8 August 2024
Hydrogen has, over the past few years, been massively overhyped as an energy source for the post-fossil fuel age.
This is due to the backing of the European Union (EU), the United States (US) and Japan in terms of vast subsidies and support measures.
The reality is hydrogen is inefficient as an energy source and the most likely low-cost solution is direct energy from the sun.
In certain sectors such as maritime shipping and fertiliser production, hydrogen may have a commercial future. However, in other sectors, it will simply not be able to compete with solar and wind directly.
Of late, solar energy – the energy once considered the domain of ‘tree huggers’ and ‘greenies’ – has seen a massive increase in importance stemming from technical improvements and dramatically decreased costs of solar panels and batteries.
At the beginning of the century and even 10 years ago, solar power was a minor source of energy. It has since evolved rapidly, now constituting 6% of the world’s electricity supply. This is simply because the cost of solar power has dropped dramatically from as little as a decade ago.
In 2010, electricity generated from solar photovoltaics cost approximately US$0,45 per kilowatt (KW). By 2022, it had fallen to US$0,05 per KW.
Solar, unlike other forms of non-renewable power, does not depend on the availability of natural resources such as gas or oil.
The bigger the scale of production of solar generated electricity, the lower the cost. Now, only onshore wind power is proving slightly cheaper than solar, but it is likely that it too will eventually be overtaken.
It is estimated that by 2040, given the decrease in cost, solar generated electricity will be the main source of electricity, replacing virtually all other competitors.
The main reason for the EU and the US choosing hydrogen appears to be neither commercial nor economic, but political. Europe has learned, at its considerable cost, of its dependence on hydrocarbons from Russia since the beginning of the most recent invasion of Ukraine in 2022.
However, there are low-cost environmentally friendly and carbon neutral alternatives, such as solar power, which are increasing in importance globally.
The Economist has projected that within 10 years, solar power will be the main source of electricity generation globally and by 2040, the main source of all energy use.
The ubiquitous solar panels have now become increasingly common all over the world including in Africa. Those with sufficient cash to invest are generating electricity from the rooftops of their home, given the unreliability of grid power. So why have developed countries in the EU, the US and Japan chosen an expensive energy source like green hydrogen and not solar powered electricity? The answer is in one word – China.
China is the dominant producer of solar panels and batteries, in large part because they are produced on such a vast scale and they are being subsidised by the Chinese government. This is what is driving the decreasing cost of solar power.
China went through a long and risky industrial policy to become globally competitive in the production of solar panels and batteries.
In 2011, when it was not obvious that this sector would become so competitive in generating electricity, the government provided substantial subsidies to the emerging industry. There is perhaps a deeper reason for the choice of the EU, which is based on matters of industrial policy, in terms of why solar is not acceptable to the EU.
The EU could in theory start to focus on low-cost production of solar panels and batteries in Europe and north Africa, but this would involve competing directly with China. This is something the EU has no appetite for, because they basically do not believe they can be as competitive as China.
Those who believe there will be a massive export market in the EU for Namibia’s green hydrogen need to consider the agreements currently being designed and signed between the EU and Egypt and Germany and the United Kingdom (UK) and Morocco.
There are several plans for the development of green hydrogen projects on the Red Sea. Many of these multibillion-dollar projects are meant to provide green hydrogen for the numerous vessels still passing through the Suez Canal. However, many of the north African green energy agreements are based not on hydrogen but on the direct export of green electricity by cable across the Mediterranean to Europe and the UK.
The largest project is the US$20 billion deal to develop solar generated electricity from Morocco by establishing a cable that will extend 4 500km to the UK, generating some 11,5 gigawatt (GW) of power, or what is 8% of total UK electricity demand.
In Australia, there is a similar but larger plan to develop a 20GW solar farm and transmit electricity under the sea from Australia’s Northern Territory to Singapore.
Increasingly, large international green energy projects are focusing on solar and wind power generation rather than attempting to develop green hydrogen hubs. That it is now technically and commercially feasible to transmit electricity undersea over vast distances by cable has changed the future of green electricity and the role that Africa can play in resolving energy issues in Europe.
Electricity that is generated from low-cost solar power and land-based wind farms is simply killing competitors. Coal, oil and gas will, by the middle of the century become the equivalent of whale oil, a distant memory and an energy source of an earlier century.
The sun and the wind have won the battle for how our electricity and energy will be produced and the world will be a safer, cleaner and better place for it.
For Namibia, the changing economics of electricity generation are truly a blessing as with its abundance of sunshine, wind, low-cost land and political stability, the country has the potential to become a major energy exporter.
However, this takes a focused approach by the government rather than accepting resources for projects that divert the nation’s attention from its real commercial advantage.
