Forget hydrogen?

As I reported in my last post, the use of hydrogen has been talked up strongly recently, but it has also been opposed quite strongly. Indeed BNEFs Michael Liebreich says ‘forget hydrogen’ for many things - it will be too expensive to replace fossil gas for some end uses and is not very efficient as an energy vector.  

In a new review he claims that ‘as an energy storage medium, it has only a 50% round-trip efficiency – far worse than batteries. As a source of work, fuel cells, turbines and engines are only 60% efficient – far worse than electric motors – and far more complex. As a source of heat, hydrogen costs four times as much as natural gas. As a way of transporting energy, hydrogen pipelines cost three times as much as power lines, and ships and trucks are even worse’. 

This view seems to clash with an earlier more positive vision promoted by BNEF in its 'Hydrogen Economy Outlook' , which claimed that ‘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 & solar power, to store it underground for months, and then to pipe it on-demand to power everything from ships to steel mills.’ 

That study said that the cost of renewable hydrogen in China, India and Western Europe could fall to around $2/kg in 2030 and $1/kg in 2050. However, although Lierbreich’s new  review agrees with this, it says that it wont be competitive with fossil gas in many of the key sectors. For example, for industrial heating, as in the case of float glass making, he notes that the EU Hydrogen Strategy targets a hydrogen price of 1.1 to 2.4 euros by 2030, which translates into a heat cost of $11.4 to $21.1 per MMBtu. But Natural gas in Europe only costs $4 per MMBtu. So you would need a large carbon surcharge to make it viable- $140/metric tonne CO2, over four times today’s EU-ETS carbon price. In the case of steel production, he says that, with a green hydrogen price of $2 per kg by 2030, you would require a CO2 price of $125 per metric ton, dropping to $50 per ton by 2050 as hydrogen prices continue to fall.

He says it is even worse in the direct heat market: ‘by 2050, green hydrogen may achieve a price of $0.8/kg, dependent on directly connected renewable power being available at $14 to $17/MWh. To compete with $2/MMBtu gas in the heat market, green electricity at those prices would need a $56-per-ton CO2 price. However, the green hydrogen it could produce for $0.8/kg would require a price of $94 per ton to be competitive.’

He admits that there may be local reasons why hydrogen beats green electricity in some industrial context. For example, ‘many industries – including non-ferrous metals, ceramics, chemicals and food – use batch processes requiring large amounts of energy in short bursts. These can cause voltage or frequency problems, necessitating upgrading of the power grid. Battery costs are falling, but storing sufficient electrical power locally to meet bursts of demand may prove prohibitively expensive. Hydrogen could have the advantage here, since it can be delivered by pipeline at very high rates’.’  Moreover, he accepts that low or zero-carbon hydrogen will become the mainstay of the chemicals industry – there being no alternative to hydrogen for many chemical processes.  

So, overall, he says, it will have a future, but ‘hydrogen’s role in the final energy mix of a future net-zero emissions world will be to do things that cannot be done more simply, cheaply and efficiently by the direct use of clean electricity and batteries. 

Is he right?

Lierbreich’s analysis may seem at odds with the very positive projections in BNEFs latest New Energy Outlook 2020: green hydrogen provides just under a quarter of total final energy in 2050 under its Climate Scenario.  But he may be right to point to some limitations, for example, when talking about the high efficiency of using electricity in heat pumps compared to using it to make hydrogen for heating. Electrolysis is only 60-70% efficient, whereas ‘Coefficient of Performance’ figures of 3-4 times the heat output compared with direct power use are often quoted for heat pumps. However, heat pumps are expensive and these high COP figures cannot always be achieved, especially in cold weather. That is why hybrid domestic units are now proposed in the UK- with gas boilers being used as backup at peak demand/cold times. 

So in this context, although electricity wins out some of the time, piped gas also still plays a role, with the use of fossil gas progressively replaced with green gas/hydrogen using the existing gas distribution system. That may avoid having to strengthen the power grid, so that it could meet peak heating demand.  To meet the peaks, it is of course also easier to store gas than electricity. That is already widely done with methane and can be done with hydrogen.  Indeed it has been claimed that large scale hydrogen caverns are ‘a proven, inexpensive and reliable technology’ 

Hydrogen storage could also of course play a very important role in balancing variable renewable supply over longer periods than can be managed by batteries or even pumped hydro. Liebenreich notes that green hydrogen produced by the electrolysis of water using renewable power may be economic within a decade, so, although the full Power-to-Gas and Gas-to-Power cycle may have relatively low efficiency, here, as Liebreich admits, is one area where hydrogen has few competitors, and there is likely to be plenty of spare renewable power to convert in P2G mode. Though he also seem to condone some blue hydrogen  production from fossil gas with CCS. 

The use of hydrogen in vehicles is another key option. Liebreich is pretty dismissive of most of the hydrogen car projects currently underway. Some are direct hydrogen powered vehicles but most are fuel cell powered, some using cryogenically stored hydrogen. Chemi-absorption in  metal hydrides is another storage option for this and other applications, with some versions claiming to be hyper safe. Battery Electric Vehicles at present have the lead, but there are devotees of both routes forward and pros and cons on both sides. 

It is arguably the same for many of the hydrogen application areas Liebreich looks at, including hydrogen powered planes- with there still being many unknowns, the jury is still out. But he does seem happy with P2G hydrogen production for balancing variable renewables! Although not using surplus green power – as he notes in an earlier paper, he thinks the market will just go for lowest cost renewables, in bulk. That is debatable. It depends on the value of the hydrogen and the scale of the balancing requirements.  

Liebreich finishes off by saying it is possible to envisage ‘a power system reaching 80% capacity factor based on reasonably priced renewables plus interconnections, demand response and batteries. You might even get to 90%’.  But the rest would need to be flexible and storable low carbon supply and that’s where hydrogen comes in, providing balancing and also supplying key hard-to-electrify end uses. So far from telling us to forget it, he ends up saying that, in this context, hydrogen is ‘the only solution that can provide deep resilience to the highly electrified net-zero economy of the future’. But otherwise (e.g. for heating) it is less economically viable- it can’t be cheaper than the green power used to make it.