RIO DE JANEIRO, BRAZIL – Brazil will play an important role in the strategy of the French holding Engie to reach the goal of 4 gigawatts (GW) of global green hydrogen production capacity by 2030.
According to the group’s executive vice president of global green hydrogen business development, Raphael Barreau, the country has strong potential to attract projects due to the abundance of water and the good price of energy generated from renewable sources.
Electricity is used in electrolysis, the process that gives rise to hydrogen. In the case of green hydrogen, the electricity used comes from renewable sources. Barreau, recently selected to take over the company’s division for the segment, will be based in Brazil.
The executive points out that the complementarity between wind, solar, and hydroelectric generation in the country guarantees a constant supply of clean energy, which helps to lower the cost of the electrolysis units.
“Many companies are looking at the production of green hydrogen for export in Brazil, they are realizing that production here will be much cheaper than in other countries,” he says.
He indicates, however, that Brazil still needs to overcome challenges to remain attractive for projects, such as expanding the interconnection of the transmission network, in order to guarantee access in other regions to renewable energy produced in the Northeast.
The executive also points out the importance of improving regulation so that hydrogen can be injected into the natural gas transportation and distribution networks. Another aspect in which the country needs to advance, according to him, is the regulations for offshore wind power generation, which can help in the development of hydrogen.
He points out that, for the country to be competitive in the production of hydrogen for export, it would also be important to reduce taxes. “If we could reduce the tax burden on green hydrogen production, whether, on taxes on the import of materials, or other taxes, hydrogen would be more competitive,” he says to Valor.
Barreau points out that the group’s participation in the natural gas segment should also help the development of the hydrogen business, since the competencies for transportation, storage, and distribution will be similar.
“Hydrogen should take an important role in the group’s portfolio to the extent that natural gas has been declining. We think that, in some way, in the long term natural gas should be replaced by hydrogen,” he explains to Valor.
Because it is carbon-neutral fuel, analysts have pointed to green hydrogen as one of the great bets for the low-carbon economy. The solution has strong synergies with the production of fertilizers, such as ammonia. “The world has the goal of reaching carbon neutrality by 2050. In areas where we can’t use electricity, we will be able to use green gases, such as green hydrogen,” says Barreau.
According to the executive, there are applications that are already economically feasible for green hydrogen, such as replacing diesel in mining trucks.
There is also the possibility of reducing production costs, with technological improvements and efficiency gains in the electrolysis process, besides the reduction of renewable energy prices.
Barreau evaluates, however, that to guarantee the financial viability of green hydrogen it is also necessary to advance in the pricing of carbon emissions. “Hydrogen production with natural gas is cheaper, but that is a wrong view, it is not the same product. You have to compare the cost of fossil hydrogen along with the cost of emissions,” he says.
Engie intends to reach an electrolysis capacity of 600 megawatts (MW) as early as 2025. To this end, the company is evaluating projects in different regions, with emphasis on Australia, where it is developing a project that has received support from the local government. There are also initiatives underway in Chile and South Africa, in addition to countries in Europe and the Middle East.
In the case of Brazil, the company signed a memorandum of understanding with the government of the state of Ceará to evaluate opportunities in the sector. In parallel, according to Barreau, there are conversations with other state governments in regions with large clean energy generation.
The group is considering acting in partnerships but has the capital to develop projects on its own.
“Our purpose is not to be a financial investor, we want to be the engine for the creation and development of projects. But there are many possible partnerships, such as a producer looking to integrate hydrogen and ammonia generation; an equipment supplier, or another energy producer,” he points out.
With information from Valor