FIS sees hydrogen market ready for take-off
Hydrogen consistently garners attention in energy-related publications as a prospective substitute for fossil fuels, playing an indispensable role in achieving decarbonization goals. The technology for producing, transporting, and storing hydrogen is continually advancing. Considerable research is dedicated to repurposing gas networks for hydrogen transport, seasonal hydrogen storage, and improving efficiency of hydrogen production.
Progress is also being made in legislation, particularly in defining “green hydrogen.” According to the EU Commission’s Delegated Act of February 2023, hydrogen is deemed green when it is generated using renewable resources directly linked to an electrolyzer. It can also qualify as green when produced with electricity sourced from the grid, where over 90% of the energy production in the previous year was from renewable sources. Another option for hydrogen to be considered green is based on power sourced from a Power Purchase Agreement (PPA) contract, which is subject to meeting various criteria.
However, there is more uncertainty on the demand side. The low-hanging fruit for green hydrogen is its industrial usage, which currently amounts to 94.2 million metric tons annually and can transition from grey hydrogen (produced from fossil fuels) to green or blue hydrogen as a first step. By 2025, total hydrogen demand is expected to quadruple, with growth primarily projected in the transportation sector and for power generation. Nevertheless, the demand for hydrogen in the transportation sector currently appears to be lagging, with investments in decarbonizing transport favoring electric vehicles, even when some car producers made serious progress in research on hydrogen based alternatives, see more in Water, CO2, Hydrogen – Alternatives to Batteries and a Hydrogen Future? | CTRM Center . Additionally, the idea of hydrogen-based power generation is criticized due to the low efficiency of this process.
The transition from grey to green hydrogen in industries such as refineries, steel, or chemical production is ongoing, Hydrogen’s is also going to play role in power generation, alternative marine fuel, necessitating the adaptation of trading and logistics software systems to accommodate hydrogen as a new commodity. I recently discussed this topic with Harshad Kolpyakwar, Head of Solution Management for Energy solutions from FIS, who mentioned that FIS is fully prepared to support hydrogen requirements in their ETRM system, FIS Energy Trading Risk and Logistics platform formerly known as Aligne and Market Data Management System FIS Market Data Analyzer – Energy Edition. Support for natural gas trading and logistics has always been a crucial component of FIS Energy Trading Risk and Logistics platform . In recent years, the company has invested in developing LNG-related functionality, which is now in production with customers. This development makes the transition to hydrogen straightforward. The transport by pipeline or ship is similar to those of natural gas/LNG, and the liquefaction process can be largely adapted for modeling electrolysis. The recent “Hydrogen – Future wellhead for power, marine fuels, steel and financial markets” webinar organized by FIS has captured the attention of many market participants, according to Harshad. The company is optimistic about meeting the increasing demand for hydrogen trading and logistics software.
FIS Market Data Analyzer – Energy Edition has partnered with its data suppliers to increase the coverage of Hydrogen and Ammonia price benchmarks to provide industrial power, chemicals and energy users with crucial information to help them make well informed decisions.
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