The future of hydrogen remains a hot topic, with speculation continuing around its growth trajectory and impact. However, within NovAzure‘s ecosystem, leading hydrogen market players maintain an optimistic outlook, foreseeing a promising future for establishing electrolyser and hydrogen hardware manufacturing facilities in the UK, Europe, and the US. As the industry scales, costs are expected to decline. Yet, there’s a critical lesson to heed from the past: Europe and the US must avoid repeating the mistakes that led to their initial advantage in solar technology being overtaken by China, which now dominates PV manufacturing, largely due to government subsidies. Today, 97% of European PV installations rely on imported, predominantly Chinese, hardware.
Challenges and Financial Strategies in Hydrogen Development
Hydrogen projects, such as electrolysers, typically take around seven years to reach commercial viability, with a significant 95% of financing arriving in the post-FID (Financial Investment Decision) phase. The challenges for both emerging and high-income markets are substantial. The Hydrogen Council highlights that only 9% of the $319 billion announced for scaling hydrogen projects is currently in the post-FID Construction stage. According to the World Bank, six key risks need to be mitigated to secure financing for hydrogen projects: credible offtake and pricing, a clear political and regulatory environment, adequate infrastructure, reliable hardware technology performance, established planning and compliance, and acceptable interest and exchange rates. Companies like Thyssenkrupp Nucera have emphasised that provisional tax credits, such as those under the Inflation Reduction Act, are crucial for supporting the business cases of clean hydrogen investments in the US.
Geopolitical Influence and Leadership Challenges
Geopolitical dynamics, add another layer of uncertainty but also open doors to new opportunities. Europe, for example, aims to reduce its reliance on China for future green hydrogen supplies. Safety and quality standards will play a crucial role, potentially giving ‘Made in Europe/US/Japan’ products a competitive edge. This highlights the importance of building viable, sustainable supply chains, establishing common standards, and fostering close cross-border collaboration among major trading partners.
Moreover, there is a pressing need for rapid and effective education among c-suite leaders and their teams. Understanding how to leverage the hydrogen economy in the journey toward Net Zero is vital for staying competitive.
So, what specific actions are you taking to fast-track the efficiency and resilience of your hydrogen hardware manufacturing supply chain? Are your CEO, CFO, and other c-suite leaders truly equipped to identify and seize the high-margin growth opportunities that come with leading the charge in sustainability and circularity? If they’re not, then can you afford to wait?
