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Offshore Wind: Europe's Best Bet To Accelerate Green Hydrogen Developments

Patricia Seoane da Silva, Research Associate
October 26, 2020

Hydrogen has been considered the energy carrier of the future since the term hydrogen economy was first coined in the 1970s. Driven by recent decarbonization efforts across the energy sector, hydrogen has become a hot topic of discussion, evolving from its primary form to three different shades: gray, blue, and green.

Gray hydrogen produced via steam reforming of natural gas remains the dominant shade of hydrogen nowadays, whereas blue hydrogen has gained traction as an intermediate solution for reducing carbon dioxide emissions – as it adds carbon capture and storage (CCS) to the equation. In contrast, green hydrogen produced from water electrolysis using renewable electricity releases zero carbon emissions, which makes it an ideal candidate for leading the energy transition. The ultimate search for clean fuels and green hydrogen creates an opportunity for wind energy, particularly offshore wind, which has the potential to become the primary source of green hydrogen in Europe.

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On paper, the production of green hydrogen from wind – or other sources of renewable energy – offers a series of interesting advantages, such as greater energy security, lower price volatility, and the opportunity to leverage excess wind power that would otherwise be curtailed. For offshore wind, the list of benefits is even longer. From a logistics standpoint, green hydrogen produced from offshore wind could become an accessible and low-carbon alternative to power oil and gas platforms. Besides, the potential to use seawater for electrolysis could enable offshore wind-to-hydrogen projects in locations where freshwater is scarce.

But more importantly, offshore wind is a mature technology that offers various advantages from a techno-economic standpoint. In recent years, the technology has experienced significant cost reductions and reached levelized cost of electricity (LCOE) values as low as $64/MWh. In addition, offshore turbines can produce large amounts of power due to their access to stronger winds and increasingly large capacities, which are set to reach average values on the order of 14 MW to 15 MW. The combination of strong winds and high-capacity turbines is particularly relevant in Europe, where the consolidated wind supply chain and exceptional wind resources have paved the way for early offshore wind-to-hydrogen deployments in the North Sea, as illustrated below.

Offshore Wind to Hydrogen Projects in Europe-png

The scale of offshore wind-to-hydrogen projects announced to date is relatively broad, ranging from TNO's PosHYdon pilot, to the North Sea's power hub initiative, to Shell's massive NortH2 project. This range of capacities is revealing the fast traction that green hydrogen is gaining and can also be observed in other geographies outside of Europe (e.g., Australia).

However, the rising number of offshore wind-to-hydrogen projects is not enough to boost the green hydrogen economy. As we have previously pointed out, the commercial production of green hydrogen is challenged by the elevated cost of electrolyzers (around $2,000/kW). The latter reduces the economic incentive of using surplus electricity to produce hydrogen unless application stacking is considered.In the case of offshore wind, there are two additional contributions that increase the overall cost of hydrogen production: water purification and transportation.

To date, three main routes have been proposed for the production and transport of hydrogen offshore:

  1. On-site production and ocean shipping: Surplus wind power and seawater are used to produce hydrogen in an electrolyzer. Afterward, green hydrogen is compressed and stored in tanks and transported by ships to land.

  2. Production and blending to a natural gas pipeline: Surplus wind power and seawater are used to produce hydrogen in an electrolyzer. Afterward, to avoid the high costs of shipping, hydrogen is blended into a gas export line and transported to land via existing gas infrastructure.

  3. Onshore production and land transportation: Wind power is transported through high-voltage DC (HVDC) subsea cables and used to power an electrolyzer installed onshore. Afterward, green hydrogen can be transported through either pipelines or trucks in the form of compressed tanks.

Out of these routes, the first two require a water purification step to obtain high-purity water from seawater. This type of treatment is crucial to prevent sediment accumulation on the electrodes, avoid corrosion, and ensure good levels of hydrogen purity. Depending on the quality of the seawater, treatment requirements can range from just membrane desalination to additional purification steps that eliminate organic compounds, suspended solids, etc., but should in all cases be expected to significantly increase costs.

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These costs are eliminated when water electrolysis happens onshore, as in Shell's NortH2 project, where the electrolyzer is installed at the Eemshaven seaport. However, this option can incur high transportation costs if the wind farm is located far away from the shore (e.g., a floating wind farm) – which would require additional transmission infrastructure. As a reference, HVDC transmission lines are about 10 times more expensive than a natural gas pipeline per mile, and the transport of electricity through HVDC infrastructure is subjected to higher transmission losses. 

Eventually, there is a trade-off distance to shore at which water treatment requirements offset additional grid infrastructure. The key point that those interested should be aware of is Europe's potential to leverage the various benefits and drawbacks of producing hydrogen from offshore wind.

Northern Europe combines an exceptional wind resource and a consolidated supply chain (i.e., natural gas infrastructure, turbine equipment, port facilities, etc.) with a high demand for green hydrogen from the industrial sector – which should be prioritized for a successful hydrogen economy. Add to these factors the limited solar resource, and wind energy becomes Europe's best bet to build upon the momentum of green hydrogen.

The U.K. Continental Shelf, historically dominated by the oil and gas industry, exemplifies Europe's potential to be at the forefront of the energy transition and the hydrogen economy. In a recent study we completed in partnership with Wood Mackenzie, we found that the U.K.'s growing offshore wind sector – on track to reach 40 GW by 2030 – will not only increase the overall share of renewables in the U.K's energy mix, but can drive significant offshore green hydrogen production. In combination with repurposed legacy pipelines feeding hydrogen fuel cells, such a system could even help decarbonize otherwise challenging offshore platforms, which would help the U.K. and neighboring countries tap into difficult-to-access hydrocarbon reservoirs at a significantly lower carbon footprint. 

Interested parties should be increasingly aware of this opportunity, and monitor the North and Baltic Sea for early developments related to offshore wind-to-hydrogen.

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