Luc Graré

VICE PRESIDENT SALES AND MARKETING

lugra@nelhydrogen.com

GREEN HYDROGENOPPORTUNITIES IN THE ENERGY

SYSTEM

Early Pioneers in Each Technology Field

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Hydrogen is key to electrify the transport sector

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Hydrogen as preferred future fuel alternative:

− True zero emission from production to use

− Can beat fossil fuel applications on a TCO-

basis

− Low weight (compared to e.g. batteries),

especially relevant in the heavy duty segment

− Fast recharging (fueling) time

− Long driving range

− Low/no need for electric grid upgrades

− Not dependent on rare earth metals

(e.g. cobalt, lithium)

− Global standards for fueling established

− Same quality fuel used for small to large

applications

− Cleans the surrounding air

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Fossil parity for mobility sector achievable in Norway today

• Regional hydrogen production, use of low cost renewable energy

• Possible to integrate with central heating grid

• Parity with taxed diesel possible already from 4-8 ton per day

0.40 NOK/kWh 25 NOK/kg + 13 NOK/kg 11 NOK/kg+ = 50 NOK/kg

Large scale

Central production

20 MW / 8 tons per day

High pressure

distribution

1,000 – 1,500 kg

/truck

Efficient dispensing

As conventional

fuels

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Centralized production close to power or heat source enables business case

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$ 135$ 124

$ 71$ 72 $ 70$ 59 $ 55 $ 47 $ 45 $ 42

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

$ 359

$ 248

$ 157

$ 125

$ 98$ 79

$ 64 $ 55 $ 50 $ 43

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Wind and solar is on a trajectory to become the cheapest form of electricity

Wind LCOE

Unsubsidised levelized cost of energy ($/MWh) 2)

Solar PV LCOEUnsubsidised levelized cost of energy ($/MWh)2)

• With falling LCOE1) of wind and solar

prices, renewable hydrogen follows the

same path, as electrical power constitute

70-80% of the total cost of hydrogen

• Record low auction prices for solar PV

and wind has seen prices as low as

$17.7/MWh and $17.86/MWh

respectively (as of 2017) 3)

• Prices are expected to drop further,

LCOE of solar PV and onshore wind are

expected to fall by 71% and 58%

respectively by 20504)

• At $50/MWh renewable hydrogen is

becoming competitive with fossil fuels

and at $30/MWh renewable hydrogen is

becoming competitive in most marketsNote: 1) LCOE = Levelised cost of energy, which is a way of calculating the total production cost of building and operating an electricity-generating plant

Source: 2) Lazard; Renewables Now, 3) IRENA (International Renewable Energy Agency); 4) BloombergNEF New Energy Outlook 2018

Cost of wind and solar has dropped by 69% and 88% during the last decade –renewable hydrogen following on the same path

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• Wide variety of existing and new markets

where electrolysis can play a major role

– Exchanging fossil hydrogen with

renewable hydrogen (f.ex fertilizer)

– Exchanging coal with renewable

hydrogen (f.ex steel manufacturing)

– Oxygen & heat adds value

• Electrolysis “bridges the gap” between the

power and industry sector, increasing the

value of electrons

• Ability to adapt to diverse and intermittent

renewable energy sources becoming

increasingly important

Decreasing cost of renewable hydrogen (and oxygen) opening up new business areas

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historic under construction future scale up

Large scale natural gas reformers

Nel large scale alkaline electrolysis

$/kW

SMR w/o CCS – capex range

Hydrogen production - capex price

Fossil parity

at $500/kW

capex level

Source: Nel

With current ongoing

expansion

Future large scale

(New products/ technology development)

Growth in renewable hydrogen will accelerate with reduced capex for electrolysers

• SMR – “steam methane reforming” is dominating

hydrogen production today, using natural gas and

steam

• Nel is establishing a new manufacturing plant

targeting a >40% cost reduction

• Expect to see further reduction in capex with increase

production volume, and further size scaling of products

• Nel targets capex to drop below SMR over time

• Electrolysis expected to be the preferred production

method if opex (i.e. power prices) are low enough

(or at parity) with the alternative production

methods

Nel ElectrolysersCAPEX - Significant economy of scale

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EURO/kW

MW

400

EURO/kW

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Factory expansion will drive down Capex

New plant

phase 1

updated 360

MW

New plant

phase 2 +

360MW

Current –

40MW

Total Notoden site – Capacity

760MW