Mitsubishi is set to make a substantial investment in what could become the world’s largest green hydrogen project, indicating the industry’s resilience in pursuing clean energy initiatives despite rising costs.
Japan’s Mitsubishi Corporation, a major trading house, is planning to invest approximately $690 million (over 100 billion Japanese yen) in a green hydrogen production plant slated for construction in Rotterdam’s Europoort industrial area, as reported by Nikkei Asia. The project, named Eneco Electrolyzer, is designed with an 800-megawatt (MW) capacity, capable of producing up to 80,000 tons of hydrogen annually. This production capacity is nearly 30 times higher than existing operational green hydrogen projects worldwide.
The Eneco Diamond Hydrogen joint venture, involving Rotterdam-based energy firm Eneco and Mitsubishi, will be responsible for constructing and operating the project. The initiative aims to utilize renewable energy from solar parks and wind farms to produce clean hydrogen primarily targeted for the industrial sector.
Eneco submitted its planning application in November 2023, with construction expected to commence in 2026. The green hydrogen plant is scheduled to start operating in 2029.
While industries and governments are increasingly turning to hydrogen for faster decarbonization, the deployment of large-scale projects is hindered by the high costs associated with green hydrogen production. Analysts note that cost reductions are crucial for clean hydrogen to play a significant role in the global energy transition. Green hydrogen, currently priced between 3 to 8 euros per kg in some regions, is more expensive than ‘grey’ hydrogen produced from natural gas.
Despite these challenges, there is a growing interest in low-carbon hydrogen projects, with China leading in green hydrogen deployment. However, the U.S. and Europe, while implementing initiatives to encourage low-emission hydrogen production, face delays in funding schemes and project execution, according to the International Energy Agency (IEA).
The IEA’s Global Hydrogen Review 2023 report emphasizes that low-emission hydrogen’s progress is impeded by increasing equipment and financial costs, potentially putting projects at risk. While government support remains strong, more significant progress is needed in technology, regulation, and demand creation for low-emission hydrogen to realize its full potential.
President Biden’s plan to allocate $7 billion to seven hydrogen hubs in the U.S. has been recognized as a step toward a low-carbon hydrogen economy, although private investment is seen as crucial for achieving ambitious goals. Wood Mackenzie’s analysis suggests that reducing the cost of clean hydrogen production to $1 per kilogram by 2030 is currently challenging due to higher renewable power costs and other factors.
Globally, there is substantial interest in hydrogen projects, with over 100 million tons per annum (Mtpa) of announced projects by the end of the third quarter of 2023. However, developers face challenges in securing financing and overcoming high costs, incomplete policy frameworks, and a lack of offtakers in the green hydrogen sector. Policy support is currently skewed toward production, with limited focus on transportation, storage, distribution, and broader infrastructure necessary for the development of hydrogen and its derivatives.