CAIRO - 30 August 2022: A recent study published by the Egyptian Center for Thought and Studies sheds light on the Egyptian state’s efforts to open the door to investment in green hydrogen with regard to energy sources.
The study explains that this comes in light of the government’s efforts to diversify the basket of energy sources in recent years, where opening the door for investments in green hydrogen is considered a promising field in the event of overcoming various challenges.
The Egyptian government signed a memorandum of understanding with the Indian Energy Company, with the aim of building a green hydrogen production facility worth 8 billion dollars in the Suez Canal Economic Zone.
The study indicated that the value of the first phase of the development plan for the facility amounts to 710 million US dollars and covers 600,000 square meters.
The deal targets the export market and a small amount of the internal market, as the Egyptian state plans to produce 20,000 tons of green hydrogen and 100,000 tons of green ammonia by the year 2025. It aims to serve different sectors that can be adapted to the energy source developed, such as the transportation sector, as the government stated after signing the memorandum of understanding, that the ultimate goal is to produce 220,000 tons of green hydrogen and 1.1 billion tons of green ammonia.
What is Green Hydrogen?
The study pointed out that green hydrogen is an emerging type of low-carbon renewable energy, as green hydrogen contains much less carbon emissions than gray hydrogen, which is produced by steam reforming of natural gas. It added that 99% of the hydrogen produced globally in 2020 was derived from fossil fuels are carbon-based sources, but not green hydrogen, which represents only 1% of the hydrogen market.
Green hydrogen is the result of the electrolysis of water, and it has clear environmental benefits in reducing carbon emissions from sectors with huge emissions, such as steel and cement production, thus helping to limit climate change.
The study indicated that this matter, in theory, does not require huge or costly infrastructure development, as natural gas pipelines are sometimes used to transport hydrogen, but it is not without challenges, as many pipelines need to be modernized in order to transport hydrogen.
A pilot program in France mixed hydrogen into a gas grid in 100 homes, where natural gas-fired power plants can be converted to burning hydrogen to provide backup power during periods of high demand.
Usage of Green Hydrogen
The study indicated that green hydrogen is used in transportation, heating and the natural gas industry, and it can also be used to produce green ammonia.
In the transportation sector, hydrogen can be used as fuel for internal combustion engines. Where hydrogen vehicles are not limited to cars, trucks are also designed to run, and hydrogen-powered aircraft are already being designed by Airbus, with a planned launch of the first commercial aircraft by 2035, but it will not be widely used in aircraft before a year 2050.
The study also pointed out that hydrogen can be used for cooking and heating indoors as well, as hydrogen heating has been proposed as an alternative to supply most UK homes with energy by 2050, and the British government intends to launch pilot projects to show how the fuel can supply areas containing hundreds of homes with energy as well.
Green hydrogen is used to produce green ammonia; the main ingredient in fertilizer production, and the Hydrogen Council stated in 2021 that the cost of green ammonia would be competitive with conventionally produced ammonia by 2030.
Challenges of using Green Hydrogen
The study explained that the main problem with green hydrogen is the high cost of production, as it is the main factor behind the decline in its use, but the hydrogen market is expected to grow, as the cost of production is expected to drop from $6 / kg in 2015 to about $2 / kg by 2025. This projected price is a potential turning point that makes green hydrogen competitive with other fuel sources.
The EBRD is in discussions with developers' associations about financing green hydrogen projects. Funding and concessional grants must be mobilized, at least in the initial phase, for hydrogen to become commercially viable.
Indeed, Siemens has developed offshore wind turbines that have been equipped to mix hydrogen, thus helping to increase green hydrogen production, and major European companies have announced plans to convert their truck fleets to hydrogen energy, in 2020, and as of the same year, the value of the global hydrogen market has reached $900 million, and the global hydrogen market is expected to jump to 10% by 2030, before reaching $300 billion by 2050.
The study indicated that the agreement signed between the Egyptian government and ReNEW Power Company comes as a new step among several steps taken by Egypt to diversify the basket of renewable energy sources produced.
ReNEW Power is a renewable energy producer based in Gurgaon, India, where the company has reached an agreement with the Egyptian Electricity Transmission Company (EETC), the General Authority for the Suez Canal Economic Zone (SCzone), the Sovereign Wealth Fund of Egypt (TSFE), as well as the Energy Authority New and renewed.
In accordance with this latest agreement, ReNEW will build units capable of converting electricity to hydrogen as well as its derivatives.
The facility is located in the coastal city of Ain Sukhna, Suez Governorate, and is expected to have a production capacity of 1.32 million tons per year. This will make it one of the largest green hydrogen factories in Egypt so far.
ReNEW Power will also become the eighth clean energy generator to produce green hydrogen in the Gulf of Suez in Egypt.