There’s plenty of hype around the potential for a green hydrogen economy in the Caribbean, but is that matched with substance and with a viable business case?
New Energy gathered five leading green hydrogen and energy experts – Philip Julien (Kenesjay Green Limited), Vernon Paltoo (NGC), Thibault Menage (HDF), and Christiaan Gischler and Roberto Aiello (IDB) – to make the case for the production, use and export of hydrogen in the Caribbean.
New Energy News: Make the case for hydrogen in the Caribbean: Why does green hydrogen matter for the Caribbean? What’s the potential?
Philip Julien: The climate crisis has led to green hydrogen becoming a globally sought after commodity. This is primarily due to the low carbon footprint associated with its generation, compared to fossil-fuel based gray hydrogen that is currently the predominant source of commercially-generated hydrogen around the world. The Caribbean as a whole has a strong supply/demand value proposition in this new green economy for a few reasons.
From a demand perspective, there is an existing hydrogen-to-ammonia or methanol conversion capability that lies in Point Lisas, Trinidad. Equally importantly, Point Lisas is currently in demand for hydrogen, due to its current shortfall of natural gas, which is its historical hydrogen source. This means that if Trinidad is able to generate additional renewable energy to produce green hydrogen, it also has the existing infrastructure to convert this green hydrogen to a transportable and exportable commodity.
From a supply perspective, there is potential surplus renewable energy sources throughout the Caribbean, which now have this new green hydrogen market opportunity to consider as potential offtakers.
What is particularly interesting is the possibility of linking a potential surplus of green hydrogen generation with the existing green hydrogen demand potential in Trinidad. This could lead to the inter-Caribbean supply of green electricity and/or hydrogen, which in turn leads to its conversion and the export of green commodity products. In other words we’re describing a scenario that would result in economic benefit for all islands involved in this new green value chain.
New Energy News: From a private sector perspective what opportunities do you see for green hydrogen production and investment in the Caribbean?
Thibault Menage: We do not just see opportunities, we see projects. We have been developing and financing them in the region since 2015. HDF started with a large Hydrogen Fuel Cell in Martinique, then later the world’s biggest hydrogen power project being built in French Guiana, and now we are developing groundbreaking projects in Barbados and Trinidad & Tobago. There are already competitive applications in green hydrogen power and hydrogen-to-X that have proven to be bankable. More applications such as heavy marine mobility will soon become viable as well. In order to stay ahead, regional players need to come up with innovative business models. If we can do that, there is a bright future for H2 in the Caribbean.
New Energy News: Given the high price of electricity across the region, is it economic for us to be producing green hydrogen in the Caribbean?
Roberto Aiello and Christiaan Gischler: The high cost of electricity in the Caribbean is an important barrier to the competitiveness of GH2 given that electricity represents the larger portion of the cost structure. The key word is scale: only offshore wind and geothermal energy can produce GH2 in the Caribbean in the quantities and at the cost required to be competitive with the rest of the world. There are also elements of the value chain that remain expensive, such as electrolyzers, but these are expected to decrease with the increasing uptake of the technology. The larger the size of the electrolyzers, the better the economies of scale and the more cost-effective the proposition. Important to note that while GH2 costs vary across countries, it is currently expensive for most applications at a global level. It is expected though that the price of hydrogen technologies will decline as was the case with renewables, and some studies forecast cost reductions in the range of 80-90% by 2030 relative to 2020. This would make GH2 competitive with gray H2 which is currently in the range of 1-2 USD/kg.
New Energy News: What countries are taking the lead in green hydrogen development? Aside from Trinidad, are there other countries in the region that have an obvious competitive advantage?
Vernon Paltoo: For the Caribbean, aside from Trinidad and Tobago, the potential for green hydrogen lies in the availability of low cost renewable energy. Some territories in the Caribbean – such as Dominica, St Kitts and Nevis and Montserrat – have the potential to produce geothermal energy, and are interested in implementing green projects similar to the Icelandic model. We also see other green hydrogen developments of interest in Barbados.
Take Dominica, an island with only 750 km² in land area and yet with a geothermal potential of over 1000 MWh of power. In 2022, Kenesjay Green completed a Country Assessment Report for the Commonwealth of Dominica, which outlined a broad strategy for the use and conversion of the nation’s geothermal resource into new hydrogen derivatives, as part of a new industrial eco-park and green refueling port.
Barbados also has abundant renewable potential which, if scaled up, would allow for the viable production of hydrogen. In 2022, the country announced plans to develop a 50 MW photovoltaic plant with 128MWh of long-term green hydrogen storage and batteries.
New Energy News: What is a hydrogen hub? What would it mean for the Caribbean to become one?
Vernon Paltoo: A hydrogen hub is a network of hydrogen producers and consumers, with connective infrastructure to accelerate the use of hydrogen as a clean energy carrier that can deliver or store tremendous amounts of energy.
The Caribbean’s energy infrastructure, if inter-connected, has the potential to develop into a regional renewable energy and green hydrogen hub. Trinidad and Tobago and the Caribbean already have many of the building blocks in place. On the upstream end, Latin America and the Caribbean region have significant renewable resources such as wind, solar, geothermal, and hydro resources, which allows the region to have 55% of clean power generation compared with the global average of 35%. On the downstream end, Trinidad and Tobago already possesses many of the assets and trading relationships for hydrogen production, given our long tradition in oil and gas and petrochemical production. At present, there is a dynamic, thriving energy ecosystem and existing markets for ammonia/methanol, with long-standing trade relations, shipping and export routes for energy exports. Beyond the industrial sector, hydrogen could also provide a possible avenue to transition towards clean mobility as the transportation sector shifts from gasoline and compressed natural gas (CNG) towards electric driving, both with batteries and fuel cells powered by hydrogen.
A Caribbean hydrogen cluster can contribute to a stronger regional energy ecosystem, strengthen economic development and growth, improve regional transportation, boost economic integration and place the region in a leadership position in decarbonization and the energy transition.
Roberto Aiello and Christiaan Gischler: Caribbean countries are exploring how to benefit from the development of GH2 (and derivatives such as ammonia, methanol, and green fuels). Given that scale matters, the integration of fragmented island energy markets would be key to obtain a better bargaining position vis-a-vis technology suppliers and to achieve more cost-effective solutions. For example, an aggregated regional procurement of large-scale offshore wind could be considered by CARICOM states.
There is also a global trend to place ports as ‘Hydrogen Hubs’ as they would aggregate several hydrogen off-take applications in a single site, i.e. to supply shipping fleets with green ammonia for example in their future decarbonization pathway as well as port energy services. This concept applies to the Caribbean given that shipping and port services are of key importance for logistics and trade. Direct and indirect value added and economic integration from maritime transportation places the sector among the most important in terms of GDP.
New Energy News: How are you working with governments to make the shift towards a green hydrogen economy?
Roberto Aiello and Christiaan Gischler: The IDB is providing technical assistance to countries to contribute to the ongoing discussion on the role that green hydrogen can play in the Caribbean. We are supporting the development of national strategies and roadmaps and technical assessments according to their specific needs. The Roadmap for a GH2 Economy in Trinidad and Tobago is a good example of such studies.
We have also developed a report jointly with the Caribbean Centre for Renewable Energy and Energy Efficiency, the Caribbean Development Bank, and Hinicio, with inputs from IRENA, that examines some case studies to showcase examples of potential GH2 applications in the Caribbean: https://publications.iadb.org/en/green-hydrogen-opportunities-caribbean
Philip Julien: KGL’s role is not explicitly one to persuade governments, rather we have been working on demonstrating the economic viability, environmental benefit, and global possibility of a green hydrogen economy to all stakeholders. Ultimately we want to demonstrate that this green hydrogen economy can be achieved through a robust partnership between the public and private sectors, and in a manner which benefits the region economically and environmentally – a true win-win for the Caribbean.