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Strategic exploration of low-carbon and renewable hydrogen opportunities in Canada in 2023

DNV helps companies to identify and understand hydrogen risks to make better and more informed decisions.

Note: DNV takes our customer’s confidentiality seriously. We know that our services can become part of their competitive edge. We do not always share our customer’s names, but the examples we share of work done are always real.

 

Challenge

A leading energy company wanted to understand how they could prepare for a future where hydrogen demand is expected to grow significantly.

The company already has an advantaged hydrogen footprint in Canada but wanted to further explore the economic and technical feasibility of increasing hydrogen production in Canada for local use and export to global markets. Specifically, the company was interested in the areas of production, transportation and distribution, storage, utilization, and power-to-gas opportunities.

 

Solution

The company solicited DNV to provide an overall assessment of the hydrogen market landscape in Canada, identification and mapping of business opportunities, and an opportunity ranking assessment.

When trust matters, this was an easy choice. DNV recently completed or is in the process of delivering technical due diligence and advisory services for fifteen hydrogen projects in Europe and North America, and is supporting approximately sixty clients, including developers and investors, helping to identify and understand hydrogen risks to make better and more informed decisions.

Our assessment uncovered potential pathways for the company to enhance their leadership position over the long-term by forging strategic upstream and midstream partnerships, including joint industry projects, progressing with its own new build projects to boost their hydrogen production capacity and distribution capabilities, and enhancing its position in key market segments.

 

Technical and economic feasibility assessment

Based on an assessment of best available technology and market insights, DNV provided the company with an opportunity ranking of the most economically attractive hydrogen production and export opportunities in Canada for 2030 and 2050.

Our assessment determined that the market would have the strongest hydrogen demand growth through 2050, followed by OECD Pacific, North America, and China. This reflects the forecast provided by DNV’s Energy Transition Outlook 2023 report.

Based on a technology readiness level review, we found that using hydrogen to produce blue ammonia for export was, based on the state of technology maturity in 2023, the most economically attractive option for export. We also developed a levelized cost of hydrogen (LCOH), which enabled us to find the most economically attractive opportunities for hydrogen production in Canada.

Ammonia powered ship

Ultimately, DNV verified that there are favorable economic conditions for producing and distributing hydrogen in Canada and concluded that the customer’s existing hydrogen operations provide a solid position to build on.

We also provided the customer with assurance on which province was offering the most economically attractive opportunities for hydrogen production based on policies, feedstock, and infrastructure maturity.

 

Market opportunity assessment 

Based on 2023 market conditions and data available at the time, DNV provided the customer with market intelligence and a technology assessment to enable development of a competitive hydrogen solution for Canada’s steel manufacturing sector.

We concluded that demand for green hydrogen in Canada’s steel sector could grow significantly from 2035 onwards thanks to government policies incentivizing the use of low carbon feedstocks. We also determined that the steel industry is ready for a combination of hydrogen and fossil fuels in the blast furnace, with future technology pathways that could deliver greater emissions reduction under development.

We determined that 2023 was the right time for the customer to become a bold thought leader by bringing together members of the steel industry for dialogue around accelerating the ramp up of green hydrogen, and ultimately enhance their market position by leveraging this effort to secure early green hydrogen offtake agreements.

Hydrogen distribution pipelines

As the customer already makes low carbon hydrogen to decarbonize their own operations, we also assessed potential market opportunities around supplying hydrogen for use in renewable power generation. We were able to model a scenario, based on 2023 market conditions and available data, showing Canadian power plants adopting more hydrogen gas turbines, which in turn creates an opportunity for direct use of hydrogen for sustainable power generation.

We recommended the customer to explore opportunities for partnering with industry peers to accelerate blending hydrogen into the existing pipeline infrastructure and gas turbine/duct firing assets. This will help to familiarize the public with hydrogen and show that it can be handled and used safely. Our scenario also found that one specific Canadian province has the right mix of features that could, over the long term, create an economically attractive case for using hydrogen in power generation – including CO2 sequestration, an existing market for CO2, spare pipeline capacity, and a deregulated power market.

 

Impact

DNV provided advisory services at the early stage of opportunity identification, and our work enabled the customer to come to a better, more informed decision about their hydrogen journey.

We are proud to have helped our customer to understand the opportunities and risks related to hydrogen production and market opportunities in Canada. We are confident that the customer was able to use the information, DNV provided, to stop undisciplined capital from negatively impacting their hydrogen strategy and implement necessary risk management measures.

Contact our team for more information and tap into our expertise with hydrogen.

Related information

 

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