Many SME industrial operators have a lot to offer in the green hydrogen market
Huge market potential brings business opportunities throughout the hydrogen value chain
The hydrogen economy brings with it substantial business opportunities. The Baltic Sea region alone (Finland and Sweden) is estimated to consume around 65 TWh of hydrogen in 2050. The required hydrogen production plants are estimated to need about 100 TWh/a of renewable electricity. The electricity demand to support the region's hydrogen economy is thus estimated to be 15% higher than the electricity consumption of Finland as a whole in 2021. The transition to a hydrogen economy will bring investments in a wide range of technologies, including renewable energy production, electricity distribution, hydrogen plants and further processing of hydrogen products. Investments will also be needed for the distribution and storage of end products and their use in sectors such as industry or transport. In addition to the investment, clean energy and hydrogen production facilities require maintenance and upkeep. There is, therefore, a vast list of market potential, with business opportunities opening up across a wide range of the value chain.
Business opportunities arise from support services and technologies built around production facilities
The main focus of the discussion on business opportunities related to hydrogen or its downstream processing plants is often on the leading technologies associated with the plants, such as electrolysers or methanation plants. However, while the role of the leading technologies is essential, it should be noted that plants need a wide range of other technologies and services around them to operate. The production of hydrogen or its downstream products requires, among other things, firm foundations, a separate building, electrical and automation systems, piping, drainage, waste heat recovery systems, compressed gas handling, storage and handling of hydrogen or its downstream products, as well as project planning and project management. Once completed, the plants also require maintenance and servicing. These technologies and services, built around the main technologies, represent a significant business potential for which many industrial SMEs have the appropriate know-how to build new business.
Steps to exploit the business potential of the hydrogen economy
The first step towards exploiting business opportunities is to identify a company's competences in the context of the hydrogen economy. The relevance of the current offer for hydrogen projects should be clarified and described as clearly as possible. This should be accompanied by the definition of a target level of future positioning towards which the company can steer itself, for example, through competence development or acquisitions. The aim should be to create a sufficiently interesting and clear package to offer for future projects. Once their own position and the future offerings have been clarified, companies that have undergone a similar internal development process can create partnerships and thus build further larger joint offers in cooperation. These can lead to subcontracting packages that are relevant and attractive for project developers and have sufficient weight in large-scale hydrogen economy projects. In this way, smaller players without a clear competitive advantage on their own can also gain access to a broader range of hydrogen projects through cooperation.
To be successful in competition, it is essential that the hydrogen economy offerings and competitive advantages are very clearly communicated. Project developers receive many contacts and need to stand out from the crowd. The competitive advantage can be strong project management skills, efficiency, quality of work, flexibility or cost-effectiveness in general. Development work focused on the company's hydrogen economy is important, as the hydrogen economy has huge potential not only in the Bothnian Sea but also in the wider Nordic market and elsewhere in Europe. Important references will be gathered from the first projects, and rapid action is an asset. The opening up of existing references relevant to the hydrogen economy will be emphasised in these projects that will be launched in the near future, as the actual hydrogen references are still scarce for many operators.
The hydrogen economy requires not only the development of businesses, but also the involvement of the public sector
Companies have a lot of work to do to clarify their own position, offerings, references and competitive advantage while building cooperation. Municipalities and cities also need to understand their own potential in the hydrogen economy and contribute to building an attractive investment environment. Public sector actors and the regions' own development companies should also play a role in facilitating cooperation between businesses.
A good example of initiating development is the Kemi Digipolis led project "Hydrogen opportunities for Kemi", which identified the region's preconditions for developing the hydrogen industry and mapped business opportunities in northern Sweden and northern Norway for operators in the Meri-Lap region. Many of the findings on local opportunities in the hydrogen economy and the development of business offerings can be replicated more widely for future players in the hydrogen market. It would be important to discuss these both within the company and with potential partners.
The complete reports of the Hydrogen Potential for Kemi project can be found at: www.digipolis.fi/kiertotalouskeskus/uudet-avaukset
Author:
Waltteri Salmi
Senior consultant, Gaia Consulting