HYDROGEN INSIGHTS

Why Hydrogen?

Decarbonisation of Energy

Our energy systems around the global have to undergo a profound transformation to reduce their impact on the environment in which we live. This has been recognised within the targets set by many nations in the Paris Agreement.

We now see that low carbon electricity from renewable sources may become the preferred energy route. In order to achieve the decarbonised energy world envisaged by the agreement, the share of electricity in mix of all of the energy consumed by end users worldwide would need to increase to 40 % in 2050 (from about half that amount in 2015)..

However, the total decarbonisation of certain sectors, such as transport, industry and heat, may be difficult purely by means of electrification. This challenge could be addressed by hydrogen, produced  from renewable sources, which allows large amounts of renewable energy to be channelled in alternative ways from the power sector into these difficult end-use sectors.

Hydrogen could therefore be the missing link in the energy transition: renewable electricity can be used to produce hydrogen, which can, in turn, provide energy to sectors otherwise difficult to decarbonise through electrification. These include the following:

  • Industry: Hydrogen is widely used in several industry sectors (refineries, ammonia production, bulk chemicals, etc.), with the vast majority of it currently being produced from natural gas. Hydrogen from renewables could replace fossil fuel-based feedstocks in high-emission applications.
  • Buildings and power: Hydrogen from renewable sources can be injected into existing natural gas grids, in many cases to be mixed with natural gas but also some envisage pure hydrogen grid systems, thereby reducing natural gas consumption and emissions in end-use sectors.
  • Transport: Fuel cell electric vehicles (FCEVs) provide a low-carbon mobility option when the hydrogen that fuels them is produced from renewable energy sources and offer driving performance comparable to conventional vehicles. FCEVs are complementary to battery electric vehicles (BEVs) and can overcome some of the current limitations of batteries (weight, driving range and recharging time) in the medium to high use applications such as trucks, trains etc.

Hydrogen Facilitates More Renewable Energy Production

Hydrogen produced from renewable electricity, via an electrolyser can facilitate the integration of higher levels of Variable Renewable Energy (VRE) into the energy system.

  • An electrolyser is a device that splits water into hydrogen and oxygen using electricity. When electricity produced from renewable energy sources is used, the hydrogen becomes the carrier of the renewable energy, complementary to electricity. Electrolysers can help integrate VRE into power systems, as their electricity consumption can be adjusted to follow wind and solar power generation. Thus, they offer a flexible can also provide grid balancing services (upwards and downwards frequency regulation) whilst operating at optimal capacity to meet demand for hydrogen from industry and the transport sector or for gas grid injection.
  • The built-in storage capacity of downstream sectors (e. g. the existing natural gas infrastructure and/or the hydrogen supply chain) can serve as a buffer to absorb VRE over periods and potentially allow for seasonal storage.
  • Hydrogen from renewable electricity will create a new downstream market for renewable power. It has the potential to reduce renewable electricity generators’ exposure to power price volatility risk, in instances where part or all generation is sold to electrolyser operators through long-term contracts.

What is Smart Hydrogen?

Hydrogen is not readily available on Earth in a pure state. However, it exists naturally as a constituent element in many other compounds, so, to deliver pure hydrogen, it needs to be extracted through thermochemical, biochemical or electrochemical processes.

Our current primary energy sources include solid, liquid or gaseous fossil fuels, and renewable electricity. Currently, the most important as a source for hydrogen production is natural gas, at almost 70%, followed by oil, coal and, far behind, electrolysis of water using electricity.

Primary energy sources for current worldwide hydrogen production

Smart Hydrogen combines:

  • a solution to the electrical grid network challenges faced by the mature renewable electricity technologies
  • opportunities resulting from new hydrogen supply pathways
  • prospects for new hydrogen energy applications
  • creation of different and new trends in energy markets via “Power to X technologies”

The ultimate aim of ‘Smart Hydrogen’ is to create a hydrogen value chain that optimises technical performance and financial revenues enabling it to compete on an equal, fully commercial basis with fossil derived hydrogen. With this in mind, the concept of “Power to X” (P2X) refers to energy conversion technologies that allow for the potential decoupling of power production plants from the electrical market to use their product in a number of other sectors (hence the “X”), such as transport, heating and chemicals. Figure below presents the concept of Smart Hydrogen. The sections below analyse this concept highlighting the different challenges and opportunities facing the energy sector and how Smart Hydrogen can be a part of the long-term solution.

Concept of Smart Hydrogen

Hydrogen's Role in Transition

Hydrogen is an energy carrier and not a source of energy. It can be produced from a wide variety of energy sources. Historically, hydrogen has been predominantly produced from fossil sources. In a low-carbon energy future, hydrogen offers new pathways to valorise renewable energy sources (see Smart Hydrogen for a discussion of possible pathways for the production of hydrogen from renewable power). This section focuses on hydrogen produced from renewable electricity via electrolysis – referred to, more simply, as “hydrogen from renewable power”, or in industry parlance as “power-to hydrogen”.

Hydrogen and electricity, as energy carriers, are complementary in the energy transition. Hydrogen from renewables has the technical potential to channel large amounts of renewable electricity to sectors for which decarbonisation is otherwise difficult:

Industry: Hydrogen produced from fossil fuels, currently widely used in several industry sectors such as refineries, ammonia, bulk chemicals, etc. could be substituted by hydrogen from renewables, however, the current development status of the technology means that renewable hydrogen is more expensive to produce. In the longer term, hydrogen from renewables may replace fossil based feedstocks in these CO₂ emission intensive applications provided it can achieve economic competitiveness.

Buildings and Power: Decarbonisation of heating is the key driver for injecting renewable hydrogen into the gas grid resulting in reduced CO2 emissions. Projected hydrogen volumes for this market dwarf those from mobility – with an equivalent impact on CO2 emissions – this sector has also historically been seen as difficult to decarbonise. Making an impact likely delivers wide ranging infrastructure change – i.e. pipeline systems – which could facilitate the mobility market. This ‘scale-up’ will be significant in reaching the volumes necessary to trigger cost reductions through technical economies of scale and improve the competitiveness of hydrogen from renewable power in the long term. A key advantage of this so-called “power-to hydrogen” over electricity itself is the fact that hydrogen can be stored on a large scale, which enables the system to smooth out large swings in production and demand as well as allowing for inter-seasonal storage to meet seasonal demand peaks (e. g. for heating in winter).

Transport: When fuelled by hydrogen produced from renewables, fuel cell electric vehicles (FCEVs) are a low or zero carbon mobility option with the driving performance of conventional vehicles (driving range, refuelling time). FCEVs are complementary to battery electric vehicles (BEVs) and they expand the market for electric mobility to heavier vehicles and high duty cycle segments (long-range or high utilisation rate vehicles, e. g. trucks, trains, buses, taxis, ferry boats, cruise ships, aviation, and forklifts) where batteries are currently limited.

Hydrogen as enabler of the energy decarbinisation in Europe..

Europe's Decarbonisation Challenge

A published study by Pöyry, an international consulting and engineering company, shows pathways towards decarbonisation in Europe. The study investigates the key question: “How can a fully decarbonised energy sector be achieved and what are the risks of precluding options in favour of certain technologies?”. Pöyry has developed an analytical framework for the power, heat and transport sectors to quantify the risk in not allowing some technologies to participate in the decarbonisation challenge, through implicit or explicit policy actions. It compares a balanced ‘Zero Carbon Gas’ pathway where hydrogen, biomethane and carbon capture and storage (CCS) compete with renewables, biomass and nuclear in all sectors to a forced ‘All-Electric’ pathway where gas infrastructure and gas technologies are excluded.

This is a model serves as just one example of how the future could play out. There are many other studies which offer variations on this theme. What it does, is  serve as an example of the work that is underway around the world to anticipate and plan how our energy systems will change.

The scale of Europe's decarbonisation challenge - emissions by sector (MtCO2e)

Heat Sector Transformation

The chart below shows that in the non-process heating sector a combination of natural gas district heating (with CCS), hybrid heat pumps and stand-alone hydrogen boilers are required to meet the decarbonisation targets. This transition is reliant on a number of new technologies such as hybrid heat pumps and new fuels (e.g. hydrogen and biomethane) becoming commercially available. Hybrid heat pumps utilise electricity in warmer ambient temperature conditions and natural gas/biomethane/hydrogen during periods of colder temperatures. Consequently hydrogen appears in small quantities by 2030 and then expands as the supply chain develops. The process heat segment decarbonises via a large scale roll-out of CCS gas (natural gas and biomethane), and hydrogen boilers.

Zero carbon gases transforming Europe's heating sector

Note: the heat sector also delivers 7.5MtCO2 of negative emissions in 2050 that offsets the very small amount of emissions from the production of hydrogen from methane reforming and other use of CCS.

Transport Sector Transformation

As can be seen in Figure 5 decarbonisation in the transport sector is achieved through a mixture of hydrogen vehicles, mostly in the freight sector, and electric vehicles, primarily in the passenger sector. Nearly 100m hydrogen-powered vehicles are deployed alongside 330m electric vehicles.

Europe's heating sector

Power Sector Transformation

The expansion of electricity use in transport and heat means that, total European electricity demand will increase by 60% to 5,300TWh in 2050. Solar and onshore wind are the main drivers of the required 150% capacity increase across Europe. Interconnector capacity grows strongly, but nuclear capacity falls over time (30GW by 2050), as there are cheaper options available. Figure 4 shows the resulting generation mix, which is dominated by renewables as the cheapest form of zero carbon generation, with nuclear progressively exiting over time (only 225TWh in 2050). Generation from CCS gas (135TWh), and hydrogen CCGTs (25TWh) contribute to system security and flexibility.

Europe's power generation transformation

Future Gas Demand

Continued usage in CCS power and heat installations and as a precursor for hydrogen, means natural gas use in 2050 is 4,800TWh, only 5% lower than in 2020.

Hydrogen Safety

Like other energy carriers, hydrogen presents certain health and safety risks which require appropriate measures to be put place to ensure the safe production, distribution, storage and use.  Hydrogen has been used in industry for many years and its properties and behaviour are well understood.  There is, therefore, a baseline of information and standards on which to build as hydrogen is deployed into new technologies and more public facing markets. 

Safety considerations and incidents can slow, or even prevent, the deployment of a new energy technology if the risks are not well communicated and managed. Carbon capture and storage (CCS) is a salient example, and lithium-ion batteries have also faced concerns. On the other hand, the health and safety impacts of established energy products – gasoline, diesel, natural gas, electricity, coal –are familiar to consumers and rarely questioned, showing that risks – including flammability, presumed carcinogenicity and toxicity – can be managed to the satisfaction of users.

As a light gas, consisting of small molecules, hydrogen requires special equipment and procedures to handle it. Hydrogen is so small it can diffuse into/through some materials, including some types of steel and plastic pipes, and increase their chance of failure. It also escapes more easily through sealings and connectors than larger molecules, such as natural gas.

Hydrogen is a non-toxic gas, but its high flame velocity, broad ignition range and low ignition energy make it highly flammable. This is partly mitigated by its high buoyancy and diffusivity, which causes it to dissipate quickly – unlike natural gas or gasoline vapour. It has a flame that is not visible to the naked eye and it is colourless and odourless, making it harder for people to detect fires and leaks. There are already many decades of experience of using hydrogen industrially, including in large dedicated distribution pipelines. Protocols for safe handling at these sites are already in place, and these have been adapted and further developed for hydrogen refuelling infrastructure. However, today, they appear complex and unfamiliar compared to those for other energy carriers we are more familiar with. Whilst it is expected that widespread use in the energy system will likely bring new challenges, the available safety knowledge and data from industry are expected to provide the key to safe system roll out. Indeed, already today (Sept 2019) there are over 8000 fully safety certified hydrogen vehicles operating in California alone.

Hydrogen Roadmap Europe

The Fuel Cell and Hydrogen Joint Undertaking (FCH JU) and European Union published a Hydrogen Roadmap for Europe to assist long-term decarbonisation strategy of the European energy system. It includes future hydrogen demand potential of particular energy sectors arising from implementing hydrogen-based technologies.

Stakeholders can use the following framework to establish an actionable hydrogen transition work plan. The roadmap proposes a strategic prioritisation of actions by market segment to start the hydrogen roadmap for Europe. Such a prioritisation of segments is based on an overall timeline of hydrogen’s mass market acceptability and the advantages of hydrogen applications in each specific subsegment. These advantages include certainty of commercialisation, the amount of required investment and the probability of systemic effects. According to this logic, segments can be classified into three categories:

Hydrogen offers a number of no-regret moves, big opportunities, and optional investment fields for prioritisation

No-Regret Moves

This section represents all segments that must significantly deploy hydrogen to decarbonize. In these segments, hydrogen is the only option for decarbonization, the option with the best cost competitiveness, or with significant momentum indicating near-term financial viability. In this section, investments are prioritized based on their time to market or the potential market size. For instance, hydrogen-fueled, high-grade industry heat shows immense potential, but only after 2030. Alternatively, transportation modes such as forklifts and trams will make it to market faster but offer less total hydrogen demand.

Big Opportunities

This is the area where hydrogen has significant potential, but other technical solutions and players are competing to dominate the market. Industry and regulators have to take proactive actions to realize this potential and position the European industry for success. Otherwise, other countries may decide to pursue the potential, develop the technical solutions, and market their products in the EU. This section examines the trade-off between mass market acceptability and potential advantages. The policy and regulatory framework shall be designed in a way that provides long-term visibility for market demand for zero-emission products so that fuel cell and hydrogen market players can decide to invest to develop and seize these opportunities. The market for mid-sized cars, e.g., promises huge

potential with large positive spill over effects in other subsegments such as small cars. However, with intense competition from Asian OEMs and high investment requirements to provide model variety and availability, automakers need to manage the risk of falling behind international competition very carefully.

Options

This section represents those subsegments in which hydrogen has fewer advantages than competing decarbonization solutions, less total potential in a reasonable timeframe, and a higher risk of having negative spill over effects. Examples include the small car subsegment, where BEVs will offer the main decarbonization choice due to current cost advantages, more mature states of development, governmental support (subsidies), and public acceptance. However, discounting this option would be a great mistake, since it covers substantial European markets.

Community Energy

The Community Energy Concept

Community energy is the economic and operational participation and/or ownership by citizens or members of a defined community in a renewable energy project. Community energy is not limited by size, taking place on both large and small scales.

Community energy is any combination of at least two of the following elements:

  • Local stakeholders own the majority or all of a renewable energy project.
  • Voting control rests with a community-based organisation.
  • The majority of social and economic benefits are distributed locally.

However, various definitions of community energy are found worldwide depending on a government’s intent to steer investment and ownership in renewable energy generation in this direction. Requirements for communities to qualify as a community energy project may be more or less stringent depending on the respective policy’s actual intent to democratise the energy assets and to create a distributed energy system. This makes global stocktaking of community energy projects difficult.

Community energy projects differ in size and scope. They may include minority and partial ownership by a few members of a municipality in a project, the generation assets owned by a co-operative whose shareholders are solely recruited from the project-hosting community, or communities developing their own energy autarkic community centres or municipal and citizen partnerships, etc.

Benefits of Community Energy

A community’s economic and operational participation in renewable energy projects is a key factor for building community acceptance and support for the development of renewable energy projects.

Additional benefits of community energy can include:

  • Added value for the region through the establishment of a new economic sector, job creation and a local identity
  • Increase in actor diversity resulting in shared decision-making and increased transparency in planning and construction
  • Integration of citizens into sustainable economic processes
  • Lower energy prices
  • Acceleration of energy access and general renewable deployment rates
  • Technology and business model innovation