Hydrogen is just one piece of the decarbonization puzzle

Melodie Michel, Reporter Energy and Mines

Miners need to approach decarbonization holistically, combining solutions such as electrification, energy efficiency, batteries and green hydrogen to leverage their synergies. But where should they start?

Enel Green Power is the world’s largest renewable power operator, with around 49 GW of capacity installed in 21 countries, and offers a range of decarbonization solutions for miners. Energy and Mines asked the company’s Senior Commercial Officer, Lorenzo Ducci, to share his insights on the role of hydrogen in mining decarbonization, and he made it clear that hydrogen should not be approached as a standalone solution.

“For us, hydrogen is a complement to electrification: you need electricity to produce hydrogen, with only 60% efficiency, so it is more logical to use renewable electrons directly. Electrification offers the cheapest and simplest route to decarbonize a large portion of the final energy use, but we also acknowledge that not all processes can be decarbonized through electrification — and that’s where we see the potential of hydrogen,” he said.

According to him, currently the most promising use cases for hydrogen in the mining sector are primarily in processing or as fuel for transportation that cannot be electrified, including mining trucks, excavation machinery, trains to the port and beyond. He noted that green hydrogen’s potential to help produce carbon-free minerals could create new business opportunities for miners. “Hydrogen can be used for its chemical properties to produce green minerals such as steel. This would allow miners that currently export ore to become more vertically integrated, positively expanding their business model,” he added. This possibility is already being investigated by tier 1 miners in Australia and beyond, and in this sense, green hydrogen has the potential to reshape the metals’ supply chains.

PREFERRED BUSINESS MODELS

Enel Green Power generally offers two types of hydrogen solutions. The first is a collocated, behind-the-meter option, whereby the electrolyzer is installed next to one of Enel’s renewable plants, so they are directly connected, avoiding grid charges. The second is a standalone solution where the electrolyzer is built at the grid-connected offtaker’s premises. This reduces the cost of hydrogen transportation, but can result in high grid electricity costs. “The trade-off is between the transport costs and grid charges,” Ducci pointed out.

However, for mines with enough land availability, the company is thinking about a hybrid solution: building the renewable plant and the electrolyzer together at the offtaker’s site. In this case, the electrolyzer would not be connected to the grid, but to an offgrid renewable plant. And because both would be located at the mine, there would be very little transportation costs.

This solution would provide the shortest time to market, integrating with renewable strategy development, and therefore could perfectly tie in with a mine’s overall decarbonization strategy.

“The big possible limitation we see in this solution is in its scalability, due mainly to the availability of land and resources,” said Ducci. “That is why I mentioned the other two models at the beginning, because they could be alternatives in the future to have hydrogen supply in larger quantities and at a lower cost,” he added.

ECONOMIES OF SCALE

Of course, green hydrogen’s biggest hurdle remains its cost, which is currently far from competitive. “The elements that mostly affect the green hydrogen price are the energy price of the renewable energy and the capex of the electrolyzer. The current energy price is of course an issue, but historical data suggests that the price of renewable electricity will continue to go down, so I don’t see this as the real game changer,” said Ducci.

According to him, what really needs to change to make green hydrogen more competitive is the price of electrolyzers, and that can only be achieved through economies of scale. He explained: “There is a lot of talk about adding gigawatt hydrogen capacity, but today there are fewer than 100 MW of electrolyzer capacity worldwide. It doesn’t quite add up. So the point here is to work together with electrolyzer manufacturers to allow them to leverage economies of scale. To scale up the technology, we need to start having projects.”

THE IMPORTANCE OF PARTNERSHIPS

But for Ducci, the most important element necessary to make green hydrogen a valid decarbonization tool for miners is collaboration. “Our approach is to learn the mentality of the miners, to understand what they really need, but also to help them look at the different solutions available to them, since we are a leader in the energy transition. We need to pave this way together,” he says.

This is particularly true in the green hydrogen space, since the market is still far from mature. “We don’t want to consider the miners as simple buyers of hydrogen, because they need to invest in this technology as well. We want to work together, create this partnership within which to build solutions and develop applications.”

Ducci’s advice to miners at the start of their decarbonization journey is to find the right partner, study the portfolio of available solutions, and create a pilot project to understand how all the different elements, including renewables, batteries and hydrogen, work together. “You need to think of the mine as an ecosystem, and show the will to become a green mine,” he concluded.