In response to the Inflation Reduction Act (IRA), the German hydrogen company Thyssenkrupp Nucera has witnessed a surge in client demand in the United States. If the market takes off, the company may partner with Italy’s De Nora to establish local production capacity.
During a trip to the United States this week, Thyssenkrupp Nucera discussed several possible green hydrogen projects “with very realistic deadlines,” according to chief executive Werner Ponikwar.
The production of green hydrogen, which uses renewable energy, is viewed as essential to decarbonizing industries and so achieving climate goals.
According to Ponikwar, who joined the IPO candidate from industrial gases company Linde last year, Nucera is looking at how the IRA, which provides incentives for clean energy initiatives, could help subsidize investments in production capacity, research facilities, and pilot projects in the U.S. market.
Ponikwar’s remarks are in line with an increasing number of European businesses, such as Audi VOWG p.DE, Schaeffler, and Northvolt, who are considering expanding their U.S. presence due to the favorable framework the IRA offers.
Ponikwar declared, “We are obtaining a new growing market. The interest in our electrolyzers has grown dramatically and conspicuously.
Energy executives said this week that governments all over the world need to simplify regulations surrounding hydrogen supply to draw in investment and scale it up to become competitive enough to replace the usage of fossil fuels in heavy industry.
Ponikwar predicts that the U.S. hydrogen market will increase from its current size of a few hundred megawatts to a mid-double-digit gigawatt (GW) number by the end of the decade.
Ponikwar stated that the legislative details of the IRA addressing hydrogen are still being worked out and that the majority of the projects in the discussion would probably not receive a definitive investment decision before that time.
In Houston, Texas, Thyssenkrupp Nucera already has a presence in the country, mostly providing services to users of its chloralkali technologies. According to Ponikwar, it is collaborating closely with co-owner De Nora, which has a production facility in the US.
If the market expands as strongly as anticipated, “we will consider developing manufacturing capacity jointly with De Nora in the States,” he said.
CF Industries has placed an order for a U.S. hydrogen plant with Nucera, a 66-34 joint venture between Thyssenkrupp and De Nora that already has a strategic alliance with American company Air Products.
A significant part of the IRA is the Hydrogen Production Tax Credit, which offers a 10-year federal tax credit of up to $3 per kilogram for clean hydrogen produced after 2022 at plants that start operations before 2033. That might help projects that would normally be losing money turn a profit.
In a market where it competes with companies like Norway’s Nel, Britain’s ITM Power, France’s McPhy Energy, and American firm Plug Power, Nucera designs the electrolyzers required to manufacture green hydrogen.
Focus is placed on so-called alkaline water electrolysis, which according to Credit Suisse will hold 60% of the worldwide market by 2030 since it is better suited for large projects. Proton exchange membrane electrolysis is expected to account for about a third of the market.
Unlike other renewable technologies where that is a requirement to qualify for credits, the IRA does not compel manufacturers of hydrogen equipment to produce locally, even if it favors hydrogen generation.
Siemens Energy, a player in the hydrogen market and a company ramping up electrolysis module production at its Berlin facility held in partnership with Air Liquide, claimed it could already meet the requirements.
In an email, the company stated, “From our factory in Berlin, we can supply projects all over the world and then organize the assembly of the electrolyzers through local partners on site.
The European Union’s Green Deal Industrial Strategy, which is considered as a response to the IRA, should foster conditions similar to those in the United States for the hydrogen economy, it added.
Ponikwar of Nucera agreed, pointing out that Europe’s propensity for bureaucracy would hinder advancement there.
“People in the United States are more realistic. In comparison to Europe, the regulation is likewise a little less thorough.”