Renewable hydrogen has long way to go: Siemens Energy
Renewable hydrogen has a long way to go to widespread adoption as renewable power is still a "scarce good" in many places and offtakers are not yet ready, according to German firm Siemens Energy's chairman Joe Kaeser.
"Industrially feasible solutions [in the hydrogen space] will not be ready before 2027 at the earliest," Kaeser told television station CNBC on the sidelines of the World Economic Forum in Davos, Switzerland.
The "more or less inefficient" process of making hydrogen is not feasible in places where renewable power is "scarce" and therefore expensive, Kaeser said.
This means the focus has to be on regions with a surplus of renewable power, such as in deserts, he said. "If your opportunity cost on electricity is basically zero you can make a sort of meaningful business case for green hydrogen, but that's pretty much it."
But these regions are typically far from demand centres and transporting hydrogen is still complicated and costly, Kaeser added, while potential offtakers are not ready to buy low-carbon hydrogen in meaningful quantities. Kaeser said that state-controlled Saudi Aramco's chief executive Amin Nasser told him that his firm would like to do more in the hydrogen space but is struggling to find buyers.
But Siemens Energy is still betting on future developments in hydrogen. It recently opened an electrolyser factory near Berlin together with industrial firm Air Liquide. The companies aim to produce 3GW/yr by 2025. Siemens Energy is also providing services related to hydrogen including plant engineering and design, and the development of hydrogen-powered turbines.
Driving the transition
Germany should focus on developing sustainable products and solutions that could help bring down global emissions, Kaeser said.
The country has ambitious plans to reduce its own emissions but even if these are achieved they are likely to be outweighed by increased emissions brought along by economic growth in countries such as India and Indonesia, he said.
Germany therefore needs to develop sustainable solutions that are "economically feasible as a business model", apply them at home and then "export them to the world". Otherwise Germany risks losing the "economic wealth" it has accumulated, according to Kaeser.
At the same time, it is important "to have more honesty about the cost of sustainability," given that going green will be expensive. And "if there is no profit pool, nobody will innovate".
