Riku Rokala works on business development in the energy and telecommunications industries.
Hydrogen—green hydrogen, in particular—is a promising solution for meeting climate targets and reducing greenhouse gas emissions. That’s why transitioning to a sustainable hydrogen market model is more important than ever. All sectors, from industry and energy to mobility and home heating, are looking for alternative ways to reduce their greenhouse gas footprint and their dependence on fossil fuels. However, a mature and sustainable hydrogen economy needs to include three elements: well-functioning market mechanisms, reliable infrastructure and diversified use of data.
Because of the war in Ukraine, energy security and self-sufficiency have emerged as crucial strategic themes in the hydrogen debate and are actively discussed, even outside the energy industry. Although the energy sector has so far been excluded from sanctions, European energy companies, especially those heavily dependent on imported Russian energy, will increasingly invest in alternative energy sources in the near future.
"The situation is constantly evolving, but the trend is that two-thirds of the gas sourced from Russia will be replaced by another form of energy within a year,” says Juha-Pekka Weckström, CEO of Helen, an energy production company based in Finland. “There is a strong desire for a rapid transition."
Wind power creates value in the hydrogen cluster
Helen has a long history of running various energy plants. Although hydrogen production differs from coal or hydroelectric power plants, Weckström believes that hydrogen production fits Helen's overall strategy and will play a significant role in future business.
According to Weckström, there are substantial business opportunities for hydrogen. "We've built a lot of wind power in just a few years. However, wind power is not always available and its price changes sharply,” he explains. “Now we have the opportunity to combine wind power volatility with hydrogen production. In this way, we can produce fuel at low prices for both industry and third parties."
Many in the market believe that wind power accounts for a significant share of the value creation of the entire hydrogen cluster. However, big questions remain. For example, what kind of hydrogen production will take place? What will be the end-customer applications?
Weckström believes that the hydrogen business is likely to be concentrated among the big players and will be high-volume production. "It is already clear that we are going into wind power generation with big money and on a broad front,” confirms Weckström. “Hydrogen production, in turn, will proceed through significant industrial pilots and partnerships, which can be expanded, if necessary." Weckström notes that Helen's hydrogen strategy is firmly in the pilot phase.
Future export opportunities require investment in integration
Overall, the Finnish hydrogen ecosystem is clearly in a start-up phase. At the core of the system is the Finnish national hydrogen cluster, built by key industrial market players, suggesting there is strong business potential in hydrogen.
To enable a large-scale and accelerated transition, the government has made significant development investments through the funding of various projects and research institutes. The big question is whether there will be a European hydrogen market and a pipeline infrastructure that will enable hydrogen to be transported from one place to another — from Finland to the central European market, for example.
"Finnish operators should aim to play a bigger-than-ever role in the European hydrogen market,” says Weckström. “Much depends on how much the EU and its support mechanisms will ultimately fund the hydrogen network. In the long term, it is essential that Finland integrates with the Baltic States and the other Nordic countries in this area."
Information sources and needs of the hydrogen economy
While electricity and natural gas have robust physical and digital trading infrastructures, there is no equivalent system in place for managing pure hydrogen. In fact, the entire hydrogen ecosystem is different in that it will integrate processes and trade from different sectors.
Market players may include pure hydrogen production plants, heavy transport logistics companies, the chemical industry, thermal plants, or even hospitals that can use the oxygen generated as a by-product of hydrogen production. Synthetic fuel plants could become an industry in their own right, turning pure hydrogen gas into a zero-emission synthetic fuel for use in conventional internal combustion engines. This setup, however, poses a challenge for value chain actors who are planning investments to exploit this new business opportunity and need to optimize their own operational activities through a range of different use cases and market conditions.
Clean hydrogen can also serve as important energy storage. In windy weather, during hours of low electricity prices, hydrogen should be synthetically produced to provide electricity for storage, and in times of high electricity prices, hydrogen should be used to generate electricity for the grid using gas turbines.
"To develop the hydrogen market, it would be worthwhile to immediately launch a digital twin pilot to demonstrate the market in concrete terms,” suggests Riku Rokala, CGI's Business Development Director for Energy. “Such an open platform would help all parties in the ecosystem to better understand the interdependencies in the value chains and to identify new business partners and refine their own investment plans."
CGI invests in enabling the hydrogen economy
In the Netherlands, we have been involved in “hydrogen valley” pilots, where the data exchange and data needs of new energy ecosystems have been tested locally. Several similar hydrogen valleys already exist in Europe. In Finland, too, hydrogen valleys are being set up in areas with strong wind generation capacity and heavy industry.
The green energy revolution and new opportunities for the hydrogen economy are key areas of innovation for CGI globally. We are developing solutions and data platforms to accelerate this transformation. In addition, we publish our perspectives on the topic, such as our white paper, Vision for a European Hydrogen Economy.
"As the new hydrogen ecosystem is built step-by-step, starting with local networks and eventually merging into a national and even multinational infrastructure, it is important to support development with agile data platforms that can be developed as needed," says Rokala.
For this purpose, CGI is developing the CGI AgileDX Hydrogen data platform, the underlying data hub engine of which is already widely used in several European countries, including in the electricity market.
Learn how CGI AgileDX Hydrogen is supporting an integrated hydrogen economy and advancing hydrogen ecosystems.