Global credit intelligence provider and market analysts, Fitch Solutions, have announced that the company expects an increase in low-carbon hydrogen production technology development as sustained growth in global hydrogen production capacity has caused rising interest in low-carbon power source solutions.

As a result of international commitments towards the global energy transition, and increased calls for renewable energy developments to diversify national power sources, energy developers have begun to look at low-carbon hydrogen production and power generation technologies and their adoption into the mobility and industrial sectors, as a means to transition away from carbon-emitting energy sources.

Fitch Solutions Senior Power and Renewables Analyst, Thomas van Lanschot, stated that new hydrogen-fueled electricity generation projects are coming online within the global pipeline, and are expected to take the form of combustible fuels and fuel cell plants for the development of light, storable, and energy-dense fuel cell technologies.

With the development of green hydrogen projects in Namibia and South Africa, the African continent has started to compete for its position as a global contender in the hydrogen export market. Fitch Solutions Infrastructure Analyst, Daine Loh, indicated that an increase in low-carbon hydrogen production will lead to significant opportunities for investment in hydrogen infrastructure in the coming years, facilitating the opportunity for the use of low-carbon gases in carbon-intensive power sectors, thus, diversifying the portfolio of energy companies aiming to diminish their carbon footprint while stimulating job creation and socioeconomic growth.

Lanschot outlined that renewable energy developers will stand to benefit from an increase in hydrogen production, while long-term natural gas producers and suppliers will be negatively impacted, and as a result, will look towards adopting hybrid technologies to incorporate a blend of natural gas with hydrogen and hydrogen-based ammonia. Thus, facilitating the continued use of existing gas-related infrastructure and assets.

With up to three times the energy density of fossil fuels, and being capable of multiple types of storage methods, such as compressed gas, or in the state of a liquid or solid, low-carbon hydrogen serves as a promising alternative to non-renewable energy resources, offering a sustainable solution to energy storage and distribution while improving the reliability of intermittent renewable energy sources.

Global low-carbon hydrogen production remains at low levels, however, as the costing is not yet competitive. Governments across the world will need to implement a wide range of fiscal policies to close the price-gap between low-carbon hydrogen and emission-intensive hydrogen produced from fossil fuels before a scalable low-carbon system can be considered. With costs ranging up to seven times as much as producing hydrogen from natural gas when compared to using renewable sources, a number of technological advances will be needed before the cost of making hydrogen with solar photovoltaic energy can compete with its production through non-renewable sources. As a result, hydrogen being produced today accounts for 900 million tons of global CO2 emissions.

With over 20 countries having publicly announced the development of strategies to tap into the hydrogen development sector, however, – including Canada, Chile, France and Portugal – the number of pilot projects for the production of steel and chemicals using low-carbon hydrogen has increased, causing a fall in price for the cost of hydrogen fuel cells but an overall increase in the sales of hydrogen fuel-cell vehicles.