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. 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, we can realistically expect the costs of electrolyser capacity to come down over the next decade or so. In addition to economies of scale derived from wider deployment, new materials for the electrolysers’ membrane process are being developed all the time. Whereas, each MW of electrolyser capacity currently costs around 1 million US dollars, there are hopes that the figure could halve by 2030 to bring down costs of whole cycle still further.
Energy Voice 29th March 2018 read more »