Pinning Hopes on Hydrogen

Green Hydrogen Economy to Spark Infrastructure Boom

By Simon West

BREAKBULK MAGAZINE ISSUE 3 / 2020 – ENERGY UPDATE – Until recently residents in Orkney lacked the means to store their surplus clean electricity. Blessed with strong gales and rough seas, the island chain off Scotland’s northeast coast was producing more power from its wind and tidal generators than the local grid could handle.

“Back when they constructed the national grid they never envisaged that Orkney was going to become this renewable generation powerhouse,” said Caron Oag, marketing officer at the Orkney-based European Marine Energy Centre, or EMEC.

“So in a sense we have outgrown the cable that connects us to the Scottish mainland. And it means that while we can export a lot of electricity back onto the grid, not everything can fit, so we’ve got this issue of almost having too much renewable energy.”

EMEC, the world’s first and only operator of open-sea testing facilities for developers of wave and tidal converters, came up with a solution: green hydrogen.

Since 2016, the group has been operating a 500 kW proton exchange membrane, or PEM, electrolyzer on the Orkney island of Eday that uses surplus renewable power to split water into oxygen and high purity hydrogen – a process known as electrolysis.

The compressed gas is kept in special cylinders as an energy storage medium until it is needed, then transported in mobile storage units to Orkney’s capital, Kirkwall. The hydrogen is converted back into electricity through a fuel cell – electrolysis in reverse – and used by boats docked in Kirkwall harbor.

Nearby a refueling station dispenses pressurized hydrogen for vans fitted with their own fuel cells, offering motorists a clean, emissions free alternative to gasoline and diesel.

Production has also sparked several pilot projects around Orkney, including a seagoing ferry due to run on a hydrogen-diesel hybrid system, a small passenger aircraft to be powered by electric motors, hydrogen fuel cells and gas storage, and even a study into the feasibility of a hydrogen-fueled distillery to produce sustainable gin.

“When you see the demonstration projects we have on the go in Orkney, you are seeing how a potential hydrogen economy could work on a small scale, and how that potentially could be scaled up or applied in other areas,” Oag said.

Time to Scale-up

Orkney is not the only place in Scotland harnessing green hydrogen.

Aberdeen, for example, capital of the UK’s oil and gas industry, is fast becoming a hub for pioneering green technology, with plans this year to launch the world’s first fleet of hydrogen-powered double-decker buses in a £8.3 million project backed by the European Union’s Joint Initiative for Hydrogen Vehicles, or JIVE.

For proponents, Orkney and Aberdeen give a peak into a carbon-free future in which clean, versatile and easily storable and transportable hydrogen plays a major role in the energy transition.

“Hydrogen is currently enjoying unprecedented political and business momentum, with the number of policies and projects around the world expanding rapidly,” said a recent report by the International Energy Agency, or IEA. “Now is the time to scale up technologies and bring down costs to allow hydrogen to become widely used.”

The link between hydrogen and energy stretches back decades – the first internal combustion engine powered by oxygen and hydrogen was built more than 200 years ago, while it was a Welshman, William Robert Grove, who developed the first fuel cell in 1842.

Supplying hydrogen for industrial use, such as oil refining, ammonia production and iron and steel processing, is big business, with global demand rising threefold since 1975 to almost 80 million tonnes in 2018, according to the IEA report.

However, production almost entirely relies on fossil fuel feedstocks: 6 percent of global natural gas use and 2 percent of coal use is dedicated to making hydrogen.

Energy-intensive industrial processes such as steam methane reforming, or SMR, and coal gasification to produce so-called gray or brown hydrogen are responsible for emitting 830 million tonnes of carbon dioxide per year – equivalent to the CO2 emissions of the UK and Indonesia combined, the IEA said.

Just a fraction of total output comes from electricity, but even then, it is not necessarily clean if electrolyzers are using power obtained from national grids.

Ready for the Hydrogen Rush

But as climate regulations become more stringent, governments and businesses worldwide are rushing to switch their carbon-intensive practices for more sustainable alternatives. And with renewable energy costs primed to fall, deploying electrolysis on a grander scale to produce clean hydrogen for use in sectors such as shipping, chemical manufacture, heating and long-distance transportation is starting to ramp up.

“A lot of the big traditional gas and energy utility players understand that hydrogen is going to be a key component of this electrification strategy,” said Louis Brasington, an associate at Cleantech Group.
“Therefore, they are all partnering up in joint consortiums to build up this infrastructure and get the electrolyzer costs down, and to share the costs of hydrogen transmission.”

This buildout of green hydrogen points to a new source of project cargo demand.

A report at the end of March by clean energy analyst BloombergNEF said that a hydrogen economy fueled by renewables could meet 24 percent of the world’s energy needs by 2050.

“Hydrogen has potential to become the fuel that powers a clean economy. In the years ahead, it will be possible to produce it at low cost using wind and solar power, to store it underground for months, and then to pipe it on-demand to power everything from ships to steel mills,” the report said.

Meeting almost a quarter of energy demand, however, will need policy commitments from governments, US$150 billion of start-up subsidiaries over the next decade and massive amounts of additional renewable capacity.

According to the report, 31,320 terawatt hours, or TWh, of electricity would be required to power electrolyzers. Accounting for the future demands of the power sector, total renewable energy generation excluding hydropower would need to exceed 60,000 TWh compared with less than 3,000 TWh in operation today.

Such an expansion would call for big spending on storage infrastructure – an estimated US$637 billion by 2050, the report said. Tens to hundreds of billions more would need to be spent on pipelines to transport hydrogen, while hundreds of billions would be required for electrolyzers, wind and solar farms.

“If a hydrogen economy is to develop to the scale where it provides 24 percent of primary energy in 2050, the infrastructure requirements are vast,” Kobad Bhavnagri, head of industrial decarbonization at BloombergNEF, told Breakbulk.

Location of Plants Critical

According to Gniewomir Flis, senior analyst at Aurora Energy Research, consortiums are likely to install electrolyzers and storage facilities close to renewable energy sources, industrial plants or ports to keep a lid on transport costs, which remain high.

“From the transport perspective, moving hydrogen is very expensive unless you have specialized infrastructure to do it. The cheapest way to do it is of course by pipeline, and there is in essence a sweet spot, which optimizes hydrogen transport costs. As a general rule of thumb, I would expect any production facility to be situated close to the main off-taker.

“It is likely that we will see a lot of these facilities by ports for different reasons. Electrolyzers would benefit hugely from cheap power from offshore wind, so that is one reason to situate your electrolyzer plant close to the shore.”

Plants could even be installed offshore to minimize transmission costs.

Tractebel Engineering and Tractebel Overdick, subsidiaries of France’s Engie, last year unveiled a concept for an offshore platform that could convert wind energy to green hydrogen on an industrial scale using electrolysis.

“Delivering up to 400 megawatts, this kind of plant exceeds the output of previous technologies many times over. It could already be put into practice today, for example in the North Sea,” the companies said in a statement.

According to Flis, offshore hydrogen production options are viable, although companies would have to consider the impact of seawater on electrolyzers: “They have a lot of expensive catalysts, you do not want them to get corroded.”

Opportunities may also exist for a buildout of blue hydrogen produced from natural gas when carbon capture and storage, or CCS, is used with traditional SMR, although this is an expensive option, BloombergNEF said.

Despite the buildout, industrial-scale deployment faces formidable challenges.

Green hydrogen is still more expensive to produce compared with fossil fuel-derived hydrogen, although costs are likely to slide in the coming years as cheaper wind and solar capacity comes online and electrolysis technology expands.

If the right policies are implemented, BloombergNEF estimates that renewable hydrogen could be produced at US$0.80 to US$1.60 per kilo in most of the world by 2050. That matches gas priced at US$6 to US$12 per million British thermal units, or MMBtu, making it competitive with natural gas prices today in Brazil, China, India, Germany and Scandinavia on an energy-equivalent basis.

“Deployment very much at this point requires us to put in place the necessary infrastructure, but also to level the playing field between green hydrogen and the potential uses, whether that is through carbon pricing, or green mandates in industries, such as steel, to use green hydrogen instead of coking oil,” Flis said.

“The actions that we take over the next decade will determine whether hydrogen will have a larger role in our energy system, or whether it will remain a niche product.”

Colombia-based Simon West is a freelance journalist specializing in energy and biofuels news and market movements in the Americas.