Ben Gray, Strategic Marketing Manager, Power & Grid at Schneider Electric
If we weren’t already aware, the release of the latest set of IPCC reports (and the even starker picture they paint compared to previous iterations) has made abundantly clear to governments, businesses, and society as a whole the dangers of climate change and the urgent need to decarbonise. Whilst we know that electrification is the most efficient route to decarbonisation, green hydrogen (hydrogen produced using renewable energy) will be essential in meeting the decarbonization goals in many industries which cannot easily electrify.
The key point here, is that green hydrogen is the technology compatible with a net zero future, as opposed to alternative hydrogen techniques utilising fossil fuels even if they produce limited emissions (e.g. grey, yellow or blue hydrogen).
Significantly, Schneider’s position is shared by the UK government, who this month announced a doubling of the UK’s low carbon hydrogen production capacity to 10GW by 2030, with at least half of this figure coming from green hydrogen. That this technology will comprise an important part of the government’s intentions to produce 95% of the UK’s electricity via low carbon means by 2030 whilst supporting 12,000 UK-based jobs is closely aligned to our role as an impact company and is why we’re devoting significant time and resources, including in UK manufacturing, to ensuring our offer is optimised for the industry.
Although currently only accounting for <4% of global hydrogen production, the potential for green hydrogen is huge, with prices for green hydrogen expected to hit parity with grey hydrogen within the next decade. It is for this reason why $350 billion is set to be invested into research and development over the same period. The driving force behind this burgeoning technology is the fact that it offers a way to decarbonise a series of hard-to-abate industries like steel, cement, chemicals metals, and long-haul travel, with the demand for ‘green’ steel such that buyers are willing to pay a 25% premium for it (1).
Furthermore, green hydrogen is set to play an increasingly large role in the energy grid as a clean fuel source that can easily be stored over long periods and used to deal with energy curtailment costs, for which National Grid ESO paid £282 million to deal with in 2020. This is particularly pertinent given the rise in electricity generation from renewable sources, and it is partially for this reason that 20-35% of UK final energy consumption in 2050 will be met by hydrogen-based fuels.
Nonetheless, transitioning from small-scale viability demonstrations to large-scale industrial processing necessitates a shift from strictly scientific and technological obstacles to logistical, economic, and, in certain circumstances, political challenges. Furthermore, the perception of risk surrounding hydrogen and the challenge surrounding certifying that any hydrogen is produced using green electricity present further hurdles for a technology that is still very much in its embryonic stages of commercialisation. This absence of information consequently has the potential to make it challenging for investors to move forward with confidence, and so the industry must be able to present assurances and signals to them based on compatible technology that already exists. Without this the complete transition to net zero may be at risk.
As a result, Schneider Electric has created a portfolio that stretches across the full green hydrogen value chain (from renewable farm and grid connection to green hydrogen plant and supply chain) to ensure our customers have a toolkit that continually reduces investment risks and costs, increases safety, and reduces downtime across project lifecycles. Our offer is based upon leading expertise in energy management and industrial automation and utilises next generation connected hardware and software, including AVEVA and ETAP, to digitally integrate the management of users’ power and process into one control system.
Our complimentary end to end digital solutions allow for simulation of both the power and process sides of the plant to optimise design for increased operational resilience, efficiency, sustainability, and responsible profitability. Importantly, Schneider also offers consultation and digital transformation services, which can help you tackle your sustainability targets, advise on cybersecurity, and improve your efficiencies amongst a plethora of other services.
By partnering with Schneider, stakeholders provide their investors with the confidence of an established name with vast experience in ensuring entire value chain optimisation. Green hydrogen is an integral part of the net zero future, playing a crucial role in not only supporting the electrification process but also in tackling hard-to-abate industries. Those that act now will reap the rewards by positioning themselves as experts in an industry set to be worth $2.5 trillion globally by 2050, those that do not will be left behind.
Who are we?
At Schneider Electric, we drive digital transformation by integrating world-leading process and energy technologies, end-point to cloud connecting products, controls, software and services, across the entire lifecycle. We apply a wide, multi-dimensional perspective at both a global and local level to bring about long-term positive change in our role as an impact company. At the core of this is ‘Life is On’, our aim to empower all to make the most of our energy and resources, bridging progress and sustainability for all. This means not only leading by example in our own ecosystem, but also being part of the solution for our customers, suppliers, and the society we exist within. We judge ourselves not just by our financial performance, but across all ESG dimensions including the environment. It is for these reasons why we were named Corporate Knights’ ‘Most sustainable corporation in the world’ and a ‘Diversity Leader’ in the Financial Times’ Top 50 in 2021 amongst a number of other awards. If you would like to find out more about our efforts to create a more sustainable world, please visit our website
(1) - BNEF Roundtable, 17 March 2022, https://www.bnef.com/insights/28555/view?e=Analyst%20Reaction:sailthru