Ensuring hydrogen supply chains don’t become ​‘nobody’s problem’

You can’t throw a rock in energy circles without hitting someone talking about hydrogen. The endless hype around hydrogen stems from the fact that many energy experts see it as essential to reaching net-zero targets, contending that it has a particularly critical role to play in decarbonizing energy-intensive sectors such as heavy-duty transport, shipping, aviation and the manufacturing of steel and cement. 

In the International Energy Agency’s Net Zero by 2050 roadmap, hydrogen use is forecast to grow sixfold by 2050, meeting 10 percent of total energy needs. Policymakers are rushing to catalyze the industry, including the European Union’s target of deploying 40 gigawatts of the electrolyzers used in hydrogen production by 2030 (up from less than a gigawatt today) and the $8 billion in support for hydrogen hubs allocated in the U.S. infrastructure bill. 

Fast-declining costs to produce ​“green hydrogen,” which uses renewables to power the splitting of water instead of natural gas, have raised hopes that this latest wave of hydrogen hype will succeed where others have failed. However, despite this enthusiasm about advances in hydrogen production, little attention has been given to the complex supply chains and infrastructure required to bring the gas to end users, risking a repeat of the project delays and cost overruns that plagued previous hydrogen false dawns. 

“Complex systems always break down at the interfaces,” said Angela Ackroyd, CTO of hydrogen service provider Lifte H2 and a veteran of the industry, most recently with Shell Hydrogen. ​“We have to do a lot of troubleshooting, because none of the equipment vendors really worry about the complete supply chain — it’s nobody’s problem.” 

Where hydrogen supply chains break down 

There are two related aspects to the supply-chain issues facing hydrogen projects, each stemming from the nascent state of the industry. Equipment manufacturers have yet to develop robust standardized products for use with hydrogen, forcing developers — and customers — to often turn instead to equipment adapted from the compressed-natural-gas industries. This lack of standardized equipment combined with a lack of experience designing and integrating these systems is a recipe for friction and frustration. 

Consider the use of green hydrogen as a fuel for ultra-heavy-duty transportation, such as the mining or freight transportation sectors, which are likely to be among its earliest adopters. Green hydrogen is produced at an electrolyzer, which outputs to a compressor, which outputs to a tube trailer, which in turn transports the compressed gas to a storage tank at a refueling facility. Each piece of equipment may be manufactured by a different vendor, and each has its own operating requirements. 

Hydrogen requires compression to more than three times the pressure of natural gas, leading to reliability issues with today’s compressors that require carefully planned redundancies. Optimal compressor performance requires a continuous 24/7 flow of gas from the electrolyzer, but this may pose a challenge to green hydrogen projects that rely on variable wind and solar. New carbon-fiber tube trailer technologies can hold much more gas at higher pressures than steel tubes, but they are more vulnerable to overheating if filled too quickly — and they may face permitting issues with regulators unfamiliar with the technology. 

Currently, the integration of the myriad of components that are part of hydrogen supply chains is handled either in-house by end users (e.g., fleet operators or large corporates), which often find these projects much more technically challenging than anticipated, or by vertically integrated gas companies that demand the end users also sign a contract to lock in a long-term gas supply. Neither approach is likely to scale quickly enough to achieve the corporate and political decarbonization goals that must be met to avoid the worst outcomes of climate change. 

Scaling a hydrogen ecosystem

If hydrogen is going to succeed, the industry will need to step away from bespoke technology applications and shift toward robust, standardized products, turning one-off demonstrations into replicable and bankable projects. This requires aligning manufacturers, end users, and regulators and standards-setting organizations toward shared goals. ​“Accelerating the hydrogen industry means building ecosystems, rather than trying to ​‘in-house’ everything,” said Matthew Blieske, CEO of Lifte H2. 

The recently launched company, founded by veterans of Shell’s hydrogen team, represents a different approach than that taken by gas incumbents. Lifte aims to be a technology-differentiated hydrogen development company and a trusted partner for both vendors and end users, leveraging decades of experience and relationships in the industry to help both sides come together around the right equipment specifications and system designs needed for successful projects. 

On the product development side, modifying equipment lines for hydrogen or scaling up manufacturing of new and innovative technologies is costly and risky. The industry needs project pipelines backed by large end users in early-adopter sectors such as heavy-duty and ultra-heavy-duty mobility, establishing common performance requirements and aggregating the demand required to make these investments. 

Integrating these supply chains in real-world projects means bringing together nascent hydrogen technology ecosystems with a systems-engineering perspective. Experienced service providers are needed to optimize how system components fit together, with particular attention given to the interfaces between them to ensure that ​“nobody’s problem” doesn’t become a major problem for project timelines. And while technology is global, all projects are ultimately local, making experience working with regulators and permitting officials across different jurisdictions an invaluable asset. 

As in other industries, third-party service providers that can integrate supply chains will play a key role in facilitating the growth of a competitive hydrogen ecosystem. However, even with support from an experienced team, moving the hydrogen industry up the learning curve will require executing on actual projects — not just issuing press releases announcing memorandums of understanding. 

“This industry needs people who are doing real things and not just talking about it,” said Blieske. ​“You need real, motivated customers and real engineering and delivery companies to roll up their sleeves and work together to solve real problems.”