Rystad: Bigger desalination market essential for green hydrogen production

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ENERGY & UTILITIES

The rapidly growing pipeline for green hydrogen projects is facing the risk of remaining non-operational unless a parallel desalination market is created to supply them with the necessary volume of fresh water, a new analysis by Rystad Energy has revealed.

The nascent green hydrogen sector has a current target of 206 GW in installed capacity by 2040 which, according to Rystad, will require a total of 620 million cubic metres of water. The analysis found that the planned projects are "overwhelmingly" in areas where fresh water is in short supply.

While many of the planned green hydrogen projects are researching and developing built-in desalination capabilities, Rystad said that there will need to be many desalination facilities externally and that for the green hydrogen to be "green", those facilities must be powered by 100% renewable energy.

The current green hydrogen pipeline is aiming for around 30 million tonnes of hydrogen per year by 2040. However, over 70% of these electrolyser projects will be located in "water-stressed" areas such as Chile and Spain. Rystad found that as a result of this, almost 85% of the planned 2040 hydrogen capacity may need to source the water supply via desalination.

Read more: Dow Benelux to build green hydrogen plant in the Netherlands

An increase in desalination will also require an increase in renewable energy capacity to ensure the hydrogen is green. Currently, only 1% of desalination facilities worldwide are powered by renewables, with most using thermal energy or power from the local grid.

“Using water to produce clean hydrogen will be a key factor for the energy transition, but most of the world’s planned green hydrogen projects are to be located in water-stressed regions. This creates a need for growth in the desalination market, and for more renewable energy to power it, adding more costs for developers – but also opportunities for suppliers,“ said Minh Khoi Le, renewable energy analyst at Rystad Energy.

The Rystad analysis found that the top five regions in terms of planned green hydrogen capacity are currently Australia, Western Europe, Central Asia, West Africa and the Middle East. With the exception of Western Europe, all of these areas have water-stress levels of medium or higher, according to the World Resource Institute. This means that the demand for freshwater is already threatening supply capacity. 

There are also several hydrogen electrolyser projects in countries with high levels of water stress outside of these five regions. Spain and Chile, for instance, are among the countries with the highest water stress and currently have a combined 42 projects planned, with more expected.

Read more: Iberdrola and Cummins team up for Spanish green hydrogen

Rystad found that 14 green hydrogen electrolyser projects are planned in regions that are in the extremely high water-stress category, 53 planned in places with high water stress and 162 in areas with medium to high water stress.

Projects in the higher water-stress areas will "almost certainly" need desalination to supply water, Rystad said, which implies an annual demand of 125.7 million cubic metres of water by 2040. Some notable green hydrogen projects in Oman and Saudi Arabia as well as numerous projects in Spain will be in this category.

Demand for desalination could grow fivefold to 526 million cubic meters by 2040 if all the hydrogen projects within regions with water stress levels above medium are realised. This will include heavy hitters in the green hydrogen pipeline such as projects like TotalEnergies’ HyEnergy 5 GW electrolyser in Australia and Germany's Aquaventus at 10 GW by 2035.

The United Nations expects freshwater demand to increase globally by 60% by 2025 − for agriculture alone. Therefore, regions with water stress levels above medium will most likely need to develop this additional desalination capacity to support green hydrogen production.

Read more:  Hydrogen "not cheap" & "needs support" says World Energy Council

While there are only a few projects in regions of low water stress, many of these are located near the shore or are taking offshore wind as feedstock, such as in Western Europe and Brazil. If all these projects add seawater desalination, total desalinated water demand for green hydrogen would hit 620 million cubic meters by 2040.

At present only a handful of commercial-scale desalination facilities use renewable energy. Two of the biggest such desalination projects are in Australia – both using wind power. The Kwinana project is powered by the 80 MW Emu Downs wind farm, while the Kurnell development is supplied by the 140 MW Bungendore wind farm.

Solar also features in some desalination projects but on a smaller scale, including at the Al Khafji and Yanbu 4 seawater reverse osmosis plants in Saudi Arabia. Some commercial electrolyser systems have moved to include reverse osmosis desalination units.

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