Bluefield’s team is always tracking global events and their potential impacts on water, and more and more headlines are centering around hydrogen as the new fuel of choice that produces net zero emissions. The U.S. government is on board as well. In our recent water-focused analysis of the Infrastructure Investment & Jobs Act, US$10.8 billion was dedicated to energy, including hydrogen hubs. Green hydrogen is a clean fuel that’s produced by splitting water into hydrogen and oxygen, using renewable energy, such as solar or wind to power the process. The result is carbon-free energy using water as the raw material input.
Demand for water could soar if hydrogen takes off. According to Water UK’s Net Zero 2030 Roadmap, water demand could increase by 15% to 20% if hydrogen emerges as an alternative fuel for power and transportation (e.g., truck fleets). While any uptick in demand sets to financially benefit water utility coffers, it could also stress existing water infrastructure and drive up the need for additional infrastructure investments in new capacity. It is for this reason, that water utilities need to get up on the learning curve, anticipate the needs, and leverage hydrogen as a chance to strengthen their role in guiding smarter cities and communities.
The race towards a hydrogen economy for electric power and transportation is global. The International Renewable Energy Agency’s (IRENA) 2021 World Energy Transitions Outlook estimates that hydrogen and its derivatives will account for 12% of final energy consumption by 2050, with two-thirds coming from green hydrogen (made with clean electricity) and one-third from blue hydrogen (made from fossil fuels and using carbon capture).
Whether or not you believe the hype, it’s worth considering what it means for the water industry if hydrogen does take off as a (future) fuel of choice. Our team of expert’s ongoing discovery of growth opportunities in water has led to these initial perspectives:
“Alternative” water supplies (and projects) are already available as sourcing options for hydrogen plants. Reclaiming wastewater and desalination, particularly in coastal environments, should be at the forefront of utility (and power developer) strategies. Water reuse, which is proving to be a lower cost and resilient water supply at US$0.66 to US$1.62 per m3, could bridge the gap between producers (i.e., wastewater treatment plants) and offtakers (i.e., industry, agriculture, municipalities). The potential economic benefits could also accelerate project financing for capital-intensive municipal and private water projects that often slow down project development.
Hydrogen offers the water sector a chance to minimize its own carbon footprint. The water sector, which is more often seen as a victim of climate change (e.g., droughts, floods), also contributes an estimated 2% to 3% of carbon emissions, globally, in energy-intensive practices like pumping water, wastewater treatment, and automobile fleets. For this reason, green hydrogen fuels, let alone other microgrid strategies (e.g., battery storage) for onsite electricity and transportation, present a legitimate opportunity for water utilities and cities to reduce their own carbon footprints. Further, onsite energy storage enables much needed resiliency in the aftermath of large storm events (e.g., hurricanes), earthquakes, and wildfires. Initial steps towards microgrids and onsite energy capture (i.e., biogas) are already underway, and hydrogen could be next on the menu of options.
A global energy transition ushers in new players, new potential partners. Solar power generation is now competitive with fossil fuels and an electric vehicle manufacturer (i.e., Tesla) is one of the most “valuable” companies in the world. While it can now be argued that a green hydrogen economy is far down the road, it should be noted that solar photovoltaics and wind energy have taken hold as large-scale power sources in the last decade and a half. In the wake of this rapid growth, renewable supermajors, like Nextera Energy, Iberdrola, TotalEnergies, and Enel, are now progressing toward large-scale hydrogen, energy storage, and water asset ownership that could ultimately reshape the water industry landscape.
From the outset, the water sector, particularly utilities and its service providers, is already well-positioned to play a critical role in the future of energy as a supplier but also in better managing growing competition for water from domestic, commercial, and industrial users. If anything, Bluefield considers this an opportunity for water utilities. From Melbourne-to-Paris-to-Johannesburg, utilities are uniquely situated with access to water supplies (e.g., groundwater, surface water, wastewater), existing treatment capabilities (e.g., wastewater reuse, desalination), and an array of distribution assets. To their further advantage, they are already located in proximity to population centers, markets, and renewable energy, where hydrogen demand is likely to be highest.
Having witnessed the renewable power sector’s explosive growth firsthand, there is no reason the water sector should not seize on the moment by owning the key role it plays in our energy future. Given that the smartphone reshaped telecom strategies, ridesharing disrupted transportation, and streaming changed entertainment consumption habits, there is no reason that water cannot be a catalyst for change in energy—and hydrogen offers such an opportunity.