World’s biggest offshore wind producer moves into hydrogen

Offshore wind farm Image: Orsted

Danish utility Orsted A/S took a final investment decision on its first hydrogen project as it expands beyond wind power.

The world’s biggest producer of electricity from turbines at sea will use the technology at its Danish demonstration project H2RES to produce green hydrogen. It’s a small, but concrete step for the company that could help it stand out in the upcoming competition for billions of euros of government subsidies to scale up the industry.

Hydrogen made from wind or solar is essentially a fossil-free fuel. It’s seen as crucial by governments and utilities to help cut carbon from industrial and transport sectors. The technology has a central place in the European Union’s Green Deal package, with investment in the bloc expected to reach as much as 470 billion euros ($570 billion) in the coming decades.

Avedøre Power Station where Orsted's H2RES green hydrogen project will be located.

“We see renewable hydrogen and other sustainable fuels as cornerstones in reaching net-zero emissions by 2050,” said Martin Neubert, chief executive officer at Orsted Offshore.

The project will have a capacity of two megawatts, producing as much as 1,000 kilograms of hydrogen daily, which will be used for road transport in Greater Copenhagen and the surrounding area, Orsted said in a statement. That’s tiny compared with the scale that would be needed to make a major impact on the climate.

These early projects will rely on government subsidies to get built. The Danish Energy Agency has awarded a grant of 34.6 million Danish Kroner ($5.6 million) to Orsted and other partners in H2RES. Bigger facilities will need even more. European countries are planning to spend billions of euros this decade to fund the first utility-scale projects.

Orsted expects H2RES to be up and running later this year. That could give the company an edge in applications for bigger subsidies, by showing that it already knows how to effectively build and operate a wind-powered hydrogen production plant.

The utility is involved with a number of much bigger projects, like a 100-megawatt electrolysis facility to produce ammonia for chemical giant Yara International ASA. It’s part of a broader strategy for the Danish utility to store the renewable energy it produces and use it for a wider range of applications than selling into the electric grid.

Orsted will buy electrolyzers, electric machines that extract hydrogen from water, from the Danish startup Green Hydrogen Systems A/S for H2RES. While the project is small, it’s a big win for the electrolyzer-producing company as it scales up and competes for bigger contracts with more-established players in the industry.

© 2021 Bloomberg L.P.

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