there are some real challenges there, not only because of the physical connectedness problem that you're talking about, but also that other parts of the economy may also be demanding that hydrogen at points when you really need to produce the power. So, it starts to bring out some really difficult and challenging questions around how to secure your supply of power. How do you strike the balance between providing enough hydrogen for other parts of the economy whilst keeping the power on? Yeah, those are some of the really challenging questions that we face at the moment with, if you like, in modelling speak, the fixed input being your policy deadlines, 2050 being the ultimate one.

 

[00:25:51] – Jon Slowe

And another quite contrasting application of hydrogen could be hydrogen in trucks. So, what you described, Brendan, is quite a smallish number of power plants using hydrogen, using quite large amounts of hydrogen. Nerea, you've been looking at the market trucks and that's much more distributed application for hydrogen. So, give us a picture of where that's at is that something you see growing a lot across Europe, that hydrogen will be used in heavy goods vehicles?

 

[00:26:27] – Nerea Martinez Hipolito

Yeah, it is something we have looked at recently and kind of looked at it from a lens of in order to have a market for hydrogen trucks, you really need three things to be there. So, first of all, the products need to be available. And we've seen from the manufacturers that these hydrogen trucks are being developed and brought into commercial operations, mostly behind their kind of like, electric models. But we are seeing from kind of the mid of the big ramp up in that production, so that's going to be there. But we also need to think about the infrastructure and the total cost of ownership and infrastructure across Europe is also quite missing. So, we've seen also good steps in terms of the regulations supporting that. And the forecast for the total cost of ownership could bring cost parity with diesel trucks at the end of the decade. So, we see the market really ramping up from around 100 heavy trucks with hydrogen today, all the way up to around 32,000 by the end of the decade. So, a big ramp up. There also an important application.

 

[00:27:34] – Jon Slowe

Okay. And I guess listening to you both talk about this, two different applications, it brings home the number of things that need to be joined together. Not only the production, the distribution, storage that you might need for those hydrogen turbines, Brendan, and then making sure that the trucks are available, the turbines are able to run on hydrogen, and the economics of that are compelling enough to attract investment. So huge amount of things to join together.

 

[00:28:06] – Brendan Murphy

Yes. In a very short space of time.

 

[00:28:08] – Jon Slowe

Yeah.

 

[00:28:10] – Brendan Murphy

If we have time, perhaps we could just think of another recent example and conversation that I had with a major airport that is looking at their own decarbonisation plan. And that in itself is a major challenge, because that is a multi-energy, if you like, a multi energy dilemma in question, you start to think about questions like, should we run the airport as a private wire arrangement? And off the grid, can we produce enough of our own power? How much hydrogen can we store on-site? And if you start to think about that question. How much hydrogen do we need to store on-site, for example, for sustainable aviation fuel for the jets? You need to start looking quite far afield at what's happening in the policy landscape in other countries to get a sense of, well, how many jets are likely to land here requiring fuel, requiring hydrogen. That makes the investment question and the final decision quite difficult to make. So, you need to almost break these decisions down into manageable stages, in shades of certainty, if you like, and try to spread your risk by not putting all of your eggs into one basket.

 

[00:29:36] – Jon Slowe

Yeah, and I guess it makes the simplicity of what the US have done with the inflation reduction act of giving quite a generous, simple subsidy and using that as a way to kick start the market rather than trying to solve every problem. And there's so many problems, both of you, just problems, challenges, opportunities, if I'm thinking glass half full, but there's so many things to get lined up. Okay, let's bring out the talking energy, talking new energy crystal ball. And I'm going to set the dial, I'm going to set it really short in a short time frame this week because I think with hydrogen it's easier to think long term, but harder to predict the next years. So, let's set it to 2027, just three years away. Use that sense of urgency, Brendan, that you talked about. And I'll ask you each for one, two, if you got two, you really want to share two trends that we'll be seeing in the market in 2027. So, we've gone through the three things you're seeing at the moment. What's your top one? Maybe two trends in 2027. Nerea, let's start with you.

 

[00:30:58] – Nerea Martinez Hipolito

Okay, thank you. Jon. Think in 2027, first problem we were addressing regarding the investment pipeline and kind of the modularity of projects, I think we'll see a gigawatt scale market already across Europe where we see the size of projects reaching the hundreds of megawatts already. We will have understood really well from the first projects deployed, kind of the investment proposition. I think the risk of investment from that side will be minimised and we will be focusing on further on kind of the infrastructure part of the puzzle and understanding kind of not only the first offtakers but we will start thinking about further markets where hydrogen clean. Hydrogen can play a role in decarbonising, such as the power sector, the marine industries, aviation industries and so on.

 

[00:31:50] – Jon Slowe

Okay, so we'll have unblocked that pipeline not blocked that's too strong, and the focus would have moved on from the first offtakers onto other areas. Okay, and have you got a second or is that sum up your view?

 

[00:32:12] – Nerea Martinez Hipolito

I think if we're thinking about the second trend we're talking about, about that global race, I think we see the h two global mechanisms which aim to bring imports of hydrogen derivatives start really bringing those imports in 2025. So, I think by 2027 we'll have a good indication already of which markets are best positioned to be exporters and potentially start to see which kind of hotspots are the preferred countries to bring hydrogen into Europe. Potentially, see some consolidation there or start to kind of think of kind of coalitions between those countries. Potentially, maybe the beginning of start to see which markets will proliferate and which ones are kind of fall down the race, potentially.

 

[00:32:59] – Jon Slowe

Yeah. Okay, so move from what you described with Namibia as an example, Brendan, that being study a huge opportunity to that actually starting to move forward and exports starting to flow, or a lot more clarity on where those exports will flow from.

 

[00:33:18] – Nerea Martinez Hipolito

Yeah. Sorry, Brendan. Potentially, I think also kind of an opportunity for these markets to set some standards on pricing. If they have kind of that power over the markets importing, I think that we could still see the beginning of that.

 

[00:33:37] – Brendan Murphy

Okay, yeah, that's similar to what I was about to say, which is I think that you start to see, for example, as narratives, we'll start to see imports coming in around that point, mainly from the Middle East, from the Neon project, and if you like, that starts to create the price benchmarking. So, you mentioned the Namibia project. I had a conversation last year in investor conference with the project developer for the Hyphen project in Namibia, and the single biggest risk for them, or issue for them to resolve was price setting. How do you set the price for the fuel? So, I think we'll start to see benchmarking pricing mechanisms, perhaps not things like clearing houses, but that type of thing start to emerge thinking, consolidated thinking on how that needs to be done, basically.

 

[00:34:31] – Jon Slowe

Yeah. Okay. Very interesting, Brendan, your prediction for 2027 as to what the topic of conversation will be, what will be the key trend?

 

[00:34:45] – Brendan Murphy

So, picking up a point that Nerea just made at the end there about, if you like, seeing more obviously where hydrogen is more naturally produced and places where it's less naturally produced, easily economically produced, you sort of start to see the import exporter lines becoming clearer. I expect that by that point in 2027, we'll see quite a lot of interconnections between countries and projects across the European market, perhaps a little bit less so the UK simply because of geography and physics. And I think you will start to see something resembling an import export market through ports and hubs and import corridors. So, I think we'll start to see the lie of the land becoming more clear, I think.

 

[00:35:56] – Jon Slowe

Okay. And I referenced earlier, Brendan, that sort of balance between in country production and demand and imports to match demand. I guess that what you're saying is that will start to become clearer, and we'll see cross country flows as well starting to emerge and maybe not be in place, but that pattern start to become a bit more certain.

 

[00:36:23] – Brendan Murphy

Well, exactly. So, if you take an investment today where you're looking for a low carbon hydrogen agreement and an offtaker agreement, something along those lines, you were setting a price and the offtaker agreement might be sort of ten to 15. Years, which is a manageable risk because you don't expect imports to start arriving in volumes and setting prices really meaningfully until a bit later than that. So, you could probably derisk that with the support schemes that are available in Europe and the UK. But after that, when you start to butt up against the import, when you start to see the tension between created by imports arriving into Europe, you may naturally think, well, the cost of production, the levelized cost of production in the country that I'm operating in just isn't cheap enough, I can get it cheaper somewhere else. You start to get that natural market force applying in hydrogen.

 

[00:37:21] – Jon Slowe

Yeah, okay, we better draw it to a close there. Keeping our time lots more we could have talked about and dived into. And I think from what you both said, we're at a fascinating phase in the development of green hydrogen only at the very, very beginning. See revisiting the topic a lot more in future podcast episodes. Brendan, Nerea, thanks very much for your time and sharing your thoughts.

 

[00:37:52] – Nerea Martinez Hipolito

Thank you very much for having us.

 

[00:37:54] – Jon Slowe

Thanks as always to everyone listening. Hope you enjoyed the episode, and it gave you some new perspective, new thoughts on hydrogen and even what it might mean for your role in the energy transition. So, look forward to welcoming you back next week. Please remember to rate us to send us ideas at talking new energy for guests, future episodes, future topics, and look forward to welcoming you back next week. Thanks, and goodbye.

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