5 Hydrogen Industry Predictions for 2023
Here are some predictions for the hydrogen industry in 2023. We share our own thoughts as well as insights from key industry leaders.

2022 saw a lot of buzz around hydrogen. So much so that it was being considered a bubble, again, which we can safely say is not ideal given the current political situations, globally. Hydrogen has had a lot of media attention which has been great to build up more awareness around the potential use cases.

Now it is 2023 we were curious to see what insights and predictions other industry experts have to share. Firstly, we wanted to start with our own prediction which will then lead to other expert opinions.

Hydrologiq’s Prediction – Construction will drive off-grid adoption

There are plenty of thoughts on the macro world of hydrogen, so we wanted to take our deployment experience and get a little deeper with our prediction. Given that our prediction has a deeper emphasis on one of the major future hydrogen consumption industries, construction.

With Europe’s largest infrastructure project, HS2, celebrating its first 10 diesel-free sites in 2022 we anticipate that we will start to see more of these sites in 2023. HS2 will provide a ‘Diamond’ site rating system for sites that have stopped using diesel and only use zero-emissions technologies. Additionally, there are contractual commitments to reduce carbon emissions. In order to achieve this Diamond site status or even realistically reduce emissions to a meaningful amount, hydrogen will be key given that HVO produces on-site emissions.

However, our realistic view of this becoming a common approach across broader construction is that it will not happen until at least 2025. Until then it is about getting the supply chain in place and users ready, customers will be pushing show of progress in removing emissions from sites.

Another factor at play will be the London NRMM (non-road mobile machinery) Low Emission Zone (LEZ) which, while only kicking in from 1st January 2025 it will require operators to start changing their practices ahead of time ‘the CAZ, Opportunity Areas and Greater London zones will no longer have different emission standards. All NRMM on all sites within Greater London will be required to meet Stage IV as a minimum. Constant speed engines will continue to be required to meet Stage V”. (All the details can be found here). 

While this only means a reduction in emissions, for tier-one contractors it will be a good time to start trialling new options such as hydrogen. Ultimately we anticipate 2023 to have more hydrogen trial deployments across various construction scenarios for information gathering.

We asked experts in the hydrogen industry:

What do you predict will be the biggest changes to the hydrogen industry in 2023?

Supply Chain Innovation

In order to reach ubiquity to the level of diesel or petrol, there really needs to be a focus on the development of the hydrogen supply chain. Currently, sourcing hydrogen is difficult, let alone finding green hydrogen providers. With this in mind, we are working on key initiatives at Hydrologiq to help develop software and products to enable a process that is smooth and in line with what currently is expected of a supply chain.

Will Rowe, Founder & CEO of Octopus Hydrogen said:

“For us, 2023 is going to be a year of delivery. We’ll see the deployment of green hydrogen projects and more progress toward our goal of 100MW live in 2025.

Green hydrogen produced via electrolysis using renewable energy is an important piece of the puzzle in achieving net zero. So we expect to see even more innovation around green hydrogen supply chains. For example, Octopus Hydrogen’s optimisation software calculates the best times to use green electricity in electrolysis.

On a wider scale, we’ve seen announcements from India, as they join the likes of the USA and EU who are also introducing incentives for the deployment of green hydrogen. This could be transformative for the hydrogen industry overall as momentum builds.”

Real Demand for Zero Emissions Solutions

More industries will start to understand just how much CO2e they are emitting which will ultimately lead to more demand for true net zero solutions. With the race to decarbonise and more industry data being presented to businesses it will become far more front of mind to ensure all options are explored, not just low-emission alternatives.

Katie Mollon, Product Manager for Hydrogen Stationary Power, BOC

“In 2023, we expect to see continued growth in the use of hydrogen for clean, off-grid, power
solutions. Diesel generators currently provide much of the power for temporary applications such as music festivals, movie sets, and construction sites. That comes with an environmental cost. As an example, the use of diesel generators on film sets can contribute up to 15% of the entire project’s carbon emissions, equivalent to 426 tonnes of CO2e per film made.

Permanent applications such as commercial buildings, hospitals, and data centres are also reliant
upon stationary generators to provide much needed power, both as primary and back-up supply.
The demand for zero-emissions solutions here is huge – by 2030 it is estimated the UK will have 2GW of electricity capacity connected to data centres, requiring 100% of this grid supply to be replicated as clean backup power.

The visibility and high-profile nature of these events and industries are driving whole areas of our
economy to decarbonise, and hydrogen is currently offering the most viable zero emission option.

BOC is experienced in supplying hydrogen for off-grid applications, our HYMERA fuel-cell generator
has provided silent, zero emission hydrogen power to the construction and outdoor event sectors as a flexible alternative to small petrol and diesel generators since 2016.”

Snowball Effect Increases

2022 saw hydrogen start to really gain traction which has ultimately carried the momentum into 2023. This should see the snowball effect increasing as more announcements come through around hydrogen projects. We will see this snowball effect accelerate through a mix of continued rapid technological advancement, government support and increasing private investment interest.

Salah Mahdy, Global Director – Renewable Hydrogen (Howden):

“5 years ago, even the most optimistic experts would not expect that the hydrogen industry
would be where it is today. Hydrogen was initially seen to be an effective tool that we could
use to fight climate change. However, the political situation in Europe early in 2022 has given
the hydrogen story another important role and accelerated the pace of its adoption. And
now, hydrogen is poised to become a major tool in supporting countries with their energy
security that has now become a strategic and critical need for many.

I know that many energy experts feel that 2023 will be the year of hydrogen, but it is my own
belief that 2022 was actually the year of hydrogen, and that its bright future has already
started because of the encouraging adoption and acceleration in 2022. The effect of the
extraordinary support that the hydrogen industry has gained last year, through the Inflation
Reduction Act in the USA and Hydrogen bank in Europe, is what is behind this amazing
cadence and momentum that we have today and what we will see in the future in the
hydrogen market, it is basically what triggered everything.

It is difficult to predict the future but what makes me optimistic is that there has been positive
and fast transformation in all the directions we need such as technological advancements,
government policies and regulations, and the market increasing demand.

For example, in terms of technology and when we look few years back, the cost of
generating hydrogen from renewable sources had decreased significantly since 2017 which
has made green hydrogen increasingly attractive. These advancements in renewable energy
and electrolysis technologies, which are critical for producing green hydrogen, are expected
to continue to improve and bring down the cost of production. Research and development
will also progress in critical areas throughout the hydrogen value chain such as hydrogen
compression, hydrogen storage and transportation, enabling the distribution of hydrogen to
remote regions and locations.

And government support is also a crucial element in this equation, and in the news, we have
all seen governments around the world setting ambitious targets for the deployment of green
hydrogen, and are implementing policies to support its development. This includes funding
for research and development, incentives for companies to invest in green hydrogen, and
regulations mandating the use of low-carbon hydrogen in certain industries.

Additionally, private investment in green hydrogen is also increasing, with companies from
various industries such as transportation, electricity generation and heavy industry showing
interest in the potential of green hydrogen to decarbonise their operations.

All these factors contribute to the growing optimism about the future of renewable hydrogen,
and it has a good chance of becoming an important player in the energy mix in 2023 and
beyond. This what make me confident that it is likely that green hydrogen will see further
significant growth and development in the next few years, and I do not see it only a business
opportunity but – in the first place – an effective tool to create a cleaner and sustainable
Future”.

A Year of Action

It’s been very clear that there have been a lot of plans, thoughts, and discussions around hydrogen viability and potential projects. 2023 will be the year that we see businesses and customers taking action to see hydrogen finally start to make progress as the fuel of the future. With projects getting Final Investment Decisions and off-take agreements being signed, 2023 is going to be the year of hydrogen lift-off.

Chris O’Connor, Head of Hydrogen – Equans

“It feels like the UK hydrogen sector is at a bit of a crossroads going into 2023. 

On one hand there’s plenty to be positive about. A lot of momentum was generated in 2022 with projects of all shapes, sizes (& colours) participating in government funding competitions. With an additional 500MW electrolytic allocation round planned for 2023, hydrogen is no longer seen as a pipe dream but rather an integral aspect of net zero.

But on the other hand there’s the wider backdrop… An energy crisis, a tightening public purse and an almost inevitable recession. When push comes to shove, will hydrogen remain high on the government’s agenda? Afterall, the vast majority of projects are not viable without state intervention.

So what do I think? Well I’m inclined to land on the side of positivity. The UK isn’t alone in recognising the importance of hydrogen and there’s a lot of countries jostling for that first mover advantage. This isn’t the time to stumble, particularly if we want the hydrogen sector to become the export opportunity that it is touted to be. Encouragingly, this sentiment was echoed in Chris Skidmore’s Net Zero Review published last week.

So I think the government support will remain (albeit perhaps slightly dampened) and projects will continue to progress. In particular, I think 2023 will be the year that the sector gets on with it and stuff happens behind the scenes. Hydrogen projects don’t just happen overnight so I expect the sector will be buzzing with engineering, consenting and commercial negotiations as projects accelerate towards final investment decision.

Anyway, speculating aside, the main thing that I know for certain is that if the UK has any chance of meeting its 2025 hydrogen targets then 2023 needs to be a big year.”

And the ever-vocal and strongly opinionated Michael Liebreich, Founder & Senior Contributor BloombergNEF said:

“Here are my 2023 predictions for hydrogen: one-third of the projects promoted during the year will make sense; two-thirds will be dumb as a rock; 90% of both will never see the light of day. Happy New Year!”

Even if that statement is true 10% will be making a big impact and how can we increase that percentage for the 1/3rd that does make sense? What are your thoughts? Share them in the comments below. 

Author

Marius Fermi


Marius has 10 years of digital marketing experience helping businesses develop GTM strategies and enabling growth. He has also recently completed the Hydrogen Specialist course at the Renewable Energy Institute.

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