Oil&gas

Hydrogen Giant Says Building Power Cables To Asia Impossible

Posted by: Quickresponse | March 9, 2023

By Ugiagbe Owen David

Hydrogen giant Nel has backed Saul Griffithâ€™s suggestion that Australia should electrify its domestic power grid wherever possible but warned that hydrogen will be a more efficient way to export the nationâ€™s vast renewable energy resources to other countries than sub-sea powerlines.

Nel chief executive Hakon Volldal said the argument proffered by Dr Griffith at The Australian Financial Review Energy & Climate Summit earlier this month boiled down to a simple fact of physics, but did not mean hydrogen would miss out in the clean energy revolution.

Mike Cannon-Brookes has invested in Sun Cableâ€™s plan to connect Australian renewables to customers in Singapore via a powerline. Dhiraj Singh

Dr Griffith argued that it would be more efficient for Australia to feed renewable power directly into a society built around electrified devices rather than use that renewable power to make â€œgreenâ€ hydrogen and then burn hydrogen to power cars, kitchens and other points of urban consumption.

â€œWeâ€™re a hydrogen company, but Iâ€™m not a hydrogen fundamentalist,â€ Mr Volldal told The Australian Financial Review.

â€œFrom a physics point of view, if you convert electricity, which is what youâ€™re doing, youâ€™re taking renewable energy from solar and wind and you convert that into hydrogen, thereâ€™s an energy loss. Every conversion step is a loss. So if you can electrify directly, it makes sense.

â€œWhy waste a percentage of that energy?â€

But Mr Volldal said hydrogen could be a big export industry for Australia and the company recently sealed a $90 million deal to manufacture electrolysers for Australian oil and gas giant Woodside.

â€œI think hydrogen is an export play. Unless you want to build transmission lines from Australia to Asia, and I donâ€™t see that happening, itâ€™s easier to transport that energy by using hydrogen as a gas or liquid hydrogen or ammonia or some kind of hydrogen product,â€ he said.

Hakon Volldal, chief executive of Nel, says hydrogen is a more viable way to export renewable energy than cables.

â€œThe same goes for Chile and the same goes for the Middle East and North Africa. So a lot of that energy has to be exported from where itâ€™s cheap and easy to produce to markets where, you know, itâ€™s more difficult to produce energy.

â€œEurope and Asia, we have a problem, we import most of our energy and hydrogen is a good energy carrier.â€

Bullish on hydrogen
The comments come as Sun Cable proposes to build a 4200-kilometre network of power cables that would connect giant renewable energy farms in Australiaâ€™s north with power consumers in Indonesia and Singapore.

Chaired by Australiaâ€™s third-richest man Mike Cannon-Brookes and backed by Australiaâ€™s second-richest man Andrew Forrest, Sun Cable expects its $35 billion project to be in construction by 2024 and fully operational by 2029.

While Dr Forrest has invested in Sun Cable through his private company Squadron Energy, he is also bullish on hydrogen through the company that made him a billionaire; Fortescue Metals.

Fortescue plans to become a green hydrogen exporter and is building a hydrogen electrolyser factory in Queensland to supply the equipment that converts water into hydrogen and oxygen.

Nelâ€™s electrolyser contract with Woodside came barely three months after it sold an electrolyser to rival Australian oil and gas company Viva Energy.

Mr Volldal said he was adding staff in Australia and it was conceivable that Nel could build an electrolyser manufacturing factory in Australia if demand proved strong enough.

â€œWe are adding people on the ground to assist customers with sales and business development and engineering,â€ he said.

â€œWith Woodside, given their rather aggressive expansion plans in Australia turning into hopefully a hub for export into Asia and other markets, it would make sense to look into establishing [electrolyser] manufacturing capacity in Australia.

â€œRather than having a second gigawatt [electrolyser manufacturing] facility in Europe, maybe it should be in Australia ... that could happen.

â€œIt depends a little bit on what kind of support do you get? What is the domestic demand? How many customers can you develop?

â€œWoodside alone is a high-quality customer, they have big plans. So maybe, you know, just even Woodside could justify having [a Nel electrolyser manufacturing hub] production capacity in Australia.â€

Aside from export markets, Mr Volldal said hydrogen would also be essential for decarbonising the steel industry and the fertiliser industry, among many other industrial uses.

â€œItâ€™s impossible to make ammonia unless we have hydrogen. Itâ€™s impossible to reduce iron ore into sponge iron unless you can have a reduction agent and that is currently coal,â€ he said.

â€œIn all of these industrial applications, if you want to decarbonise them, you cannot use just green electrons, you need to use green hydrogen.

â€œSo I think over time it will be a combination of hydrogen for hard to abate industries like steel, methanol, ammonia, refineries and then export going into the grid in markets where there is not a surplus of energy.â€

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