EDP

Solution Statement

With a strong commitment in supporting decarbonization efforts worldwide, EDP views renewable hydrogen as a complementary solution to its current activities in renewables, electricity storage, electric mobility and energy efficiency. 

EDP is developing renewable hydrogen projects, taking an end-to-end approach that includes the deployment of new renewable installations (wind and solar), the installation and operation of electrolyzers and associated storage systems, and the delivery of hydrogen to final consumers, as a complement to other decarbonization solutions. 

EDP’s main investment interests are in renewable hydrogen production facilities, including in electrolyzers and renewable facilities, and in hydrogen refueling stations. Nonetheless, EDP may support the investment in other components of the value chain, including storage, transportation and distribution and production of derivative products (ammonia, methanol or others), which are essential to establish a successful value chain and enable the widespread adoption of renewable hydrogen. 

EDP will leverage on its existing activities to successfully develop projects and supply              competitive renewable hydrogen. Its expertise

in developing cost-competitive renewable installations and knowledge of electricity trading enable the design of cost-competitive renewables mix. The historical development of thermal assets (including within industrial clients and clusters) provide engineering experience to develop projects and make available locations and infrastructure that can be repurposed to reduce costs. EDP’s understanding of consumers decarbonization needs will help foster adoption and enable the design of innovative business models. Additionally, the demonstrated track-record in innovation (including scaling up technologies from pilot to market integration), will help decrease development risks.

Challenge Statement

EDP has identified several hurdles that need to be overcome to ensure the successful implementation of its renewable hydrogen projects.

From a technology perspective, the investment costs of electrolyzers, storage and compressors are still very high, particularly due to a lack of production capability, namely at scale. Additionally, the efficiencies of electrolyzers and the lifetime of the membranes are still fairly low.

EDP is a firm believer that electrolyzers should be supplied by additional renewables, through direct connections or renewable PPA. However, renewables deployment still faces lengthy development times (particularly permitting and licensing), and heavy charges are applied if the renewables are connected through the grid (which will most likely be the case given the difficulty of installing renewables at scale close to large-scale electrolyzers). A transitional period waiving grid charges may be considered to foster the adoption of efficient solutions. 

Capturing additional revenues from ancillary services provided to the electricity grid will enable reducing the cost of hydrogen, but several regions do not have such markets in place.

Collaborating with off-takers in the development of renewable hydrogen projects is key to ensure success. However, final consumers often do not have the right incentives to begin the transition to hydrogen, whether due to lower cost of fossil alternatives, the exemption of carbon costs and other taxes, and the higher investment costs of technologies that use hydrogen.

Energy Compact Description

To support the development of a successful renewable hydrogen economy, EDP has recently created a dedicated business unit to pursue commercial projects and a technical knowledge center dedicated to hydrogen production and supply systems. 

EDP is currently developing projects ranging from small R&D initiatives to large-scale projects up to 100 MW and with the potential to significantly scale up. Examples of R&D initiatives include the FlexnConfu project, which will assess the collocation of an electrolyzer in a natural gas power plant, and the BeHyond project, which aims to conceptually develop a coupled offshore hydrogen and wind facility. 

EDP is assessing smaller-scale projects dedicated to individual offtakers, including in their premises, or small hubs, which may demonstrate the integration of different decarbonization solutions within industrial and mobility settings. 

Larger-scale projects are being developed in the premises of 4 of EDP’s coal power plants or collocated with renewable assets. The establishment of renewable hydrogen hubs on EDP’s coal plants will promote a just transition of the regions, taking advantage of the local skilled labor force, reduced costs through the repurposing of existing infrastructure, and local ports to scale-up for export.

Energy Compact Indicator 

By 2025, EDP aims to be promoting 250 MW of electrolyzer capacity, including developing renewable hydrogen hubs in the premises of EDP’s coal power plants, leveraging on the installation of >500 MW of renewable capacity (wind and solar). This will contribute to EDP’s commitments of supporting the increased use of renewable energy, being carbon neutral and becoming coal free.

Simplified licensing for RES and electrolyzers, temporary grid tariffs exemption, fiscal reform with long-term visibility following the polluter pays principle and support mechanisms for consumers will reduce costs and accelerate adoption