French hydrogen producer Lhyfe is in talks with steelmakers in Europe for possible collaborations and hydrogen production plant development, head of the industry division Frederic Naudi tells Kallanish.
In the short term, the firm aims to switch from grey to green H2 in heat treatment, as well as the annealing process where grey H2 is already used in limited quantities. The company is also targeting the use of hydrogen in reheating and electric arc furnaces. The challenge is to “test and prepare the ground for this transition”, including scaling up both H2 production and renewable energy procurement. Lhyfe is currently testing the use of hydrogen in high volumes for direct reduced iron plants.
As storage and transport technology would make costs rise, and DRI and EAFs require high volumes of hydrogen, Naudi believes the best option is “on site supply”. This means building dedicated production plants close to the equipment they will feed.
“We need high-capacity production plants in hundreds of megawatts and that’s what we are working on, not only on possible steel industry applications but also on other sectors such as chemicals. The challenge is now to implement mega units,” Naudi explains. He adds that the company is collaborating with electrolyser producers, with the aim of building new, larger equipment capable of guaranteeing industry supply. It is also boosting renewable energy supply security.
“We need to have extra capacity of [energy] supply in order to have … maximum availability … but for that, we need to get this energy from further away, a longer distance, which is something that will get more and more complicated in the future, because to qualify as green energy it needs to be close to the user. Maximising the green energy in hydrogen production is the challenge,” Naudi observes.
Lhyfe is not importing renewable sources today as it manages to satisfy its needs locally, “but as the projects become larger the issue will be on the table and it is going to be difficult to source green energy from countries outside Europe,” he says. Procuring an energy mix including low-carbon nuclear sources, abundant in France, is not an option for the company, which is focusing on 100% green power.
“But we are open to that in case of impossibility to get hold of renewable sources … If we put together all the industry sectors to supply in Europe, a huge amount of clean energy will be required in the future. The mix between low-carbon and renewable energy will probably exist. If there is such a mix and if there are different actors in the sector, our strategy is to stick with the green part,” Naudi notes.
The executive is convinced that hydrogen-based DRI is the best option for steel industry decarbonisation. Switching from natural gas to hydrogen feed in annealing furnaces, meanwhile, will reduce the amount of hydrogen needed thanks to oxygen treatment, Naudi says.
“An electrolyser’s green hydrogen processing produces large amount of oxygen – for 1kg of hydrogen we produce 8kg of oxygen … When you mix them in the combustion, performing an oxy-combustion, you reduce the amount of hydrogen you need, that is why the amount of hydrogen produced is not the same as gas because we improve the combustion by using oxygen,” Naudi explains.
By 2030, hydrogen demand from industry will outstrip supply. The sector needs time and investment to build European gigafactories for electrolysers and train new skills. Naudi believes it is only a matter of time before European players scale up supply and see a future supply and demand balance.
“We are trying to do as much as possible at the maximum speed to sort all the current constraints,” he notes. Lhyfe plans to decrease green H2 prices by scaling up technology. At present, the company is producing and selling H2 at competitive prices thanks to French subsidies, which are designed to fill the gap between green H2 and fossil-fuel hydrogen prices. By scaling up production, in time, costs of electrolysers and components will reduce, making green hydrogen competitive.
A start-up created in 2017 with a presence in 11 countries and looking to expand, the French hydrogen firm is involved in 93 projects – 20 of which are at an advanced stage of development. Aiming to be one of the leaders in green hydrogen production in Europe, the company is targeting a total installed capacity of 55MW in 2024, 200MW in 2026 and over 3GW by 2030.
Natalia Capra France