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Shell refines its focus on the hydrogen market

Posted by | Michael Ratcliffe

Last week, Shell made a move that looked very much like a major nail in the coffin of the hydrogen passenger car market.

In October 2023, Shell quietly shut down its three UK hydrogen filling stations for passenger cars.  Following this, last week, it did the same in California.  Originally planning to establish 48 stations across the state, Shell scrapped these plans last year and announced the closure of all five passenger car stations, while maintaining its three heavy-duty hydrogen stations as part of the $150 million ZANZEFF (Zero and Near Zero-Emission Freight Facilities) project.

Despite these closures, Shell continues to play a significant role in Europe’s hydrogen sector, engaging in several key projects in the Netherlands and Germany. It aims to construct Holland Hydrogen, set to become Europe’s largest renewable hydrogen plant by 2025. Shell is also a founding member of the “H2Accelerate” consortium alongside BP, TotalEnergies, Daimler Truck AG, IVECO, Linde, and Volvo Group. This consortium is focused on creating a mass market for hydrogen trucks, with Phase 1 developing a hydrogen corridor for heavy trucks across Italy, Switzerland, Germany, Demark, Sweden, and Norway. In August 2023, Shell launched another pilot, a “pay-as-you-go” hydrogen truck program in Germany, supported by a truck filling station in Passau.

However, Shell still operates 38 passenger car filling stations in Germany. The litmus test for hydrogen passenger cars will be if Shell announces that it is also closing these, especially as we have recently seen Everfuel’s recent shutdown of its passenger car hydrogen filling stations in Norway and Denmark.

The EV market competition

If you look at the competing passenger EV market, these moves by Shell make a lot of sense. The company is better off channeling its resources toward hydrogen applications in hard-to-decarbonize industrial markets such as steel, cement, or fertilizer production, as well as focusing on heavy-duty trucks and buses, instead of the passenger car market.

The cost of green electricity has been falling and will continue to do so. Over the past five years, solar modules have seen a 30% increase in efficiency, whether installed on rooftops or on ground mounting systems to build solar farms. As a result, the cost of solar energy has dropped by a staggering factor of three since 2018. One of the key reasons for this is that the efficiency of current solar cells to capture and convert sunlight into electricity is low, only around 20%.  This level leaves a large amount of room for improvement. Research on new designs that can capture a broader spectrum of sunlight look very encouraging. So, we can expect efficiency to continue to increase and price per solar watt to continue to decline.

Just as solar electricity is getting cheaper so are EVs. BYD from China is already exporting EVs in the $25-$30k price range and Tesla promises that its Model 2, set to launch next year, will be as low as $25k. Comparisons between running a passenger car on electricity versus hydrogen indicate that an EV is reported to be 14 times more cost-effective.

The convergence of these forces is very likely the reason behind Shell’s decisions and none of this is painting a healthy future for hydrogen and the passenger car market.

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