The Nordic Hydrogen Valleys as Energy Hubs conference in Luleå on January 22-23, 2025, presented a wealth of facts about hydrogen development. Together, these insights painted a clear picture of the current state of the transition, which seems to be something like shaking the ketchup bottle (while waiting for the effect). One key barrier that emerged is the price gap between fossil fuels and their alternatives. It seems unsure, whether the technology development alone will bridge the gap in time. If not, it will cost the first movers, among them probably taxpayers.

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According to a mapping exercise carried out by the Nordic Hydrogen Valleys as Energy Hubs programme, there were 167 hydrogen valleys or hotspots in the Nordic countries in 2024, with a massive capacity potential of 270 TWh. However, only 0.2% of this capacity is in use. 1% is under construction.

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What is holding back development?

Brynhildur Davidsdottir of the H2AMN project listed the barriers to the development of the hydrogen economy. We lack
⚡ electricity to make hydrogen
⚡ demand for hydrogen
⚡ carrying capacity of the grid
⚡ the infrastructure in general

It is also difficult to secure funding, and the cost of new technology is high. Even scaled-up new technologies are immature, and they have to compete with mature technologies and cheap fossil fuels. Also, the public opinion is partly turning against the construction of new power plants.

In these circumstances, one cannot speak of a first mover competitive advantage but rather a disadvantage, both on the development and deployment side. The competitive advantage lies with second movers, who avoid the greatest risks.

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​​Brynhildur Davidsdottir of the University of Iceland concluded her presentation with suggestions on how to break the deadlock on green hydrogen

The main problem, according to several conference speakers, is the cheap price of fossil fuels, which is based on the fact that they are not taxed but rather supported.

The business risk that is holding back investment is therefore the price of clean hydrogen that is not competitive in the short term. For example, the price of e-methanol is now three times higher than fossil methanol.

In the longer term, as carbon prices are expected to rise and hydrogen technologies become cheaper, the researchers expect the situation to improve. We are talking about the period 2032-2033.

The researchers say that the current market situation will not lead to the desired new situation without government support for infrastructure. This means that the sooner and stronger the governments raise the price of carbon, the more it will reduce their own business risk/taxpayer exposure.

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Soft values are becoming a hard currency

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What made the Luleå hydrogen event stand out was the wealth of research data available. Another key aspect was the focus on the impact of hydrogen projects on local communities. A dedicated session explored this, where Michael Ross from Yukon University, for instance, spoke about his role as an independent mediator between local communities and energy project developers.

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Cecilia Wallmark / LTU (right), Janne Hietaniemi / Business Oulu and the author continued the story at the Nordic Hydrogen Valleys as Energy Hubs conference, where it ended at BotH2nia Goes Luleå -conference in January 2023.

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​​The social acceptability of the hydrogen transition is central to the JustH2Transit project. The transition will not be sustainable unless it is seen as fair by the communities involved, who will bear the immediate impacts. In my presentation on behalf of the JustH2Transit project, I emphasized the importance of incorporating the local perspective as the "new normal" when assessing project feasibility. The speed and profitability of project implementation depend on this, as well as the legitimacy and reputation of the entire clean transition.

You can find the summary written by the organizers and links to all the presentation materials here:

https://www.nordicenergy.org/article/nordic-hydrogen-solutions-for-our-shared-future/

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Minna Näsman

Akordi