Hydrogen firm Thyssenkrupp Nucera says IRA spurring U.S. interest

Mcphy Energy SA

09/03/2023 12:21

By Christoph Steitz
       FRANKFURT, March 9 (Reuters) - German hydrogen firm
Thyssenkrupp Nucera  TKAG.DE  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
 DNR.MI  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  LIN.N  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
 VOWG_p.DE , Schaeffler  SHA_p.DE  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.
    
    'MORE PRAGMATIC'
    Nucera, a 66-34 joint venture between Thyssenkrupp and De
Nora, is already in a strategic partnership with U.S.-based Air
Products  APD.N  and has won an order for a U.S. hydrogen plant
from CF Industries  CF.N .
    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
 NEL.OL , Britain's ITM Power  ITM.L , France's McPhy Energy
 MCPHY.PA  and U.S. company Plug Power  PLUG.O .
    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  ENR1n.DE , which is also active in hydrogen
and currently ramping up production of electrolysis modules at
its Berlin plant jointly owned with Air Liquide  AIRP.PA , 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)
 ((christoph.steitz@thomsonreuters.com; +49 30 220 133 647;))