Energy giants Equinor and RWE have agreed to work together to develop large-scale value chains for low carbon hydrogen. The partners aim to replace coal fired power plants with hydrogen-ready gas fired power plants in Germany, and to build production of low carbon and renewable hydrogen in Norway that will be exported through pipeline to Germany.
The two companies signed a memorandum of understanding (MoU) to jointly develop large-scale energy value chains, building on the partnership between Norway and Germany and the long-term relationship between Equinor and RWE.
Germany has put in place ambitious plans to phase out all coal fired power plants by 2030. Several projects for building new hydrogen-ready powerplants in Germany have been identified, replacing existing power production from coal. Until large-scale hydrogen production is developed, the power plants will be fueled by natural gas from Equinor. Replacing coal is the first carbon-reduction step, reducing CO2 emissions materially. Norway is the largest supplier of natural gas to Europe and Norwegian gas comes with the lowest carbon footprint compared to other gas supply.
The new agreement between Equinor and RWE has three main building blocks. Firstly, the two companies will facilitate the construction of new gas power plants (CCGTs), contributing to Germany’s phase-out roadmap for coal. Equinor and RWE will jointly own the CCGTs, which initially will be fueled with natural gas and then gradually use hydrogen as fuel as the volumes and technology become more readily available.
Secondly, the companies will build production facilities in Norway to produce low carbon hydrogen from natural gas with CCS. More than 95 per cent of the CO2 will be captured and stored safely and permanently under the seabed offshore Norway. The hydrogen would then be exported from Norway to Germany via pipeline.
Finally, Equinor and RWE will collaborate on the joint development of offshore wind farms that will enable production of renewable hydrogen as fuel for power and other industrial customers in the future.
“Through this collaboration we will strengthen the long-term energy security for Europe’s leading industrial country while at the same time offer a viable route to a necessary energy transition for hard to abate industries,” said Anders Opedal, Equinor’s CEO and president. “The collaboration has the potential to develop Norway into a key supplier of hydrogen to Germany and Europe, and represents a unique opportunity to build a hydrogen industry in Norway where hydrogen also can be used as feedstock to domestic industries.”
“In order to make progress in the conversion from fossil fuels to hydrogen, there is an urgent need for a rapid ramp up of the hydrogen economy,” said Dr. Markus Krebber, CEO of RWE. “Blue hydrogen in large quantities can make a start, with subsequent conversion into green hydrogen supply. This is exactly what we are driving forward with our partnership – providing the industries with relevant quantities of hydrogen. In addition our planned investments into hydrogen-ready gas-fired power plant will ensure security of supply in a decarbonised power sector.”