Investment in hydrogen as national security factor

The energy transition has been one of the most popular and widely reprinted topics relating to the energy sector over the past three years. It has been argued that its main task is the abandonment of hydrocarbon energy sources. Meanwhile, the basic goal of the energy transition has always been and remains the provision of affordable, environmentally friendly and, above all things, safe energy. With this approach in place, responsible attitude towards society, the environment and future world, optimization of existing energy sources and the search for new, alternative options are the main things.

It is extremely difficult to find an energy resource that is optimal for the surrounding community and effective for society. This requires scientific research, technical development, pilot testing, industrial scale-up and raising significant investments. That is why cooperation between engineering companies and banks is the most successful option for developing and promoting new technology. The partnership between Gazprombank and InEnergy in developing hydrogen technologies and producing new generation fuel cells and energy storage systems is one of the striking examples of such systemic work in the domestic energy market.

Effective but imperceptible
Hydrogen features the highest calorific value and lowest emissions into the atmosphere since water is its oxidation product. This makes it the optimal gas for use in the power sector. However, it is impossible to find the Universe’s most common gas in its pure form in nature. Therefore, the main task is to find the simplest but environmentally friendly and safe ways to obtain, store, transport and use it for industrial purposes.

To date, there are no full-fledged wide-scale industrial technologies involving the use of hydrogen in the market. It is mainly produced at oil refineries and petrochemical plants (about 75 mtpa globally) and normally used for their own needs. A small amount of hydrogen is used in mixtures with other gases.

Less than 0.01 million tons of hydrogen are currently consumed annually as an energy carrier in such domains as transport and power engineering. The high cost of producing low-carbon hydrogen, lack of technology enabling its wide application, including the safety of the entire production chain, lack of necessary storage and transport infrastructure and several gaps in the regulatory framework can be referred to as factors contributing to its low level of use. However, all these problems are ultimately solvable given the current development level of science. There are already companies in the market that offer various solutions enabling the efficient use of hydrogen.

For instance, many global automotive concerns have created a number of models of fuel cell vehicles whose engines directly convert the chemical energy of hydrogen into electrical energy. In addition, the use of hydrogen as a kind of “keeper” of excess energy generated by nuclear, wind and solar power plants is increasingly growing.

Hydrogen with Russian character
The independent production and use of hydrogen in Russia are so far restricted to individual pilot laboratory installations. Meanwhile, our country has all the prerequisites to develop competitive hydrogen production assets such as significant resource base, low cost of energy resources, availability of free generating capacities, geographical proximity to potential consumers and a good research base. The existence of numerous hard-to-reach and sparsely populated areas with special requirements for environmental friendliness, such as the Arctic Region, for example, is a special incentive for developing low-power hydrogen energy assets.

According to Russian Prime Minister Mikhail Mishustin, Russia intends to export to the world market more than 1 mtpa of hydrogen by 2030. According to the current version of the Energy Strategy of Russia, the exports of hydrogen may reach 2 mtpa as early as by 2035. According to Deputy Prime Minister of the Russian Federation Alexander Novak, Russia’s share in the global hydrogen market may reach up to 20% as early as by 2030.

In implementing these plans, Russian research and practical centers will have to develop entirely domestic hydrogen production technologies and create their own grounds for testing them by the end of 2024. “By 2024, we will have developed nine domestic technologies and six prototypes of equipment for production and, in general, for the hydrogen-based power sector. A test ground will also be created for testing the equipment and a number of hydrogen export projects will be launched, including projects involving the production of hydrogen on the Kola Peninsula and in Sakhalin,” the Deputy Prime Minister explained.

Initial steps on the road to a big market

The joint project of InEnergy and Gazprombank is aimed precisely at implementing the strategic task of creating a domestic research and technological base in the hydrogen domain. “Gazprombank’s industrial assets feature unique competencies and cutting-edge developments and use the best proven approaches and tools which allows them to be a driving force enabling switch-over to a new significant hydrogen introduction and use phase that will contribute to the development of the entire system as a whole. At the same time, the Bank is ready to become a pillar of support for the hydrogen industry in Russia that will patronage innovative projects and developments in this area,” Tigran Khachaturov, a Deputy Chairman of Gazprombank’s Management Board in charge of the Industrial Assets Block, said.

At the first stage, Gazprombank provided InEnergy with funding that will be used to move from the R&D and engineering phases to the production one. One of the focus areas within this project is the development and implementation of power plants based on hydrogen-air fuel cells featuring a proton-exchange membrane (PEMFC). High efficiency and environmental friendliness are the advantages of this technology. Generators with PEMFC can be used both as power systems for vehicles and for stationary applications, including the option to utilize heat.

The development and large-scale implementation of domestic energy storage systems that are an indispensable part of any renewable energy project, including hydrogen one, is another important area of joint efforts. InEnergy, with Gazprombank’s support, is working towards introducing an electrochemical energy storage system based on redox flow (RFB) and metal-ion batteries. Such systems feature high power and fast response time. They are used to balance the generation of renewable energy sources or limit peak loads and as a backup energy source.

These are far from the only technologies being developed and promoted by InEnergy. Actually, the project acts as a mediator of fundamental research and practical developments that gathers under its roof joint laboratories with a deep knowledge of chemical and physical processes and a design and commercial unit that has a deep insight into the needs of the market and is able to commercialize innovative breakthrough products. Such interaction seems to be the most effective way to help sophisticated and responsible solutions find their way to the market.

In this case, Gazprombank acts not just as an investor into individual commercial high-tech developments. In fact, it stimulates the development of modern domestic science and technology both in the energy sector and related industries, such as chemical or transport ones.

Cooperation with InEnergy is not the only area of Gazprombank’s operations. In September this year, H2 Invest LLC, a company managing the bank’s hydrogen operations, executed a memorandum of understanding with the National Technology Initiative (NTI Foundation) for the development of domestic hydrogen technologies. The document envisages the potential creation of a joint venture investment foundation that will focus on the development of promising domestic hydrogen technologies. For this purpose, the parties are considering co-financing options or investing into hydrogen projects plus the subsequent commercialization of promising initiatives.

“We have several very strong Competence Centers of the National Hydrogen Fuel Cell Technology Initiative. We have already created the first aircraft powered by hydrogen fuel cells, the first unmanned vehicle platform and a number of other solutions. Their economic and industrial scale-up is under consideration”, Dmitry Peskov, special presidential representative on digital and technological development, explained.

Transportation as a key to success

Alongside with the electrochemistry domain, Gazprombank is also developing another critical area of hydrogen economy, i.e., the creation of an infrastructure for transporting hydrogen from producers to consumers. According to recent developments, the most efficient way to transport hydrogen is to transport it in liquid form inside 40-foot ISO tank containers. It can be transported in tank containers using any type of land or water transport which does not require the creation of a special port or pipeline infrastructure. As a result, the cost of hydrogen logistics based on tank containers is almost 2 times cheaper vs alternative transport options and the geography of deliveries is much wider. In addition, tank containers enable storing hydrogen for a long time. This enables the end user to use containerized hydrogen as a storage system.

H2 Tech LLC was incorporated to develop such hydrogen transportation and storage technologies. Its main project is to arrange the serial production of 40-foot tank containers for transporting liquid hydrogen.

Transporting hydrogen in liquefied form inside tank containers is a critical technology for hydrogen economy. It is a prerequisite for creating a sovereign technological package of the new industry and launching hydrogen production operations in the Russian Federation. This technology will enable producing, transporting and storing hydrogen at competitive cost. Moreover, it can become an anchor order for the creation of new materials and components by Russian enterprises.

Element of homeland security
The development of the hydrogen domain is of particular importance for Russia in the current geopolitical conditions that have given rise to a politically motivated rejection of Russian conventional energy resources and protracted energy crisis in Western countries. Owing to the competitive advantages of inexpensive energy resources such as gas or nuclear power, Russia has an opportunity to set up its own efficient production assets to produce not only hydrogen but also unique domestic technologies. “This is what Russia’s future hydrogen strategy must be aimed at,” Alexander Novak said at a meeting of the interdepartmental working group responsible for developing hydrogen energy in the Russian Federation that took place in late October 2022.

“Given the current situation, we have felt the impact of sanctions, including on hydrogen energy projects. However, we believe that the development of hydrogen technologies is still one of the top priorities. At the same time, it is necessary to adjust the target indicators of the program towards increasing the share of domestic technology and reducing export plans,” the Deputy Prime Minister said.

The members of the working group participating in the meeting highlighted the development of domestic hydrogen production, storage and transportation technology for the domestic and international markets, creation of a national hydrogen qualification and certification system, mass production of a range of industrial products using hydrogen and creation of test grounds among the key priorities pertaining to the development of the industry. The task of developing international cooperation to facilitate hydrogen projects was also set.

It is the export of hydrogen technologies that is outlined in Gazprombank’s operating strategy, including in connection with the InEnergy project. The project participants intend to approach global markets with unique technologies and products using the Russian market as a starting point. “Gazprombank is a professional player operating in the domestic high-tech market with an investment focus on global projects pertaining to this sector. This partnership paves the way for development and technological leadership through the creation of a package of sovereign technologies and sustainable chain of domestic suppliers in today's geopolitical conditions,” Dmitry Peskov, special presidential representative on digital and technological development, said.

Thus, under the current tough economic conditions, the development of the domestic hydrogen industry is increasingly becoming a new strategically significant project aimed at strengthening the national energy and economic security in the medium and long terms.