“Middle East’s Connectivity To Markets Beneficial For Hydrogen Production”: Frank Wouters

Mohamed Jameel Al Ramahi, Chief Executive Officer, Masdar, said during the Green Hydrogen Summit 2023, “As green hydrogen continues to show growing promise as a critical enabler of our net-zero future, we must unlock its full potential by accelerating research and development and investment in this vital sector. Masdar is excited to launch the ADSW Green Hydrogen Summit to support the development of the UAE’s green hydrogen economy and help realize the global energy transition. This inaugural Summit will also pave the way toward COP28 in the UAE, where we can expect green hydrogen to be a key component of a future low-carbon energy market.”

The latest figures by the International Energy Agency (IEA) in 2019 suggest that global energy demand will increase by 25 percent to 30 percent by 2040. In an interview with T2NZ Magazine, Frank Wouters, Senior Vice President New Energy at Reliance Industries revealed that there are many things to consider. He thinks hydrogen in the Middle East has a great future based on several premises. “First is the resource. Green hydrogen is created from green energy, and the region has an abundance of sunshine and some places also wind. The second is the availability of land at a low cost because it's not a very densely populated area. And third, many countries, such as Saudi Arabia, Oman, UAE, and Kuwait are oil and gas producers.”

Wouters added, "So these oil and gas producing countries have strong physical and intellectual infrastructure available to make industrial gases with the skills that we need in the future to be cost-effective. We can build on this experience,” said Wouters.

And lastly, many countries, especially oil and gas producers such as Saudi Arabia and the UAE, have the resource to invest, train people, build the infrastructure, and do everything that is required to make it cost-effective."

On Having the Existing Infrastructure

Hydrogen is not widely available; however, the Middle East plans to develop and deploy the right technology for it in the next few years. In 2021, Saudi Arabia’s Minister of Energy, Abdulaziz bin Salman al-Saud, announced the country has set its goal to become the world’s largest hydrogen producer. The region, especially Saudi Arabia, the UAE, and Oman are likely the best candidates for transporting clean hydrogen because they have the existing infrastructure to transport and store oil. They also have the right expertise to deliver it, so adaptability to hydrogen is easy.

Echoing a similar voice, Frank Wouters stated, "Besides favourable conditions, such as having the existing infrastructure to transport and store oil and gas, another factor is that the Middle East is close to Europe and has existing trade relationships with other future importing markets such as Korea and Japan. It is geographically located between these countries where you can build a relationship with them.”

“After generating green hydrogen, other products such as green ammonia and methanol can also be produced from it. Two years ago, I attended a workshop with the Saudi Energy Minister, who suggested that it was technically feasible and cost-effective to do this. It is possible to transport hydrogen as a liquid or connect Saudi Arabia to Europe with hydrogen pipelines,” stated Wouters

“However, it's politically complex because we must go through several countries with our pipeline infrastructure. It's difficult, but it would certainly be a very elegant and low-cost way to connect these markets,” added Wouters 

Saudi Arabia has promised to keep the price of hydrogen low compared to other players. Typically, the current production costs vary from US$2 to US$7 per kg. However, the country targets production cost of hydrogen lower than US$2/kg in the future.

To this, Wouters explained, "The main reason is the resource, which allows to produce hydrogen at a low cost. Especially Neom, the north-western part of the Kingdom of Saudi Arabia, has excellent solar irradiation and wind that picks up in the afternoon. Combine the two smartly, and you have a high capacity factor for electrolysis, leading to low costs of hydrogen. So Saudi Arabia is in a very good place."

Challenges in Building the Future of the Hydrogen Economy

Hydrogen is an energy carrier, that is currently produced mostly from oil, coal or natural gas. It can also be generated from water and electricity produced from solar, wind, or biomass.

Frank Wouters clarified the issue with currently producing hydrogen, "In our overall final energy mix, electricity constitutes 20%, whereby 80% of the current energy usage is from molecules. We have now cracked the nut and know how to make renewable electricity cheap, so solar and wind power have been growing exponentially for 20 years or so."

Wouters continued, "However, electricity is difficult to store. And it's also not cheap to transport over longer distances. Whereas transporting hydrogen is nearly 10 to 15 times cheaper over longer distances. And you can store it loss-free over the seasons. For example, Europe currently has a quarter of its annual gas consumption in underground storage, which is significant. This is the level of storage we will need in the future. Fully pivoting towards a green energy system based on solar, wind, and biomass still needs storage. This is because more solar energy is available in the summer months, and we need more energy in the winter for heating and longer lighting times,” said Frank Wouters.

“We have to use electricity as much as we can and build electric vehicles and use heat pumps wherever we can. But, according to most analyses, when we go beyond 50% usage, electricity becomes more expensive. This is not feasible, I believe then, this is where hydrogen will play a role,” responded Wouters

Green hydrogen may be the fuel of the future, but there are major challenges. Since it is a new technology, the advanced equipment to enhance production is currently not available.

Elaborating on the issue, Wouters replied, "If I look at where solar comes from today, 97% of all solar wafers are made in China. So, we need to diversify our production base but also ramp up capacity for everything that we need, such as critical minerals and metals, that are used in electric motors, batteries, solar cells, etc."

"Another is infrastructure, we don't have the grids now to make the entire system work on renewable electricity. Coal-fired power plants, gas-fired power plants, and nuclear power plants are located at places different from where the future solar and wind power plants will be. So, the expansion of the grid needs to be much more resilient, robust, and flexible,” said Wouters.

Wouters continued, “We need storage capacity as well. Part of the challenge is building them and making those investments. Even though it is going to be cost-effective, it still requires massive mobilisation and allocation of capital, which we haven't even started working on yet. So, it's doable, and it will be cost-effective, and we need to start building factories for it.

Governments Involvement in Building the Right Infrastructure

The government is also taking the necessary steps to invest in building the right infrastructure and technology. Governments are involved in regulation, providing subsidies, and providing land and infrastructure. Neom, being built by the Saudi government, is also being supported by the private sector.

"Governments are necessary as the private sector can’t do this alone. They both need each other. It is a joint effort," said Wouters.

Decarbonisation is high on the agendas of the Middle East and green energy is one of the main tools for that. The region promises to become a world leader in it and achieve net zero emissions by 2050. But to attain this goal, green energy needs to be more accessible, cost-effective, and include green hydrogen in the next few decades.

"At this point, conventional hydrogen is mostly used in fertilisers and refining. These are big sectors in the Middle East, especially in oil- and gas-producing countries. But in the future, if hydrogen becomes one of the major energy carriers of the green economy, the use cases for hydrogen will expand beyond petrochemicals, refining, and fertilisers. We would be able to use hydrogen to make green steel, for mobility, energy storage, etc,” elaborated Wouters.

"We're just starting to understand the bandwidth of hydrogen," stated Wouters.

Apart from being actively involved in driving hydrogen technology, Frank Wouters loves being involved in sports, reading books, and watching movies.