What is the potential for green hydrogen production in Norway, and what is needed from politics to establish a battery industry in the country? We had a chat with Arvid Moss, EVP Energy at Hydro, about the company’s new strategic direction from a low-carbon aluminum producer to an energy and aluminum company.
What is the background for Hydro’s new strategic direction from a low-carbon aluminum producer to an energy and aluminum company, and how do these new investments take form?
The world needs to transition away from fossil fuels, and we need this energy transition to happen quickly. This is the greatest challenge of our time, and in Hydro, we believe we can contribute substantially.
Energy has been the common thread in Hydro’s history since the company was founded more than a century ago. Today, we are a top-three renewable power producer in Norway and a significant energy market player in the Nordics and Brazil. In addition, aluminum is often referred to as energy in solid-state because it is so energy-intensive in primary production yet easy to recycle again and again after use.
We will strengthen our position in low carbon aluminum and recycling for the coming years and diversify and explore growth opportunities in New Energy. The main strategic moves we have made are:
We have established a Batteries unit, which will further develop our positions in the value chains for lithium-ion batteries. These include our ownership position in Corvus Energy, the world’s largest supplier of energy storages solutions for maritime segments; our ownership in the Swedish battery cell producer Northvolt; Hydrovolt, our 50/50 joint venture with Northvolt to recycle lithium-ion batteries from cars; and the strategic partnerships we have entered with Panasonic and Equinor, to jointly mature a business case for sustainable battery production.
We have established Hydro REIN, our dedicated company to offer renewable energy solutions for more sustainable industries. Hydro REIN will develop renewables in the Nordics and Brazil and provide industrial-scale solutions to improve energy efficiency, reduce emissions and cut costs.
And recently, we have established a separate company to develop and operate hydrogen facilities to meet great internal demand and serve an external market.
Can you tell a bit about Hydro’s current exploration of hydrogen production? What is the potential for green hydrogen in Norway?
We are going into hydrogen because we see substantial potential for industrial hydrogen consumption in Hydro and other industrials. We have large internal demand for gas used for heating in our cast houses and anode production, and a hydrogen production facility could be placed near the consumption. For Hydro, a successful hydrogen business would help us de-carbonize operations and contribute to reaching our sustainability targets. At the same time, such distributed facilities would be well placed to feed other consumption in the area, both industrial and transportation.
The Norwegian transmission system operator, Statnett, did an analysis two years ago. They estimated that the “comprehensive electrification” of Norwegian society and economy would require approximately 40 TWh of electric energy for hydrogen production. 40 TWh equals around 5000-6000 MW electrolysis capacity in Norway alone. For comparison, the biggest hydrogen plants in operation today in the world are about 10 MW.
One of your new strategic investments is within electric vehicle battery recycling and production. According to Hydro, what is needed from politics to establish a battery industry in Norway?
Norwegian companies can become important players in value chains for greener batteries in Europe and contribute to accelerating the transition from fossil fuels to renewable-powered products and solutions. By 2030, the potential for the battery industry in Norway alone represents around 90 billion NOK – or roughly 10 billion Euro, and it could potentially create up to 30.000 new jobs. So, there is no doubt that this is an enormous opportunity for Norway and Norwegian industries. In Hydro, we believe we can be at the forefront of this industrial development.
If Hydro, or any other Norwegian company for that matter, is to succeed with ambitions for battery production in Norway, we as a nation must be able to establish competitive framework conditions on par with the ones in the EU.
The EU has acknowledged the need for risk relief measures for early movers in industrial-scale battery cell production. And further, they see that a holistic approach is needed, with adequate instruments and incentives, to compete with the Chinese dominance in this value chain.
To succeed with battery value chains, Norway must maintain its competitive advantages, such as access to renewable energy at favorable price levels. Other factors are important, too, including the need to strengthen our ambitions on research and development, education, and competence development within this sector. However, the perhaps most important aspect right now is to secure full access to large European markets without trade barriers. It was recently discovered that electric cars with batteries from Norway would be met with a 10 percent duty if exported from the EU to the UK. This could be very challenging for the Norwegian battery industry, and it is something that authorities must do all they can to solve.
How can Norway and Germany benefit from closer cooperation in the energy sector?
Norway and Germany already cooperate well on the energy front. The cooperation was recently strengthened by the opening of the NordLink cable between our two countries, which entered normal operations on March 31 this year.
Another potential can be seen in offshore wind development in the North Sea. Given the proximity of some of these areas, close cooperation between Norwegian and German enterprises could be beneficial.
Lastly, take the hydrogen case as an example: Norway and Hydro are well-positioned to industrialize hydrogen production and develop the market for green hydrogen. On the other hand, we know that Germany will become an enormous market for hydrogen, especially from renewables. So, here we can realize a strong hydrogen business in Norway and later supply German partners with green hydrogen to benefit both countries.
German-Norwegian Energy Dialogue 2021
Between May 19 and June 7, industry experts from Norway and Germany will discuss bilateral business opportunities within the hydrogen value chain and offshore wind production at the German-Norwegian Energy Dialogue Webinar Series.
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