The Hydrogen Economy Unleashed

By Traver Kennedy, Chairman and CEO on April 30, 2019
Traver Kennedy
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Forbes recently quoted former Secretary of Energy Steven Chu as saying, “Get ready for the 1.5¢ per kilowatt hour renewable electricity,” a cost which, “could unleash the hydrogen economy.” This is the same Energy Secretary who, back in 2009, said that “four miracles” needed to happen, all at once, for hydrogen-powered transportation to make inroads.

Today, mass-produced hydrogen cars by Toyota, Honda and Hyundai are now commonplace on the roads of Japan, South Korea, Germany, and California; oil giant Shell offers hydrogen in many of its gas stations; and not a week passes by where there isn’t a new study or expert commentary indicating that the hydrogen economy is nigh. Even Mr. Chu believes we have arrived at the point where hydrogen can become a major energy source for society. What a difference ten years can make!

We seem to be at the end of the long road that finally brings us to the Hydrogen Economy.

“Significant Technological Breakthroughs”

In a 2009 interview with MIT Technology Review, Steven Chu, who won the 1997 Nobel Prize in Physics and is the former director of the Lawrence Berkeley National Laboratory, made his “miracle” remark. Specifically, he indicated, “In order to get significant hydrogen deployment, you need four significant technological breakthroughs” in the areas of efficient production, storage, distribution infrastructure, and conversion (via fuel cells).

Fast-forward ten years. We just underwent a decade of intense technological advancement in hydrogen and steadily slid down the price curve of solar and wind renewables, which are now used to produce green hydrogen. In fact, a few months ago, the price of renewables fell below that of fossil fuels for the first time, making new investments in fossil fuels economically unviable (read our article on this milestone here).

This new low-cost reality for renewables has the potential to boost hydrogen and bring about the hydrogen economy. One of the factors constraining hydrogen’s uptake has been that, although it produces no carbon emissions when combusted, the vast majority of hydrogen (95%) has been produced traditionally using fossil fuels, such as natural gas. One such process, known as steam methane reforming (SMR), has a big carbon footprint—emitting 8.62 tons of carbon dioxide for each ton of produced hydrogen, according to National Renewable Energy Laboratory.

To become ubiquitous and fulfil its clean energy potential, hydrogen needs to be produced using clean renewables. The favorable new economics of solar and wind have an important role to play here. This is what Steven Chu referred to when he indicated in the Forbes article, “When electricity falls below 4¢/kWh it can produce hydrogen that competes with hydrogen from natural gas…So it may be that we’ll move to a partial hydrogen economy based on renewable energy.”

“The Advent of Cheap, Renewable Hydrogen is Nigh”

This is the headline of a recent ArsTechnica article analyzing how the new economics of renewables are serving to advance the hydrogen economy. CarbonBrief concurs, pointing to the “growing body of literature arguing that the falling cost of renewables combined with the significant cost reduction potential of power-to-gas technology could lead to much cheaper electrolytic hydrogen production than many have previously thought.”

One such study, published by Nature Energy, explores how researchers from universities in Germany and California created a financial model for a wind farm connected to a hydrogen electrolyzer. Although historically the costs of hydrogen production via an electrolyzer have been expensive, the researchers modeled electricity and hydrogen prices to reflect the recent downward trend in costs “as if the theoretical system were based in Germany or Texas.” The financial models demonstrate, “The recent sharp decline in the cost of renewable energy suggests that the production of hydrogen from renewable power through a power-to-gas process might become more economical,” leading the researchers to conclude, “Renewable hydrogen is projected to become cost competitive with large-scale fossil hydrogen supply within the next decade.”

Adding to this outlook, another study from DNV DL entitled, “Hydrogen in the Electricity Value Chain,” indicates, “Hydrogen produced from renewable energy will become an economic energy carrier to complement electricity and accelerate the decarbonization of industrial feedstock and heat, as well as providing long-term storage solutions.” The paper gives the date of 2035 for hydrogen to become affordable using current production methods.

This sentiment is echoed in a study of “The Role of Hydrogen and Fuel Cells in the Global Energy System” published by the Royal Society of Chemistry. The paper asserts that three factors are driving current hydrogen momentum, “Firstly, improvements in technology and manufacturing mean that systems which cost $60 000 in 2005 are now $10 000. Secondly, commercial products are becoming widely available, and significant uptake is occurring in specific sectors such as Japanese microgeneration and US forklift trucks. Thirdly, a strengthened global resolve to mitigate climate change is coupled with increasing realization that clean power alone is insufficient, due to the complexity of decarbonizing heat and transport.”

 All Costs Point to an Affordably Clean Future

Mr. Chu, pointing out that a cost of 1.5¢ per kilowatt hour will help bring about the hydrogen economy, has the experience and credentials of someone who knows how energy markets evolve. Arguably, an “unleashed” hydrogen economy needs to pass through a partial one first, whereby cheap renewables can take over the production of hydrogen to make it both clean and affordable. This, in turn, will give new technological breakthroughs that can make hydrogen production ever more efficient, such as Hydrogen 2.0, the necessary time to penetrate the market and help hydrogen go mainstream.

 

Photo courtesy of Christopher Michel.
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As the Hydrogen 2.0 ecosystem gains momentum, we’ll be sharing our views and insights on the new Hydrogen 2.0 Economy. We also update our blog every week with insightful and current knowledge in this growing energy field.

 

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