Interest in hydrogen technologies is definitely on the rise. Countries and companies are testing their options in order not to be left behind and to find their own niches in the emerging hydrogen economy. Poland, compared to the rest of CEE region, started with an impetus, but in order to become a leader, the country will need bold and well-planned actions – writes Łukasz Antas, Managing partner at Esperis Consulting, board member of Emerging Futures Institute
Polish hydrogen strategy – a big step ahead of the region
At the moment Poland is the only country in the Visegrad Group to have announced a draft hydrogen strategy. The document contains a number of important promises, albeit with little detail as regards practical action. The most important of these promises are: swift introduction of a legal framework for hydrogen economy and provision of financing mechanisms for technological and infrastructure development. The strategy also states ambitious goals, such as building electrolyzers with a capacity of 2GW by 2030 or creating 5 “hydrogen valleys” (hydrogen technology clusters).
One can hope that over 2021 the determination of the Polish government and business will make it possible to work out the details of the strategy. At least, several key decisions need to be made: where to locate the “hydrogen valleys”, how to support their development and which Polish and foreign companies would work there.
The ambitious strategy combined with Poland’s position as the second biggest producer of grey hydrogen (i.e. hydrogen from conventional fuels) in the EU (after Germany) and with declarations of interest in hydrogen projects by Polish big business: PKN Orlen, Lotos, PGNiG, Azoty, PSE, could grant Poland good start in the race for regional leadership.
Visegrad does not give up
Other countries in the region are also signalling ambitious plans, although they have not yet been formulated into concrete strategies.
The Czech Republic has a good starting position for the development of the hydrogen economy. Grey hydrogen producers, including Unipetrol (subsidiary of Orlen), are preparing pilot projects in the transport sector. The Czech Republic’s main energy producer, ČEZ, is also investing in start-ups developing hydrogen technologies, while the Czech gas transmission operator, Net4Gas, is making long-term plans to convert gas pipelines to transport hydrogen.
Slovak companies make plans to produce low-carbon hydrogen, although only on a small scale for the time being. They may follow the Czech example and convert gas pipelines to transport hydrogen, but this remains in the realm of ideas. The most interesting option is to attract investments of automotive corporations active in the country and to convince them to relocate production lines for hydrogen cars to Slovakia. Korean Kia Motors has already declared its willingness to do so. Foreign investments in the production of hydrogen cars, buses and trucks will be sought by all countries in the region. Seizing the initiative in this field would be a great opportunity for Slovakia.
Hungary’s plans are relatively more modest. Aside from a few declarations from major companies and several hydrogen storage and fuel cell development projects and studies, no decisive action has been taken so far.
All three countries can rely on their nuclear power plants to produce low-carbon hydrogen. This is important because the EU long-term goal is to eliminate grey hydrogen.
The black horse in the region – Ukraine?
interestingly, Ukraine is not lagging behind the V4 countries. RES capacity is intensively developed there, with the future possibility to use it to produce green hydrogen. Moreover, the Zaporozhye nuclear power plant could also produce low-carbon hydrogen in the future.
Ukraine is the only state in the region to have tested hydrogen blending in the gas grid. In addition, Kiev is seeking closer cooperation with Germany in the field of hydrogen technology. All this is aimed at becoming a major supplier of hydrogen to the EU, as envisaged in the EU hydrogen strategy. The Ukrainians are considering installing up to 10 GW of electrolyzers.
Ukrainian hydrogen could be transmitted through existing pipelines via Slovakia and Czechia (blending) or – should the pipelines be upgraded by 2050s – as pure hydrogen. Political instability and the slow-burning conflict in Donbas will likely continue to hinder future developments, but the potential for hydrogen production is high.
How can Poland position itself in the region?
Dominance in all elements of the hydrogen economy value chain will be impossible. It can be difficult for Poland to compete with Ukrainian production potential. Cooperation with foreign companies, e.g. automotive industry, will prove decisive in some sectors. In any case, Poland does not want and cannot allow itself to remain passive.
Regional cooperation is a great opportunity. EU funding will support trans-border projects, so it could be worthwhile to look for synergies between Silesia and the Czech industrial regions. In the future, the joint “Trans-Sudetian”hydrogen valley might become reality. For starters, one could seek EU funding for smaller projects in public transport – ex. a trans-border railway connection using a hydrogen train (an opportunity for train producers), or joint investments by Unipetrol and PKN Orlen in innovative use of hydrogen in petrochemistry.
Another opportunity in the region is Ukraine, as a growing market for technology exports, but also as a partner in the transit of hydrogen to the West. Declining gas production in Ukraine increases the attractiveness of building new connection with the Polish grid in order to e.g. supplying gas from Świnoujście LNG terminal. Why not improve the profitability of such a connection by making it hydrogen-ready (with EU funds), i.e. adapted for blending, and ultimately for transporting hydrogen from Ukraine to the West?
Aside from cooperation opportunities, countries will also have to manage their regional rivalry. Areas of competition will include: EU funds, foreign investments in hydrogen economy, and – later – for markets. Therefore, it will be worthwhile to analyse the hydrogen strategies of the countries in the region as they get published. Monitoring the activity of the business sector will also be crucial. Situational awareness would allow countries to identify the niches adequate to their potential – and ensure Polish leadership in chosen niches.
First of all, however, each country needs to do their own homework. The leadership will be gained by the country that has a well-developed regulatory system and a stable system of public and private support for the development of technologies that fit local needs. The potential for a hydrogen economy in the region is considerable, as the high dependence on fossil fuels requires a large-scale energy transition in the face of ever more ambitious EU targets.