The renewable energy sector has been rife with very optimistic outlooks lately and one corner of the market is really getting attention: the hydrogen sector.
It was not a success on Wall Street as the sector was burdened with too many challenges to become a practical source of energy in our lifetime, but suddenly even giant utilities like Nextera Energy (NYSE: NEE) and Dominion Energy (NYSE) : D) have drawn up some very ambitious plans for hydrogen.
Bank of America says hydrogen can meet our huge energy needs, fuel our cars, heat our homes, and help fight climate change. He predicts the hydrogen market will reach a staggering $ 11 trillion by 2050.
Therefore, it should come as no surprise that the hydrogen boom is likely to provide a significant boost to renewable energy, creating significant investment opportunities for solar and wind energy, the proliferation of which could further reduce the cost of hydrogen production.
Dozens of the world’s energy heavyweights, including BP, Siemens Energy, Repsol and Orsted, have already outlined their green hydrogen strategies.
US company Plug Power (NASDAQ: PLUG) has partnered with Apex Clean Energy to develop a green hydrogen grid using wind power that enables “very inexpensive” renewable energy sources to help accelerate the transition to clean energy. Plug sets a goal to provide more than 50% of its hydrogen supply from renewable sources by 2024.
However, none of them can match the EU’s hydrogen ambitions.
Three months ago, the European Union laid out its new hydrogen strategy as part of its goal of achieving carbon neutrality for all of its industries by 2050.
The European Union has set itself an extremely ambitious goal of building at least 40 gigawatts of electrolyzers on its territory by 2030, which is 160 times more than the current global capacity of 250 MW. The EU also plans to support the development of an additional 40 gigawatts of green hydrogen in neighboring countries.
The world currently produces about 70 million metric tons of hydrogen per year, of which only about 4% is generated from renewable energy sources, according to the World Energy Council.
This is because green hydrogen is currently the most expensive source of hydrogen, and gray hydrogen, produced from fossil fuels through steam methane reforming (SMR) and coal gasification, is the cheapest. But at the moment, the EU does not seem to be worried about costs, as its main goal is to be carbon neutral by 2050.
Or maybe he just wants a pioneer advantage in a market that will undoubtedly have the biggest growth of any energy sector in the coming decades.