A cornerstone of the clean energy transition, green hydrogen holds the promise of replacing fossil fuels in industries spanning from chemical factories to power plants. However, this ambitious journey is not without its challenges, particularly in terms of cost. The energy giant RWE’s recent stance sheds light on the pivotal role subsidies play in accelerating the adoption of green hydrogen technology.
Sopna Sury, a key board member responsible for RWE’s hydrogen business, recently emphasized the vital role of subsidies in driving the adoption of green hydrogen technology. In an interview with the “Süddeutsche Zeitung,” Sury noted that RWE views investments in green hydrogen projects as feasible only if government subsidies are in place. This stance echoes the early years of wind and solar power, where subsidies were crucial to bring costs down to a competitive level and pave the way for unsubsidized viability.
Sury’s remarks highlight a pragmatic approach, underlining that projects need to demonstrate economic viability to gain approval. As RWE delves into the realm of green hydrogen, this requirement underscores the need for support to propel the technology’s commercial potential.
Drawing parallels to the evolution of wind and solar power, Sury noted that it took a decade or more for costs to align with competitiveness, rendering subsidies unnecessary. RWE’s relatively short involvement of two and a half years in the green hydrogen landscape reflects the early stages of this transformative journey.
The journey towards self-sustaining green hydrogen is intertwined with technological advancements, economies of scale, and supportive policies. Just as wind and solar power eventually overcame their reliance on subsidies, the green hydrogen sector envisions a similar trajectory, with costs projected to decline as the technology matures.
Germany, a key player in the global energy landscape, recently unveiled an updated national hydrogen strategy, reflecting an amplified commitment to green hydrogen adoption. The strategy sets forth a target of having green hydrogen production plants, also known as electrolysers, with a combined capacity of ten gigawatts operational by 2030. This goal signifies the nation’s resolve to drive the growth of green hydrogen as a pivotal energy source.
While the promise of green hydrogen is undeniable, the challenge of cost remains a focal point of contention. Some skeptics express concerns that green hydrogen might be economically unviable in Germany, potentially prompting industries to seek cheaper energy sources abroad. However, Sury remains optimistic, drawing on the precedent set by wind and solar power. The gradual expansion of renewable energy capacity, coupled with advancements in electrolysis technology, is expected to reduce production costs and render green hydrogen more affordable.
In the intricate landscape of green hydrogen, Sury underscores the symbiotic relationship between investment and subsidies. Electrolyser producers, essential components of the green hydrogen value chain, are more likely to invest when there’s a substantial market demand. Subsidies play a pivotal role in spurring this demand, acting as a catalyst for investment in this nascent but transformative technology.
As the global energy landscape evolves, green hydrogen’s significance cannot be overstated. RWE’s stance on subsidies underscores the transitional nature of the technology, akin to the early chapters of wind and solar power. With supportive policies, collaborative efforts, and innovation, the journey towards self-sustaining green hydrogen holds the promise of a cleaner, more sustainable energy future.