By Christoph Steitz
FRANKFURT (Reuters) – German hydrogen firm Thyssenkrupp Nucera has seen customer interest soar in the U.S. as a result of the Inflation Reduction Act (IRA) and may create local production capacity with Italy’s De Nora if the market takes off.
Thyssenkrupp Nucera held talks about several potential green hydrogen projects “with very concrete timelines” during a trip to the United States last week, Chief Executive Werner Ponikwar said in an interview.
Green hydrogen, produced using renewable energy, is seen as key to decarbonising industry and so meeting climate targets.
Nucera is reviewing how the IRA, which offers incentives for clean energy initiatives, could help subsidise investments in production capacity, research facilities and pilot projects in the U.S. market, said Ponikwar, who joined the IPO candidate from industrial gases group Linde last year.
Ponikwar’s comments add to a growing number of European companies considering a bigger U.S. presence because of the favourable framework the IRA provides, including Audi, Schaeffler and Northvolt.
“We are gaining a new growth market,” Ponikwar said. “Interest in our electrolysers has increased noticeably and significantly.”
Governments worldwide need to simplify rules around hydrogen supply to attract investment and scale it up to become competitive enough to substitute fossil fuel use in heavy industry, energy executives said this week.
Ponikwar expects the U.S. hydrogen market to grow to a mid double-digit gigawatt (GW) amount by the end of the decade, from just a few hundred megawatts currently.
Legislative specifics of the IRA regarding hydrogen are still being hammered out, Ponikwar said, adding that most of the projects under discussions would likely not get a final investment decision before that happens.
Thyssenkrupp Nucera already has a U.S. presence in Houston, Texas, which mostly services customers of its chlor-alkali technologies. It is working closely with co-owner De Nora, which has a production site in the United States, Ponikwar said.
“We will think about creating manufacturing capacities together with De Nora in the USA if the market grows as strongly as expected,” he said.
Nucera, a 66-34 joint venture between Thyssenkrupp and De Nora, is already in a strategic partnership with U.S.-based Air Products and has won an order for a U.S. hydrogen plant from CF Industries.
The Hydrogen Production Tax Credit, a key component of the IRA, provides a 10-year federal tax credit of up to $3 per kilogram for clean hydrogen produced after 2022 from facilities that begin construction prior to 2033. That has the potential to push projects into profit that would otherwise be loss-making.
Nucera engineers electrolysers that are needed to produce green hydrogen, a field where it competes with Norway’s Nel, Britain’s ITM Power, France’s McPhy Energy and U.S. company Plug Power.
It focuses on so-called alkaline water electrolysis, which Credit Suisse reckons will account for 60% of the global market by 2030 as it is more suitable for big projects, while proton exchange membrane electrolysis is seen at around a third.
While the IRA supports hydrogen production, it does not require makers of hydrogen equipment to produce locally, unlike other renewable technologies where that’s a condition to qualify for credits.
Siemens Energy, which is also active in hydrogen and currently ramping up production of electrolysis modules at its Berlin plant jointly owned with Air Liquide, said it could therefore already meet the eligibility criteria.
“From our production in Berlin, we can supply projects all over the world and then organise the assembly of the electrolysers through local partners on site,” the company said in emailed comments.
“The IRA is a booster for the hydrogen economy in the U.S.,” it said, adding the European Union’s Green Deal Industrial Plan, seen as a response to the IRA, should create similar conditions for the hydrogen sector in Europe.
Nucera’s Ponikwar agreed, while noting that Europe’s tendency towards bureaucracy could slow progress there.
“In the U.S., people are more pragmatic. And as far as regulation is concerned, it is also somewhat less detailed than in Europe.”
(Reporting by Christoph Steitz; Editing by Matt Scuffham and Mark Potter)