The big shift in green and renewable gases COMMENTS

Lighting by Sabrina Tiphaneaux, director of studies at Les Echos études. Full study to read here: https://www.lesechos-etudes.fr/boutique/le-marche-francais-des-gaz-renouvelables-819?category=5#attr=3865,3867

Biogas, NGV, green hydrogen… between the promise of a new Eldorado and the risk of a runaway, what is the potential of green gases in France? In their latest publication, the Echos Etudes consultants provide a comprehensive and prospective overview of renewable gases in France.

End clap announced for natural gas

The multi-year energy program, which defines the course allowing France to achieve carbon neutrality by 2050, is clear as to the future of natural gas: "Natural gas is a fossil energy which, as such, will have to be removed from the energy mix of 2050".

Along with reducing consumption, achieving this objective will necessarily require the development of renewable gases. Biogas, biomethane, green hydrogen… decarbonization efforts encourage us to explore all avenues. While all these technologies are supported by an incentive policy (purchase prices, calls for projects, etc.), they are progressing in disorganized fashion.

Biogas is progressing at a relatively steady pace, particularly for its recovery in the form of electricity, which today represents the bulk of production units.

But the number of sites injecting biomethane into natural gas networks is exploding. In just over a year, the number of installations has doubled. At the same time, natural gas for vehicles (NGV), and its biosourced equivalent (bioNGV) is becoming a real alternative to conventional fuels for heavy mobility and is attracting more and more carriers and mobility operators. As for renewable hydrogen, everything remains to be done.

Its development is for the moment anecdotal but initiatives are multiplying. More than 120 projects are in the assembly or construction phase (source VIG’HY), with applications mainly in mobility.

Changing scale

The future of these sectors depends on their price competitiveness. And we're not there yet. All the players are engaged in a race, fueled by the arrival of large energy companies, to increase their production and reduce their costs.

The goal is to pre-empt the market and attract funds, especially grants. CRE anticipates more than €500 million in aid for the injection of biomethane in 2021, i.e. double that of 2020. For carbon-free hydrogen, the national strategy provides for an envelope of €7 billion by 2030.

The cost reduction margins are real in biomethane, but relatively narrow because the size of the installations is limited. The step is high and time is running out… before a possible turn of the screw.

On the other hand, for hydrogen, the levers are much more important. The manufacture of electrolysers has not yet entered the industrial phase and the race for gigafactory projects is launched.

Risk of runaway

This financial windfall augurs promising opportunities for the multitude of current and future players who are interested in these sectors. However, some ambitions may well be thwarted.

In biomethane, the outlook is very good. The 2023 objectives will probably be largely exceeded and those of 2028 achieved. But a scenario comparable to that of photovoltaics cannot be ruled out.

The phase of runaway and acceleration of the market that we are currently experiencing could be followed by a sharp market slowdown caused by a tightening of public support to limit the inflation of the budget envelope.

When it comes to hydrogen, most prospects point to rapid and very significant development. Admittedly, it is an energy that has real environmental advantages and support is massive.

But the uncertainties and challenges ahead are also significant. Technically, decarbonized technologies are immature.

They have to prove themselves. Economically - and this is the corollary of the previous point - decarbonated hydrogen is far from competitive. For certain uses, in particular for light mobility, hydrogen arrives late…