A year ago, the European Council formally agreed to continue the Fuel Cells and Hydrogen Joint Technology Initiative, with a budget of EUR 1.33 billion for 2014-2020. How will this money be spent?

The approval of the continuation of the Fuel Cells and Hydrogen Joint Undertaking (FCH JU), with a 40% increased budget, was a major step for the sector. It was a testimony to the excellent performance of the first Joint Technology Initiative (JTI), with the sector witnessing significant growth.

Several good examples, especially in the current economic context, include: Fuel Cell and Hydrogen (FCH) industries saw 6% growth in jobs per year, with the companies increasing their annual turnover by 10%. Companies also experienced an almost 60% increase in R&D expenditure since the foundation of the FCH JU.

Under Horizon 2020, the second generation of the Fuel Cells and Hydrogen Joint Undertaking (FCH 2 JU) aims to speed up the commercial deployment of fuel cells and hydrogen in Europe through the investment of €1.33bn (half public, half private funds) in a range of programmes from research to demonstration and pre-market introduction tests.

The projects under FCH 2 JU will look to deliver a new generation of materials and prototypes as well as demonstrate, on a large scale, the readiness of the technology to enter the market in the fields of transport (cars, busses and refuelling infrastructure) and energy (hydrogen production and distribution, energy storage and stationary power generation).

The funding will be channelled through seven yearly calls, based on the Multi-Annual Working Plan developed by the Industry jointly with the European Commission and our research counterpart N.ERGHY. At NEW-IG level, the process towards this crucial document was led by a Coordination Group composed of all members and organised in five topical committees.

Concretely, we are looking to prepare the FCH technologies for the market by further increasing their efficiency and durability, expanding their lifespan and optimising their cost. Another important goal is to increase the number and size of our demonstration projects as they are a crucial step towards deeper market penetration. The goal is to expedite commercial deployment of those applications with the strongest potential for addressing energy security and climate change.

With an indicative budget of €123 million, the 2015 FCH JU Call for proposals will support a total of 20 topics covering a broad range of applications. The deadline for submission of project proposals is 27 August 2015 and all practical information can be found on the Horizon 2020 Participant Portal.

How large a role could fuel cell and hydrogen technologies potentially play in energy transition in the European Union?

Fuel cells and hydrogen constitute a triple “win” for Europe because they simultaneously enhance energy security, improve environmental sustainability, and boost economic competitiveness.

The beauty of hydrogen is that it is an extremely flexible energy carrier. It can be produced from any source of primary energy including intermittent renewables such as wind, solar and bio-resources. As a by-product, it is already available in Europe in large quantities from specific chemical processes.

Hydrogen combined with fuel cells creates an efficient conversion technology. The combination forges a high-potential technology for the production of heat and electricity for buildings. It also serves as an electrical power source for vehicles.

As identified in the Strategic Energy Technology Plan (SET-Plan), hydrogen is a bridge towards achieving the recognised needs of the European Union (EU), now also outlined in the Energy Union Package.¹ It can:

• Store domestic renewables at a virtually unlimited scale; thus boosting their share in the mix and increasing Europe’s energy independence;
• Decarbonise transport through the deployment of zero-emission Fuel Cell Electric Vehicles (FCEVs) powered by hydrogen;
• Reduce primary energy consumption as well as emissions of greenhouse gases, pollutants and particulates for heating and decentralized power production.

More specifically, a 2013 study conducted by experts from the European Climate Foundation and Cambridge Econometrics showed that deployment of clean fuels in transport could significantly shift spending from imported fossil fuels towards the European manufacturing industry. In scenarios in which Europe moves rapidly to a fleet of advanced hybrid, battery electric and FCEV’s, the fuel bill for the car and van fleet will be reduced by up to €83 billion by the year 2030 (€180 billion in 2050). At the same time, EU-wide employment in clean energy and low emission propulsion systems and components would increase by up to 1.1 million employees in 2030 and 2.3 million in 2050. While it would reduce the CO₂ emissions from vehicles by 97% by 2050, it would also improve air quality with a reduction of up to 95% in fine particle emissions by 2050 – air pollution responsible for significant public health costs.

Another example is energy storage. As we move away from conventional fossil fuel power generation and from centralised grids, energy storage will grow in importance. Hydrogen is a unique energy storage medium that can be used to to store energy to fuel the FCEVs; maintain balance in the power grids by storing and releasing excess energy; as well as for both residential and corporate use to produce combined heat and power.

The technology has been highly recognised by key European and international organisations: in June 2015, the International Energy Agency released its hydrogen and fuel cell technology roadmap which shows the importance of the role these technologies could play in energy transition. Additionally, the Word Economic Forum in Davos has named Fuel cells and Hydrogen as one of the top 2015 emerging and most promising low-carbon solutions. Now it’s up to us to make that promise a reality.

What are the main challenges that need to be overcome if we are to see a widespread market roll-out of fuel cell and hydrogen technology?

We are now at the most important and one of the hardest stages of the development of any disruptive technology. Our applications are technologically mature and market ready, but have not yet reached the scale of market penetration at which the technology becomes cost-effective. To overcome the so-called “valley of death”, the virtual chasm that separates applied research from technology demonstration; any technology requires the right public/private framework of long-term stability combined with risk-sharing tools.

In terms of finance: According to the “Roadmap for financing hydrogen refuelling networks – Creating prerequisites for H₂-based mobility” study made by Roland Berger, there are several critical gaps in the existing available funding sources in Europe. This leads to insufficient coverage of the ramp-up risk and hinders early adopters’ risk-investment. We therefore need new and innovative financing schemes to overcome these obstacles.

The Juncker Plan is a step in the right direction, but we continue to support the development of other schemes as well. Our proposed approach would include the allocation of “ETICCs” or “Energy Transition Infrastructures with Carbon reduction Certificates” to early movers i.e. infrastructure developers, to serve as a guarantee to attract financial investors in infrastructure deployment. These ETICCs would be created by public authorities from the outset of an infrastructure deployment project up to the total emissions potentially avoided until the end of its lifespan on the basis of infrastructure functioning at full capacity, with an upfront guaranteed price. These certificates would be monetized by the promoters at a pre-determined fixed price only if the infrastructure is not sufficiently loaded at the end of the project period, to cover part of the losses and/or to secure lenders. This mechanism therefore accelerates the roll-out of low-carbon infrastructure in favour of the energy transition, hence the name ETICC, to distinguish the certificates from credits or conventional carbon quotas traded on the EU-ETS. This system would have virtually no cost up front for public authorities and have a strong potential to attract the financial community to support energy transition.

The second challenge is the regulatory framework. The Energy Union will bring a number of new regulatory initiatives as well as reviews of the existing ones that are particularly relevant for the sector. We need continued development of supportive regulation for market-introduction of FCH technologies (e.g. Clean Power to Transport, Fuel Quality Directive, Renewable Energy Directive), as well as streamlining of fragmented regulatory frameworks at both national and EU level.

Finally, close cooperation across all stakeholder groups remains the key for a successful transition. As recently pointed by the report “Technology Roadmap: Hydrogen Fuel Cells” (2015) of the International Energy Agency: “Overcoming risks related to investment in infrastructure hinges upon close collaboration among many stakeholders, such as the oil and gas industry, utilities and power grid providers, car manufacturers, and local, regional and national authorities.”

Ultimately, the success of stationary FCH applications will depend on how effectively they compete with current power generation systems. How well do FCH technologies currently compete, and what can be done to improve their performance?

The greatest advantage of stationary FCH’s compared to the current systems is the absence of harmful emissions which makes them suitable for almost every location of clean decentralised power production: directly in the city, in urban areas and even in environmental protection zones. They are more efficient (up to 60% electrical efficiency, 25% lower fuel consumption) which leads to much lower OPEX and higher Net Present Value (NPV)², which is also based on lower service cost and the absence of moving parts which leads to low noise and no vibrations – FCHs are therefore welcome in every building.

However, there is also a disadvantage; otherwise everyone would buy a fuel cell: currently, Fuel Cells are more expensive than traditional technologies. Nonetheless, they are still quite affordable relative to their environmental impact. The industry performs R&D activities for cost reduction of the equipment combined with supply chain consolidation and market deployment to scale up the production volume for further cost reduction. This engagement should be complemented by a clear commitment of the policy makers for FCHs and also regulations to monetarise the environmental impact.

Public acceptance of FCH technology will be critical for its success, and this acceptance will largely depend on the safety of the technology. What is being done to increase safety levels and to inform and reassure the public in this regard?

We are, of course, fully aware of the importance of correctly explaining, in a transparent way, the safety of our technology to the public. All energy carriers and sources comprise risk. Risk management is therefore inherent to their handling. Hydrogen is already well known and mastered at the industrial level. Eventually, it should be handled by any citizen as safely as they currently manage the other energy sources in their daily life.

As a reminder, hydrogen is already largely spread within our society, as industries use very large quantities of hydrogen every day which are transported by thousands of trucks on the road. Hydrogen storage and fuel cell power train technology have been extensively and rigorously tested to ensure safety. Hydrogen storage tanks on-board fuel cell vehicles are made of advanced lightweight materials and are extremely resilient: the tests carried out have shown that the carbon fiber fuel tank is by far the strongest part of the vehicle. Extensive crash tests are also carried out with Fuel Cell Electric Vehicles like for any fuel.

As the technology matures and is deployed we will have to continue informing the public in a transparent way. This should be widely presented and explained to citizens (through demonstration projects for example) as well as through various educational materials which can realistically and truthfully convey the safety of the technology. This is something individual companies can do but is also being addressed through the FCH JU. For example, the H2TRUST project is assessing industry efforts to assure FCH technology is safe and that there is an adequate regulation, hazard awareness, incident readiness and abilityT to respond to public concerns.

How does FCH market roll-out in Europe compare with the rest of the world? Are there any lessons that Europe can learn from other markets?

There are currently three regions with major investments in FCH technologies: the EU, USA and Japan. Overall, Japan is the worldwide leader in the FCH sector. It has invested heavily into FCH technologies, promoting the so-called “hydrogen society”. To illustrate the scope of their activities - they have already installed more than 138,000 residential hydrogen fuel cell units with the aim of reaching 5.3 million households by 2030. Japan recently announced an additional financial boost to residential energy storage with a stimulus package worth EUR 500 million. Japanese car manufacturers such as Toyota and Honda are investing heavily and are putting the first generation series of FCEVs on the streets.

The USA is another growing market, especially in California and the northeast US. There both the Federal government and state legislatures are investing in the technology, both through funding research and through subsidies for first movers (infrastructures and vehicles). This second approach is especially important in California which is building its own “hydrogen highway”. There are currently 12 refuelling stations and 300 FCEVs already on California’s roads, with more stations built every day.

In the EU, we are fortunate to have a unique public-private partnership (PPP), the FCH JU, which is the largest of its kind in the world and has helped the development of the technology immensely. In addition, there is a private consortium of six industrial players at the national level in Germany, which plans to build 400 refuelling stations by 2023. Besides Germany, strong national programmes and FCH activities can be also found in France, the United Kingdom, the Netherlands, Scandinavian countries and – on a smaller scale – in other EU Member States.

What can we learn from other markets? California, together with Norway in Europe, has shown the way with regards to subsidies and grants for early adopters. California, with its Zero Emission Vehicle Program, has given a boost to the zero emission vehicles domestic market. Japan’s dedication to FCH technology can surely serve as an example for Europe going forward as well. We can also look towards the US regarding disparities in development and take-up of FCH technologies between different Member States. What is clear is that different regions take different paths and speeds towards the introduction of any new technology. What is good for us is that FCH covers a wide range of issues and as such will surely find a use in every EU Member State.

What is now needed, at a time when car manufacturers such as Toyota and Hyundai are already bringing FCEVs to the market and when the EU is working hard on integrating its energy market, is to create additional financing schemes to ensure that the whole of the EU will benefit from all the positive work done by the industry and the FCH JU. By following this path we will be able to both scale up in the EU itself but also create a sustainable export platform which will bring additional value to the economy.

Development of hydrogen production, distribution and storage technologies is one of the objectives of the FCH JU energy pillar. What advances have been made in this area and which technologies show the most promise?

One of the main technologies advanced via the FCH JU is electrolyser technology where hydrogen is produced from (renewable) electricity. Past R&D programmes have led to a 50% reduction in the electrolyser stack cost since the beginning of the FCH JU with demonstrations at 100s kW scale. The 2016 Call being prepared by the FCH JU will call for demonstration of an electrolyser providing grid services at MW scale as preparation for commercial roll-out. A new study by Ludwig-Bölkow-Systemtechnik (LBST) and Hinicio that will be published in the coming months has identified the most promising green hydrogen production routes that may help us to meet our targets. These include biomass gasification, raw biogas reforming, thermochemical water splitting, photo-electrochemical cell technology and dark fermentation.

As regards distribution, the FCH JU has funded projects involving high capacity compressed hydrogen trucks, thus reducing the cost of distribution and the number of trucks on the road, as well as hydrogen liquefaction processes with reduced energy requirement by 50% for a 20x increase in plant capacity so that hydrogen can be transported in large quantities even between continents. The potential for large scale underground storage of hydrogen in Europe in order to store excess renewable energy has been assessed and found to be viable, increasing the cost of hydrogen by only 0.5 €/kgH2. The status and potential of other storage technologies, for example solid state storage, still need to be assessed before deciding to support these. Furthermore, less obvious supporting technologies like efficient clean-up and compression of hydrogen have been developed to prototype scale and are expected to contribute to increasing efficiency and reducing costs of a hydrogen-based energy system in the future.

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¹ Brussels, 25.2.2015 COM(2015) 80 final

² OPEX - ongoing cost for running a product, business, or system NPV - defined as the sum of the present values (PVs) of incoming and outgoing cash flows over a period of time.