Author: Frank Wouters
Dossier: De opmars van waterstof
Guest Editor: Ad van Wijk
Contrary to conventional wisdom, Morocco is blessed with abundant natural resources. What the country lacks in hydrocarbons is compensated by the excellent solar and wind potential. Morocco has understood this a long time ago and directed the focus away from digging and drilling to harvesting the elements to produce very cost-competitive green electricity.
The Sahara Desert, which stretches into Morocco, is the world’s sunniest area year-round, with solar insolation levels of 2,500-3,000 kWh per square meter per year. But it is also one of the windiest areas on the planet, especially on the west coast. Average annual wind speeds at ground level reach 8-9 m/s in the western coastal regions. Good wind sites in Morocco have wind speeds that are comparable to offshore conditions in Europe.
Morocco has embarked on an ambitious renewable energy program with a target of 42% of renewable electricity by 2020, which was recently expanded to 52% by 2030, which corresponds to around 11GW (gigawatt) of solar, wind and hydropower. In Ouarzazate, a beautiful city south of Morocco’s High Atlas Mountains, known as a gateway to the Sahara Desert and also known from ‘Game of Thrones’, Morocco built the Noor solar complex, consisting of CSP (Concentrated Solar Power) and PV (Photovoltaics) projects, totaling 582 MW at peak when finished. The scale of these projects and Morocco’s clever financial engineering, have brought down the cost in particular of CSP, which is now competitive with conventional power.
At the same time, Morocco still imports vast amounts of coal and is planning a liquified natural gas (LNG) terminal to cater for the growing domestic energy demand. The OCP Group (Office Chérifien des Phosphates), founded in Morocco in 1920 is one of the leading exporters of phosphate rock, phosphoric acid and phosphate fertilizers in the world. To make the fertilizer, however, OCP imports more than 1 million tons of ammonia every year at a cost of up to €0.5 billion. The feedstock for conventional ammonia is natural gas, a resource Morocco doesn’t have in meaningful quantities.
Hydrogen can be produced in Morocco from sun, wind and water. A combination of solar and wind power can provide a high load factor for the electrolysis process, leading to competitive cost of green hydrogen. Morocco announced bids of € 28 per MWh (megawatt hour) for an 850MW wind farm in 2019. The expectation is that electricity production cost will further drop to € 10-20 per MWh before 2030 at sites with good solar and wind resources. With electrolyser efficiencies of 80% and CAPEX (Capital Expenditures) of € 300 per kW in the future, hydrogen can be produced for about € 1 per kg, which is lower than e.g. in Europe.
The green hydrogen can be used in Morocco for a number of things:
- To produce green ammonia (NH3) for fertilizer and replace costly imports of grey ammonia.
- To stabilize the grid after high shares of variable renewable energy are achieved;
- To produce green hydrogen for export to Europe.
Since COP22 (UN conference on climate change) in 2016, Power-to-X (PtX) has been gaining traction in the Moroccan climate change agenda and the country now aims to be a leading international hub for the production and export of high added-value green molecules, including green hydrogen, ammonia and methanol. The Institut de Recherche en Energie Solaires et Energies Nouvelles (IRESEN) is leading the charge and succeeded in prioritizing PtX on the agenda of the Moroccan Ministry of Energy and Environment. Furthermore, IRESEN has a key role in supporting academic and research efforts advancing the green hydrogen agenda in Morocco.
Figure 1 shows how the green hydrogen R, D&D is embedded in the national green energy agenda.
Morocco is currently elaborating a hydrogen roadmap, which will be published in 2020, and several pilot projects are being defined and early discussions are taking place concerning scale-up possibilities.
The lowest hanging fruit would be to replace costly imports of grey ammonia. The bulk of currently produced ammonia, or NH3, is produced using natural gas as feedstock, with large amounts of associated CO2 emissions. However, ammonia can also be produced from green hydrogen (produced in an electrolyser with green electricity) combined with green nitrogen (produced in an air separating unit using green electricity) in the well-proven Haber-Bosch process. Ammonia produced this way does not have any carbon emissions associated with it. If Morocco manages to achieve hydrogen production costs of € 1 per kg, the resulting ammonia cost would be below € 300 per ton. A carbon price of € 50 per ton of CO2, which is expected a few years from now, leads to a carbon bonus of € 100 per ton ammonia versus conventional ‘grey’ ammonia, which would make domestically produced green ammonia competitive.
Hydrogen in the electricity sector
According to several studies carried out for Germany, Sweden, Spain and Europe, the demand for hydrogen to stabilize the electricity grid grows exponentially as a function of the share of variable renewable sources in the electricity mix. At a 50% share of variable renewable electricity, the grid can be managed with conventional means, but at 100%, up to 20% green hydrogen is required. If Morocco continues to grow the share of domestic green power, eventually large amounts of green hydrogen are required.
Hydrogen for export
Green hydrogen made from renewable electricity and water will play a crucial role in Europe’s decarbonized future economy, as shown in many recent scenarios and as advocated by the new European Commission in the framework of the European Green Deal. In a system soon dominated by variable renewables such as solar and wind, hydrogen links electricity with industrial heat, materials such as steel and fertilizer, space heating, and transport fuels. Furthermore, hydrogen can be seasonally stored and transported cost-effectively over long distances, to a large extent using existing natural gas infrastructure. Green hydrogen in combination with green electricity has the potential to entirely replace hydrocarbons.
Today, electricity comprises some 20% of final energy demand, including feedstock and international transport. About 80% of final energy demand are molecules, mainly fossil fuels. A small percentage is heat. The share of electricity in final energy demand is expected to grow 2.5 times until 2050, still leaving a large requirement for green molecules across all European sectors. There are few alternatives to hydrogen, if any, to fully replace hydrocarbons in a decarbonized energy system, so electricity and hydrogen will both play an important role as energy carriers in the 2050 energy system. Therefore, a 50%-50% share split of green electricity and green hydrogen in Europe’s final energy demand seems logical for all sectors: industry, transport, commercial and households.
Due to its limited size and population density, Europe will not be able to produce all its renewable energy in Europe itself. Therefore, it is assumed that a large part of the hydrogen will be imported. Although hydrogen import can come from many areas in the world with good solar and wind resources, an interesting possibility is the import from North Africa. Already today, according to OPEC (Organization of the Petroleum Exporting Countries) and IEA (International Energy Agency), 13% of the natural gas and 10% of the oil consumed in Europe comes from North Africa, and 60 per cent of North Africa’s oil exports and 80% of its gas exports are sent to Europe.
As explained above, Morocco could potentially produce hydrogen at scale for € 1 per kg. In Europe, however, with higher electricity production cost for solar and wind than in Morocco, the hydrogen production cost is expected to be € 0,5-1,0 per kg higher than in Morocco by 2030. But in 2050, with lower electricity production cost, higher electrolyser efficiencies and lower CAPEX, the hydrogen production cost will come down to € 1 per kg in Europe too. However, the production cost in Morocco will also continue to drop and be well below €1 per kg. Like natural gas, hydrogen can be transported via pipeline and connected to the European gas grid.
This presents an enormous opportunity.
Conclusions and action agenda
Morocco has the potential to develop a world-leading hydrogen economy for domestic demand and for export. Europe would be interested in developing a joint program and secure competitive green hydrogen from Morocco. However, such a ‘moonshot’ program requires tremendous political and societal will on a level rarely required, not only within Europe but also between Europe and Morocco. An environment for investments in Europe and Morocco needs to be designed, in mutual co-operation, for the benefit of both.
The following are necessary considerations for an action agenda:
- A strong, clear and lasting political commitment is necessary, embedded in a binding European strategy with clear goals stretching over several decades.
- A new type of public private partnership on a pan-European level must be crafted, with the aim to create an ecosystem to nurture a European clean energy industry that has the potential to be world leaders in the field. This partnership should include existing energy industry, as well as innovative newcomers.
- A novel enabling regulatory environment and associated market design is required for the necessary investments, whilst keeping the system costs affordable.
- An integrated electricity-hydrogen infrastructure and storage system policy framework needs to be designed, with fair access to energy for everyone.
- Finally, above all a new, unique and long-lasting mutual cooperation on political, societal and economic level between the EU and Morocco needs to be designed and realized. This cooperation needs to be based on mutual respect and trust, considering each other’s cultural, social and economic backgrounds.
- Global Lead Low-Carbon Hydrogen at Worley/Advisian
- Director of the EU-GCC Clean Energy Technology Network
- Fellow Payne Institute at Colorado School of Mines
- Director and acting Board Chairman at Gore Street Capital