When choosing the right energy source for industrial applications, several aspects must be taken into account, which include technological, economic, political and legal framework conditions. The energy source should not only make economic sense, but also meet the growing requirements for environmental compatibility and sustainability.
Technological requirements
- Process compatibility: The energy source must be suitable for the specific industrial processes. For example, high-temperature processes in the steel or glass industry require different energy sources than processes in the chemical industry.
- Availability and reliability: The energy source must be available in sufficient quantities and with high availability. Interruptions in the energy supply can lead to production losses.
- Flexibility: Some energy sources, such as hydrogen, can be used for both direct energy supply and energy storage, which is especially beneficial for companies that rely heavily on renewable energy.
Economic aspects
- Cost structure: The choice of energy source depends heavily on production and operating costs. Not only the current costs must be considered, but also long-term developments such as potential price reductions due to economies of scale or price increases due to CO₂ taxes on fossil fuels.
- Investment costs: New energy sources often require high initial investments, especially when new infrastructure needs to be built or production facilities have to be retrofitted.
- Operating costs and efficiency: The efficiency of the energy source influences the long-term operating costs. An inefficient energy source leads to higher energy losses and ultimately to higher operating costs.
Sustainability and environmental factors
- CO₂ emissions: A key aspect in the choice of energy source is its contribution to reducing greenhouse gas emissions. Companies are under increasing pressure to improve their carbon footprint. Hydrogen, especially green hydrogen, offers an emission-free alternative to fossil fuels here.
- Resource availability: Access to natural resources, such as wind, solar or biomass, can influence the choice of energy source. The geographical location of the company also plays a role here.
- Environmental requirements: National and international environmental standards such as the EU's climate protection targets require a gradual reduction in emissions and a switch to climate-friendly energy sources.
Political and legal requirements
Political and legal framework conditions play a decisive role in the choice of energy source. In the form of regulations, subsidies, taxes and incentives, they can have a strong influence on the economic attractiveness of various energy sources.
Political requirements and climate targets
- EU climate targets: The EU is aiming for climate neutrality by 2050. This means that industrial companies need to reduce the use of fossil fuels. The introduction of a price on CO₂ emissions (e.g. through EU emissions trading) makes fossil fuels more expensive and promotes the use of clean energy sources such as hydrogen or renewable energies.
- National hydrogen strategy: Many countries, including Germany, have developed national hydrogen strategies that promote investment in the hydrogen economy. Subsidies and subsidies are attractive for companies investing in hydrogen technologies.
Legal requirements and regulations
- CO₂ levies and emissions trading: In many countries, companies have to pay levies for their CO₂ emissions. The European Emissions Trading Scheme (ETS) is a key instrument for reducing greenhouse gas emissions. Companies that use fossil fuels have to buy emission certificates, which increases operating costs. This creates a financial incentive to switch to low-carbon energy sources such as hydrogen or electricity from renewable sources.
- Renewable Energy Sources Act (EEG): In Germany, there is the EEG, which promotes the expansion of renewable energies and supports their integration into the industrial energy supply. Companies that rely on renewable energies can benefit from feed-in tariffs and tax incentives.
- Energy standards and efficiency guidelines: Industrial plants are often subject to legal requirements for energy efficiency. This can influence the choice of energy source, as companies that rely on energy-efficient technologies benefit from tax breaks or subsidy programs in many countries.
Funding Programs and Subsidies
- Green technology support programmes: Governments offer extensive subsidies for the introduction of renewable energies and sustainable technologies. For example, companies can receive subsidies for the construction of electrolysis plants for hydrogen production or for investments in storage technologies to use renewable energies efficiently.
- Tax incentives: Tax incentives for energy-efficient technologies, such as investment deductions or accelerated depreciation, can increase the profitability of certain energy sources.
Security of supply and infrastructure
- Energy supply security: An energy source must be reliable and continuously available. In regions where access to renewable energy is limited, electricity or hydrogen can be imported from centralized production facilities, increasing infrastructure requirements.
- Infrastructure availability: The choice of an energy source often depends on the existing infrastructure. Fossil fuels such as natural gas already have a well-developed distribution infrastructure in many regions. For hydrogen, however, new pipeline networks or storage systems often have to be developed.
Hydrogen (H₂) is being discussed as a promising energy carrier for the decarbonization of various sectors. While it is still controversial in the mobility sector, the situation in industry is different. There, hydrogen offers numerous possible applications that are of particular interest in energy-intensive industries. In this article, we shed light on the possible applications of hydrogen in industry, its economic viability compared to electricity, gas and fossil fuels, as well as the state of the art and long-term forecasts.
Possible applications of hydrogen in industry
In industry, hydrogen is already being used in various areas, and its potential is growing steadily. The main areas of application include:
- Steel production: The steel industry is one of the largest emitters of CO₂. The use of hydrogen instead of coal in the blast furnace process (Direct Reduced Iron, DRI) can make this process almost emission-free. Projects such as "H2GreenSteel" in Sweden or the "Hydrogen in Steelmaking" (H2SM) project in Germany rely on this technology.
- Chemical industry: Hydrogen has been used in the chemical industry for decades, especially for ammonia production and refining processes. Green hydrogen could replace fossil fuels here and lead to sustainable production.
- Glass and cement industry: These industries are also very energy-intensive. Hydrogen can be used as a fuel in high-temperature processes to reduce emissions.
- Electricity supply and storage options: Hydrogen offers the possibility of acting as a storage facility for surplus renewable energy (wind, solar). Surplus electricity can be used to produce green hydrogen, which is converted back into electricity when needed.
- Aviation and shipping: These sectors are also very interested in hydrogen. Fuel cells could contribute to a reduction in emissions in the long term, especially in shipping.
Cost-effectiveness of hydrogen compared to electricity, gas and fossil fuels
Currently, the costs of hydrogen are still significantly higher than those of fossil fuels or electricity. This is mainly due to the fact that the production of green hydrogen via electrolysis is energy-intensive and the infrastructure is still under construction. The following factors influence profitability:
- Production costs: Green hydrogen, which is produced from renewable electricity by electrolysis, is more expensive than grey hydrogen, which is produced from natural gas. The production cost of green hydrogen is currently around €4-6/kg, but economies of scale and cheaper renewables can reduce it to €1-2/kg by 2030.
- Transport and storage costs: Hydrogen is a volatile gas, which makes it difficult to transport and store. New technologies and infrastructures are necessary here to make transport efficient.
- Long-term price development: The cost of fossil fuels and electricity is subject to fluctuations and political influences. In the medium term, CO₂ taxes could make the use of fossil fuels significantly more expensive, making hydrogen more economically attractive. In addition, hydrogen prices are expected to fall in the long term due to technological progress.
Cost development of hydrogen compared to gas and electricity
Figure: Forecast of the cost development of hydrogen compared to gas and electricity (2024-2050)
Here you can see the graph of the projected cost development of hydrogen compared to gas and electricity for the period 2024 to 2050. The cost of hydrogen tends to fall due to technological advances and economies of scale, while the cost of gas and electricity increases moderately, influenced by inflation and potential carbon pricing.
State of the art and projects
Technologically, hydrogen use is still in the development phase in many areas, but there are already major projects that show how hydrogen can be used in industry:
HYBRIT Project (Sweden): A joint venture between SSAB, LKAB and Vattenfall that aims to establish hydrogen-based steel production that aims to be completely CO₂-free by 2045.
H2Future (Austria): A pilot project for the production of green hydrogen for the steel industry in Linz, supported by the European Union.
Project H2Mare (Germany): The aim is to produce hydrogen directly on offshore wind farms and feed it into the mainland grid.
Wave-H2 (Germany) is an innovative project focused on the production of green hydrogen from offshore wave energy. It combines renewable energy sources with the production of hydrogen to ensure a clean and efficient energy supply. The project uses the kinetic energy of waves to generate electricity, which then flows directly into the electrolysis of water into hydrogen.+
Source: WAVE-H2 Project Freudenstadt Germany
Advantages of hydrogen as an energy source over electricity and fossil fuels
Hydrogen offers clear advantages in certain industrial processes
- High energy density: Hydrogen has a high energy density per unit mass and is particularly suitable for energy-intensive processes where high temperatures are required, such as in steel or glass production.
- Decarbonization potential: Hydrogen can replace fossil fuels and thus significantly reduce CO₂ emissions. This is particularly important for industries with high energy consumption and strict emission regulations.
- Flexibility: Hydrogen can be used as an energy carrier in a variety of ways, both in direct application (e.g. as a fuel) and in energy storage.
SWOT analysis of hydrogen for industrial applications
The right choice of energy source for industrial applications depends on a complex interplay of various factors. Technological requirements, economic considerations, environmental regulations as well as political and legal framework conditions play a decisive role in this. With the increasing importance of climate policy and the reduction of CO₂ emissions, hydrogen and renewable energies in particular are in focus, while fossil fuels are losing their attractiveness due to rising costs and stricter regulations.
Hydrogen has the potential to play a central role in the decarbonization of industry. Especially in energy-intensive industries such as the steel and chemical industries, it offers considerable advantages over conventional energy sources. However, profitability depends to a large extent on future technological developments, investments in infrastructure and political framework conditions. With falling costs and a clear focus on sustainable energy, hydrogen could become a competitive alternative to fossil fuels and electricity in the medium term.
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