More use of hydrogen in energy systems is increasingly held up as important to the transition away from use of fossil fuels, but it is important to analyse exactly where hydrogen is genuinely needed as a clean energy solution and how the necessary technological advances will be funded

LITTLE FUNDING
Despite plenty of hype about its potential as a solution to help the world decarbonise, green hydrogen has received relatively little funding compared to other renewable energy solutions. Only about 4% of the energy research budgets of International Energy Agency members was spent on hydrogen and fuel cells in 2018. Over 20% went to nuclear energy and around 16% to renewables

FUTURE GROWTH
Increasing volumes of cheap renewables, falling costs of electrolysers and new solutions are likely to boost hydrogen’s role in the clean energy transition, though only for specific uses. Some forms of transport, in particular trains and ferries, could be key beneficiaries as they struggle to decarbonise

KEY FIGURE
At a typical cost of €50 a megawatt hour for wind and solar in Europe feeding an electrolyser costing €900/kW, the hydrogen produced would cost around €90 a megawatt hour, far from competitive with the price of European natural gas at €12/MWh in January 2020.

The levelised cost of electricity from onshore wind in Europe ranges from around €50/MWh to $100/MWh The concept of a “hydrogen economy” goes back nearly 100 years and was revived 50 years ago as concerns for the environment began to accelerate. It is seen as a flexible energy carrier, which when used to propel vehicles or for space heating, eliminates emissions at the point of use. The production of buses, trucks, trains and cars that can run on hydrogen has started and there even is talk of the wholesale conversion of some gas networks to run on hydrogen instead of fossil fuel gas. Indeed, hydrogen has a variety of uses, but it is only as “clean” as the energy used to create it. Hydrogen does not occur naturally, but has to be split from oxygen. Whatever the process used for the splitting, it demands large amounts of energy. Hydrogen is only emissions-free when derived through electrolysis and when the electricity used comes from a renewable source of energy. Market forecasters are envisaging a future when on sunny and windy days more solar and wind energy is available than needed, or can be assimilated into the available grid network. On such days the “excess” electricity could be used to produce hydrogen, they argue, to be stored and used when needed. But a number of hurdles need to be overcome before this ambitious vision has a chance of becoming reality. There are no hydrogen mines. Today most of it is produced from methane by a chemical reformation process and is not carbon-free. Some argue that, after the reformation process, the carbon dioxide can be removed using carbon capture and storage (CCS). Most CCS techniques do not, however, totally remove carbon dioxide, meaning hydrogen derived in this way is termed “blue” rather than “green”. Carbon-free green hydrogen can be produced via electrolysis using electricity generated by renewables. In electrolysis, an electric current passes through water, which decomposes into its constituent elements, hydrogen and oxygen. Researchers in the US are investigating two other methods of producing hydrogen. Neither has yet reached commercial scale. Scientists at the National Renewable Energy Laboratory are examining the ability of microorganisms to release hydrogen by consuming and digesting biomass. Colleagues at the University of Michigan are attempting to mimic the process of photosynthesis and enable water to be broken down into its constituent elements. Despite these efforts and optimistic reports from Shell, Siemens and many others, only about 4% ($564 million) of the energy research budgets of International Energy Agency members were allocated to hydrogen and fuel cells in 2018. Over 20% went to nuclear energy and around 16% to renewables. Hydrogen’s inability, until now at least, to successfully attract funding may reflect the commercial challenges it faces in competition with other energy solutions that provide greater value for money. For specific purposes, however, green hydrogen looks set to have a role in the energy transition. Designated funding would accelerate efforts to put hydrogen to work where it makes most sense.

EXCESS RENEWABLES IS RARE As the volumes of electricity generated by wind and solar energy increase, there are times when power output exceeds local demand. In the absence of sufficient capacity on the grid network to send the electricity to where it is needed, generation is curtailed unless a local use can be found for it. Hydrogen production on the spot seems an attractive solution, but is expensive given the cost of electrolysers and the short periods for which electricity is curtailed and the electrolysers would be in use. A better economic case could be made if the hydrogen were stored and used when a lack of energy has driven up its value and the price for which it can be sold. Curtailment of renewables generation is fairly rare. In west Denmark, a high-renewables electricity system, wind production already met half of electricity demand back in 2016. Over that year, wind exceeded demand for only 1296 hours, less than 15% of the time, with an average level of surplus power of 527 megawatts (MW). But wind electricity production is seldom curtailed. Curtailment can be avoided through interconnections. The west of Denmark is connected to the east of the country, to Norway across Scandinavian waters and to Germany by land, with more international interconnections being built. Curtailment can also be avoided by demand-side management, an often automated process that gets consumers to use more electricity at times when there is plenty of it. Local grid network congestion can cause wind output to be curtailed or constrained off the grid. In the UK and Germany, the best winds sites are in the north of the countries, but load centres, where people live and work and load the electricity system with demand, tend to be further south. In the UK in 2017, wind energy contributed to 15% of total generation and 3% of available wind had to be curtailed. Even with higher wind penetration today, that ratio will not have changed much.
The volume of wind constrained off the grid may change in the longer term. As the energy transition picks up speed, proportions of variable renewables will increase, potentially increasing surpluses of supply. Whether a surplus transpires depends on the speed at which the electrification of transport and heating takes hold and demand for cooling grows in a warming world. Studies in the UK, California and Denmark suggest “surplus” energy with 50% variable renewables output and using current projections of demand is likely to be in the range of 6-9%. At that level, the volume of curtailed energy is still not enough to support a return on investment in hydrogen storage if the energy were fed back into the grid when needed. A more sensible option may be to accumulate the hydrogen — either locally or centrally — and use it for heating or transport, as is happening in some regions.

HYDROGEN ECONOMICS The costs of the equipment needed to facilitate greater use of hydrogen are expected to fall, but until that happens, production costs are generally high. The cheapest option for wind energy that would otherwise be curtailed would be to have dedicated wind farms converting all output to hydrogen, provided there was a market for it that set a high enough price. If production from a wind farm is fed to an electrolyser, each 55 kilowatt hours (kWh) of electricity produces one kilogram (kg) of hydrogen. This process requires around nine litres of water and 8 kg of oxygen is produced as a by-product. A number of markets for oxygen already exist and revenue from its sales could offset the cost of the water. If the cost of wind (or solar) generated electricity is €50 a megawatt hour (MWh), a typical cost in Europe and the US, with an electrolyser costing €900/kW, the hydrogen produced costs around €90/MWh. On the market that would not compete with an average European natural gas price of around €12/MWh in January 2020. The hydrogen cost calculation assumes a typical amortisation period of 20 years and an interest rate of 6%. At present, wind energy tends to be slightly cheaper than solar energy from photovoltaics (PV), but that could change and precise costs depend on location. Electricity generated by PV could equally be used for hydrogen production. If by 2040 the costs of wind energy and electrolysers halve, the costs of green hydrogen would still be slightly higher than those of grey hydrogen produced from methane in 2020. The costs of natural gas are expected to rise, however, and could make green hydrogen more competitive with its grey variety. HYDROGEN USES Hydrogen has many potential uses that would facilitate decarbonisation, including transport and heating. If introduced into gas grids, many domestic and industrial appliances still function provided the hydrogen content does not exceed about 20%. Some spark-ignition engines can also accommodate up to around 20% hydrogen. If gas grids were converted to operate with 100% hydrogen, considerable extra costs would be incurred to enable equipment to function satisfactorily. A study by Carbon Connect, a UK think tank, suggests a figure of around £200 billion for the UK, of which £75 billion would be for converting appliances, the remainder for the grid. This figure provides a basis for establishing an equivalent “cost of carbon”. UK natural gas consumption in 2018 was 880 terawatt hours (TWh) and emissions from gas are around 0.18 kg of CO2/kWh. If this gas was displaced by hydrogen, nearly 160 million tons of CO2 would be eliminated. Carbon Connect estimates conversion costs at around £200 billion. If the capital costs of this conversion were spread over 25 years at a low interest rate, annual costs would be around £8 billion. But this is only half the story. The additional cost of the hydrogen then needs to be added, which, assuming an (optimistic) £30/MWh, would take total extra yearly costs to about £13 billion, with the cost per tonne of CO2 saved at around £80.This figure is higher than the present cost of carbon in the EU, though studies from the UK, such as the 2006 Stern Review, and the US suggest the true cost of carbon is around, or even above, this level.

TRAINS, PLANES AND AUTOMOBILES Transport accounts for around 17% of global emissions and road transport is responsible for 73% of these emissions. To decarbonise private cars, battery vehicles are a much cheaper option than hydrogen-powered ones, costing about half as much. The mileage range of battery cars is currently shorter and refuelling times longer — a hydrogen car can be refuelled in about five minutes, while batteries need at least 30 minutes — but battery vehicles are much less risky. Stringent measures are needed to avoid leakages of highly inflammable hydrogen, as demonstrated by explosions at filling stations in California and Norway in 2019. Developing freight vehicles is a bigger prize and pilot projects are under way. The first of Hyundai’s hydrogen fuel cell-powered, heavy duty trucks will be in operation in 2020 on the roads of Switzerland. They are part of an order for 1600 trucks that will be delivered between January 2020 and 2025. Elsewhere, the Canadian Hydrogen and Fuel Cell Association reports that a CA$15 million ($11.1 million) project will develop two heavy-duty, 65-ton hybrid trucks with hydrogen fuel cells. Fuel cell trains are showing significant promise, with a number of prototypes up and running and more planned. The capital costs of a fuel cell train today are likely to be slightly higher than those of a diesel train, although recent reports suggest running costs are similar. An expected fall in the cost of fuel cells and/or the cost of hydrogen could make fuel cell trains cheaper to operate than traditional diesel trains, especially if the cost of carbon increases. There is also a case for using hydrogen powered trains, rather than electrifying rail routes. Once the infrastructure for supplying hydrogen is in place, little further investment is required. Electrification requires substantial investment in power supply equipment and bridges may need to be raised or the track lowered to provide clearance for overhead power supplies. Results from the EU Fuel Cells and Hydrogen Joint Undertaking show hydrogen trains are close to cost parity with diesel trains. Considering fast trains for intercity connections between Groningen and Friesland in the Netherlands, total operating costs of the fuel cell trains were only €0.2/km higher (€5/km compared to €4.8/km). The same differential was found when considering locomotive-hauled trains between Tallin and Narvia in Estonia. The German government has approved the use of hydrogen trains and French rail company Alstom started running them in Lower Saxony in 2018. The UK Climate Change Committee suggests the energy density of hydrogen may be a barrier to rolling out hydrogen trains, with space constraints making it difficult to store sufficient hydrogen, especially on “busy, high-speed routes and to transport heavy-duty freight”, but Alstom manages the problem with storage tanks on the roofs of train coaches.

INTO THE FUTURE Bigger transport in the form of aviation and shipping is where NGO Transport and Environment would like to see greater focus on using hydrogen as a decarbonisation solution. It proposes introducing a standard requiring fuel suppliers to blend a low percentage of hydrogen derived efuels into aviation fuel or to require airlines to purchase certain volumes of such fuels. These fuels would be subject to “high sustainability standards so industry can make the long-term investments required to scale up sustainably”, says the organisation. For shipping, “stringent operational CO2 and zero-emission port standards could be used to require cargo and luxury cruise ships to run on green hydrogen or ammonia”. Since ports will play a major role in any successful hydrogen strategy, as this is where hydrogen from offshore wind farms would likely come on shore, it would also make sense to build hydrogen refuelling infrastructure for trucks in major port areas, says T&E. For the moment, renewable hydrogen is mainly used for niche applications in Germany, Texas and the UK. On the island of Eday, one of the Orkney islands off the north-east coast of Scotland, surplus wind energy is used to generate hydrogen using a 0.5 MW electrolysis plant. The hydrogen is then used to fuel ferries that can be charged overnight and transport goods and people between the islands. Many also expect green hydrogen, in time, to be a solution in industrial processes where it is hard to remove CO2 emissions any other way, such as in steel production, as feedstock for chemicals and for high grade heat in energy intensive industry. Hydrogen use in industry could reach between 5% and 20% of total energy consumed (or about 30% if non-energy uses are included) by 2050 in the EU, suggests the European Commission.

COST REDUCTIONS As with any technology, the key to cost reduction is the rate at which the technology is deployed, but the hydrogen economy is moving forward slowly. The increasing focus on climate change and the transition to a clean energy economy is likely to accelerate the process, aided by steady reductions in electricity costs from wind and solar generation. The modest sums allocated to research and development suggest governments have been unconvinced of the potential of a hydrogen economy. But with more familiarity and knowledge of the role hydrogen can and cannot play in speeding up the energy transition, the more funding for specific research may be made available. Government commitments to zero-carbon emissions is sharpening focus, and the announcement by the US Energy Department in January 2020 of a $64 million initiative to promote advances in large-scale hydrogen production may be a step in the right direction if it is not intended to support the fossil-fuel industry by creating an alternative market in grey or blue hydrogen production. Recent announcements from Germany should also pave the way. In December 2019, the energy ministry said hydrogen would be a key part of the country’s future energy system. A draft proposal for a hydrogen strategy, published by the Economy Ministry in January 2020, calls for 3 GW to 5 GW of electrolysers within ten years. They would cost €3-5 billion, or less if prices start to fall. The UK, moving more cautiously, has committed more than £40 million to help commercialise large-scale hydrogen storage technologies. Hydrogen has a role to play in the energy transition. Establishing the exact nature of that role is progressing. The IEA reports that around 100 electrolyser projects were commissioned in 2015-2019, with an average size of around 1 MW. Economies of scale will bring down costs, but more focused action by governments will avoid the risk of money being wasted on boosting the use of green hydrogen in applications where more value is provided by alternative energy solutions being used directly.

TEXT David Millborrow