By: Phil O’Neil
Hydrogen has been closely associated with key aspects of the new energy transition for many years. Its properties as a storage medium and energy carrier make it a key point in any serious discussion about energy storage, and its consequent role in increasing renewable penetration in energy generation, transmission and distribution. Hydrogen fuel cells are also high on the agenda for expanding the number of light electric vehicles on the road.
However, what we are discussing here, and the area that is starting to attract attention from governments and municipalities looking to reduce overall greenhouse gas emissions, is green hydrogen. This is defined as hydrogen that is produced from renewable electricity by electrolysing water, or from fossil fuels with carbon capture and sequestration (CCS). It produces relatively pure hydrogen, with the added benefit of oxygen as a by-product.
The idea of green hydrogen has been around for some time. But it comes with a number of inherent challenges, the most obvious of which is that it is not hugely energy efficient. The input energy required to power the electrolysis and produce end product is much greater than the energy output that can be liberated from it.
For example, our high-level analysis of the hydrogen supply chain and the export of renewable energy to South East Asian countries for use as transport fuel shows that, when hydrogen is converted to ammonia to make it possible to transport safely, only 30 per cent of the renewable electricity originally used to power the electrolysis actually ends up moving vehicles. Seventy per cent is lost in the various conversion processes.
However, this might be a case of allowing the search for a perfect solution to obscure the value of a merely good one. A key reason those South East Asian countries might consider green hydrogen in the first place is that many are relatively short of indigenous energy supply. For countries like Japan and South Korea, for example, with their energy-hungry economies that rely heavily on energy imports, green hydrogen could provide a low-carbon alternative to coal, natural gas and oil.
In the transport sector, hydrogen would be displacing comparatively expensive liquid fuels with relatively low thermal efficiency. And although this green hydrogen route is less efficient and more expensive than using electric batteries directly, it could provide the additional travel range that batteries are yet to achieve. That enables renewable-powered electric buses, trucks, ships and trains to transport passengers and goods over the long distances needed to make them a truly viable option. And of course there’s the added bonus of reduced air and noise pollution levels.
And in theory at least, hydrogen is transportable over long distances via shipping and could evolve into a liquid global market; the alternative being a commitment to import electricity via transmission lines to neighbouring countries.
To illustrate the point, South Korea has recently announced its commitment to convert 26,000 buses using hydrogen fuel cells instead of natural gas. South Korea has negligible renewable energy generation resources, and what it has is largely in the form of offshore wind – always more expensive than onshore. So it is in discussion with the Governments of other countries to provide green hydrogen.
However, to meet this kind of demand, South Australia would need to build approximately 17 electrolysing facilities; and to power these facilities it would need to develop around 8,700 megawatts (MW) of renewable energy projects. This is where we hit the next challenge around green hydrogen: the overall price. To date, renewable energy has not been available at a price to make this kind of installation commercially viable.
This is where we see the impact of the downward trajectory of renewable electricity prices, notably solar and onshore wind. The price used for renewable electricity in current modelling and projections is $60 per MW per hour (MWh). Technological advances have dramatically improved conversion efficiency of solar panels, as well as wind-farm capacity factors, and the price could conceivably fall to $30 or even $20 per MWh, particularly in areas with high levels of renewable energy resources.
Solar power auctions in Denmark, Egypt, India, and the United Arab Emirates last year were all priced below both fossil-fuel and nuclear alternatives, and in its latest round Mexico established the lowest price yet for solar power. For a plant producing 8,000MW or more that’s a transformative difference that makes green hydrogen competitive with, or even cheaper than, gas-powered sources of energy.
By the same token, Read more »