Funded under the Sixth Framework Programme (FP6), the ENCOURAGED project ('Energy Corridors Optimisation for the European Markets of Gas, Electricity and Hydrogen') analyses the technical, commercial and geopolitical complexities of long-distance trade and imports of natural gas, electricity and hydrogen. The project assessed the optimisation of future 'energy corridors' between the EU and neighbouring countries.
Extending the benefits of the Internal Market is part of actions of the EU to integrate the energy markets of surrounding countries. These current and future neighbouring countries will play a vital role in the development of the EU, as they are the main suppliers and transit countries for oil and natural gas. That role will grow significantly will be extended in the next decades with electricity trade and later possibly with hydrogen supply from neighbouring countries. The goals of ENCOURAGED were:
- To assess the economic optimal energy interconnections and network infrastructure for electricity, gas and hydrogen of EU with and through neighbouring regions (North Africa, Middle East and Turkey, Central and Eastern Europe, Russia and Iceland) connecting EU with key producers in next decades.
- To identify, quantify and evaluate the barriers and potential benefits of a large European “energy connected area”.
- Propose necessary policy measures to implement the recommended energy corridors with a focus on investment and the geopolitical framework.
- To recommend the necessary measures to be adopted to ensure, realize and implement these energy corridors and realise a high-level of network security and organise workshops and a final stakeholders conference to assure consensus among scientists and other stakeholders to validate the results.
Hydrogen trade feasible
Concerns over energy supply security, climate change, local air pollution, and increasing price of energy services have a growing impact on policy decisions throughout the world. Increasingly, hydrogen is seen as offering a range of benefits with respect of being a clean energy carrier, if produced by clean, safe and renewable primary energy sources, such as biomass, wind, solar, geothermal or hydro. But since EU domestic energy resources are limited the question can be raised whether it is an economic efficient as well as sustainable option to produce hydrogen outside the EU and import it over very long distances to consumers inside the EU.
To answer that question first potential hydrogen demand in the EU in the very long term was projected. Next the potential cheapest hydrogen production centres were identified including the costs of producing the hydrogen there. These 12 centers outside Europe were Morocco, Algeria, Iceland, Norway, Romania, Bulgaria, Turkey and the Ukraine, where the clean gas can be made from renewables (map, click to enlarge). As a next step the total costs of selected hydrogen pathways are compared (graph, click to enlarge).
The project's study found that together the production centres could meet Europe's total projected hydrogen needs of the lowest hydrogen penetration scenario (400 terawatt-hour by 2040) and half of the highest scenario (over 1,000 Twh). North Africa has the largest technical potential (wind and solar) but production costs would be very high, followed by Turkey, Bulgaria and Romania (biomass) with a big potential and low costs, but where biomass may find more attractive, competing uses (combustion, methanation, liquid fuels). Norway, drawing on hydropower, has the third largest technical potential:
energy :: sustainability :: renewables :: hydrogen :: wind :: solar :: geothermal :: hydropower :: biomass :: climate change :: energy security :: EU ::
In summary and on the basis of the analysis of the potentials and the economic feasibility of different hydrogen corridor options with sources in the neighbouring countries, including a cost comparison with domestic hydrogen production in the EU25 (as benchmark), the following conclusions can be drawn:
- Hydrogen import supply routes are particularly attractive in the very long term, if based on renewable energy sources and can significantly contribute to the EU policy goals of securing energy supply and reducing greenhouse gas emissions if sustainability is the key objective.
- Importing renewable hydrogen could start first with some selected corridors after the introduction of hydrogen as a transport fuel, expected from 2015 onwards. Sources for this first phase could be found in Norway and Iceland.
- When a significant level of hydrogen demand (as a transport fuel) is reached. i. e. more than 10 % hydrogen vehicles in the total vehicle stock around 2030/2040, a wide supply portfolio is possible.
- Even when renewable feedstock is used, the supply cost (without tax) of many pathways is within a range of double the current cost of gasoline and hence only economically viable under similar terms as presently applied to bio-fuels.
- Due to the relevant influence of transport costs on the economics of hydrogen corridors, it is important to consider only large-scale production sources in order to exploit economies of scales to lower the relative high specific costs today.
- Of all corridor options analysed, hydrogen from hydro or geothermal power from Iceland offers the cheapest hydrogen and the lowest barriers with respect to competing with alternative use of it. This is followed by hydrogen from hydropower in Norway and Romania. The following corridors are promising but have certain limitations, e.g. hydrogen from wind power and solar radiation in North Africa (high potential, but also relative high cost) and hydrogen based on biomass from Romania, Bulgaria and Turkey - comparatively cheap, but biomass meets various alternative and very competing applications.
To lower costs, the ENCOURAGED study recommends considering only large-scale solutions in order to exploit economies of scale. Of all the hydrogen corridors analysed, hydrogen or geothermal power from Iceland offers the cheapest hydrogen and the lowest barriers with respect to competing alternative use of it. This is followed by hydrogen from hydropower in Norway and Romania, and hydrogen from biomass in Turkey:
Hydrogen could therefore be imported first from these selected corridors and used as a transport fuel. Once the demand for hydrogen (more than 10% of vehicles running on hydrogen by 2030) increases, then a wider portfolio may be considered, says the study. It concludes by underlining the need for further research on these hydrogen corridors to weigh up the pros and cons of them.
ENCOURAGED project: Energy Corridors Optimisation for the European Markets of Gas, Electricity and Hydrogen, homepage.
European Commission, Directorate-General for Research, Directorate Energy: Energy corridors: European Union and Neighbouring countries [*.pdf], Sustainable Energy Systems - July 2007.