H2 Green signs UK hydrogen fueling station supply agreement, eyes diesel displacement

London — Renewable hydrogen company H2 Green has signed a non-binding strategic agreement to supply green hydrogen to refueling company Element Two in the UK, it said in a statement May 5, as it eyes decentralized supply and storage that could displace diesel in heavy transport.

The announcement builds on H2 Green's plans to develop a network of localized hydrogen supply, storage and distribution hubs in the UK, the first of its kind in the country.

The companies will work together to align strategies with a view to accelerating the creation of the UK's first hydrogen refueling network, H2 Green parent company Getech said in a statement May 5.

H2 Green and Element Two aim to develop a joint roadmap, build a demonstration project and "negotiate and conclude a binding long-term co-development and offtake contract" in the next year, the statement said.

"Green hydrogen will play a key role in the decarbonization of commercial transportation, and the development of green hydrogen hubs will be a crucial component of our cities' plans to decarbonize and meet their net-zero targets," Getech CEO Jonathan Copus said in the statement.

"One area that we have been very interested in is the challenge of decarbonizing commercial transport fleets, and this is a very, very significant market," Copus told S&P Global Platts separately in an interview May 5.

"In 2019, the commercial diesel market in the UK was something like a GBP12.5 billion ($17.4 billion) per year market. And all of that has got to decarbonize. So how is it going to happen? Most people are of the view that hydrogen will play a really important role in that," he added.

The companies plan to co-locate Element Two's refueling stations with H2 Green's hydrogen production and storage assets.

"It is vital to the success of our business model that we partner with reliable and competitive producers of green hydrogen," Element Two's chairman, Dirk Van Daele, said in a statement. "We are therefore delighted to partner with H2Green to produce green hydrogen for our ambitious rollout of 2,000 hydrogen refueling stations by 2030."

The company has invested in locations in the north of England, Scotland and Ireland, and plans to deploy over 800 pumps in the UK by 2027.

Platts last assessed the cost of producing hydrogen via alkaline electrolysis in the UK (including capex) at GBP4.16/kg May 4. PEM electrolysis production was assessed at GBP5.19/kg, while blue hydrogen production by autothermal reforming was GBP1.60/kg, including carbon, CCS and capex.

Repurposing networks

Getech is a geoscience and geospatial technology company focused on energy transition projects, and bought H2 Green in March.

H2 Green has an exclusive option to redevelop redundant gas infrastructure assets owned by SGN Commercial Services in Scotland and southern England for hydrogen distribution around the UK, H2 Green's managing director Luke Johnson said in an interview May 5.

Johnson said the acquisition by Getech would provide crucial insight into deciding which sites would be most effective to develop.

"We believe the key to creating a really economic green hydrogen solution is to adopt a very data-led approach to identifying and predicting where, when, how demand is going to develop, and what's the most cost-effective way to service that customer base, the real focus on what their daily needs are," he said.

The first adopters of hydrogen in the heavy transport space were already emerging, he said, with bus fleet operators and public sector operators leading the way.

Vehicle manufacturers such as Hyundai, Hyzon and Toyota were making good progress, he said. "Those vehicles are viable and they're coming to market," he said, noting growing demand in the UK.

And fleet operators were starting to see hydrogen fuel cell electric vehicles as cost-competitive with diesel on a total cost of ownership basis, he said, once logistical, operational and capex costs were taken into account.

"I don't think it's a matter of saying, 'is it possible to get to diesel parity?' I think the reality will be in the longer run, it will be a cheaper fuel source," Johnson said.

Decentralized markets

High costs for transporting hydrogen mean that decentralized production and supply models would dominate in the future, Johnson said.

"One of the key elements that a lot of people overlook on hydrogen is they're forgetting about the cost of transporting it," he said. "We believe that customers are going to get the lowest-cost hydrogen by having hydrogen generated very close to where they need it."

H2 Green is pursuing a hub-and-spoke model of production and distribution close to urban demand centers, and is also eying storage facilities for its customers as well as a redundancy service for other suppliers, to ensure security of supply for customers.

"We view the transition to be dependent upon everyone working effectively together," Johnson said. "When we're talking to the customer base, they cannot accept a single point of failure."

Getech's Copus said the energy transition was accelerating a move to decentralized markets, where it could leverage its geospatial data.

"When I look at the energy transition, what I see is what I would call a kind of complex web of location-based decision-making," Copus told Platts.

"The energy transition is all about an evolution towards much more decentralized energy market," he said. "And that means that many of the decisions that people are making -- in terms of primary energy access or supply -- are very local.

"Yes, there's a very global thing to be solved, which is climate change. But often, the answer to that global challenge is at the local level," such as cities, Copus said.