Green hydrogen is expected to play an important role in achieving EU objectives to reduce greenhouse gas emissions by a minimum of 55% by 2030 and reach net zero emissions by 2050. It can be used to carry and store energy, as a fuel and as an energy feedstock. The use of green hydrogen can help decarbonise, in particular, energy intensive industries, such as the transport sector, industrial processes such as steel, chemicals and cement, and the power sector. Europe has emerged as the premier market for green hydrogen development, primarily due to supportive policies by the EU and national governments. In 2020, the EU released its hydrogen strategy aimed at stimulating private investment, developing an enabling regulatory framework to drive sustained research and innovation into breakthrough technologies and for bringing new solutions to the market. Europe also benefits from a large-scale infrastructure network that only the EU and the single market can offer, which it seeks to leverage to underpin the buildout of an integrated hydrogen economy.
Due to the aforementioned factors, green hydrogen-related deal activity in Europe has increased sharply over the last couple of years, driven primarily by several strategic partnerships for large-scale initiatives in the production and associated services segments. The Enerdatics research team has analysed deal activity in the European green hydrogen landscape since 2017, and published its findings in a single slide (attached below). The highlights of the analysis are:
- 2017-YTD 2022, Europe occupies a ~62% share of the global green hydrogen deal activity, with several strategic partnerships to develop hydrogen production projects or buildout an associated service, such as transmission infrastructure, refuelling and mobility solutions, and electrolyzer development
- 2021 was a blockbuster year for green hydrogen transactions, with activity in Europe rising to nearly 3X of the 2020 level, driven primarily by the North Sea countries of Germany, Netherlands and the United Kingdom, which recorded nearly a 2.5X y/y increase in deal volume during 2021.
- The Iberian countries of Spain and Portugal are attracting significant investor interest as well, and recorded a 4X spike in deal activity in 2021, with companies such as Iberdrola, CIP, BP, Siemens and Plug Power engaged in synergistic JVs
- The North Sea region has emerged as a hub for hydrogen partnerships, primarily due to existing logistical infrastructure such as pipelines and receiving terminals, and a significant pipeline of offshore wind projects to drive electrolysis
- Mobility applications of the clean fuel covering aviation, marine transport, railways, and road-going commercial vehicles are among the primary drivers of green hydrogen projects. The industrial segment comprising emission-heavy process such as cement and steel manufacturing, fertilizer production, and refining are some of the other major drivers.
- RWE is the most active player in the European green hydrogen landscape, with 17 active partnerships since 2017. The company’s initiatives span the entire green hydrogen value chain including production projects, transport and logistics infrastructure and intercontinental trading activities.
- Other major players include oil majors Equinor, Shell and BP, large utilities Orsted, Iberdrola, Enel and ENGIE, industrial conglomerates such as Uniper and Preem, and technology services providers including Plug Power, Siemens, and Nel
- Over the medium-term, the Enerdatics research team expects Europe to continue dominating the green hydrogen landscape, as North America and Australia play catch up. Strategic partnerships between companies with complimentary expertise will continue to drive deal activity, as it has over the last 5 years
The above analysis is proprietary to Enerdatics’ energy analytics team, based on the current understanding of the available data. The information is subject to change and should not be taken to constitute professional advice or a recommendation.