Getting real about the Hydrogen Economy

Hydrogen is frequently touted as a major player in decarbonisation, and it is. But it will only be used at scale much later, and at a much lower level than solar and wind.

Fukushima Hydrogen Energy Research Field (FH2R) and an adjoining solar power farm are pictured in Namie Town, Fukushima Prefecture, Japan, 6 March 2021 (Photo:Reuters/ Yuka Obayashi).

Countries including China, Japan, South Korea and Australia have established national plans to facilitate hydrogen development. Some of the discussion associated with these plans has been unbalanced.

Clean hydrogen is made via the electrolysis of water using electricity derived mostly from solar and wind. Claims have been made that massive new industries will be built around the export of hydrogen-rich chemicals. But good solar and wind resources are far more widely available than oil, gas and coal. Most countries can generate most of their required electricity and produce most of the clean hydrogen they need themselves.

About three-quarters of global emissions can be eliminated simply through the generation of zero-emission electricity from solar photovoltaics and wind, coupled with the electrification of land transport (electric vehicles) and heating (electric furnaces and heat pumps). These are off-the-shelf technologies that are already deployed at a large scale. Electric vehicles and heat pumps are two times and three to seven times more energy-efficient than hydrogen fuel cell vehicles and heat from hydrogen-burners respectively. Renewable electrification of transport and heating is happening far faster than utilisation of clean hydrogen because it is much cheaper.

About three-quarters of the new electricity generation capacity installed globally each year is now solar photovoltaics or wind (the figure is 99 per cent in Australia). Costs of solar photovoltaics and wind are low and continue to fall. In most countries, solar and wind are now the cheapest sources of electricity available ever. Storage, transmission and demand responses can readily balance the high penetration of variable solar and wind generation at a low cost.

So, is there a role for large-scale clean hydrogen in the energy sector right now? The short answer is, not really. Hydrogen is a clean source of energy that can be used in many places. Hydrogen can replace coal or gas for electricity generation, oil in transportation and gas in buildings to provide heat. But electricity derived from solar and wind does a much better job.

Hydrogen is like a Swiss Army knife. You can use it to do a lot of things but it is rarely the best tool for the job. It is possible to produce green hydrogen from renewables via electrolysis, followed by compression, shipping and then combustion. But nearly three-quarters of the energy is lost during this process.

A major impact of the electrification of transport and heating is increased electricity demand. A recent study showed that Australian electricity demand would double with complete electrification of transport and heating. This additional electricity demand could be met using solar and wind, and would therefore require sufficient renewable generation capacities. This introduces another question: are the domestic renewable energy resources in East Asia sufficient to meet energy demand?

The answer is yes.

Japan has modest onshore solar and wind resources. But Japan has extensive offshore wind resources in its exclusive economic zone, with 14 times more onshore solar and offshore wind resources than the country needs to meet the current electricity demand with 100per cent renewable electricity, and seven times more than required if land transport, heating and industry were electrified.

Importantly, the modelled costs of 100 per cent renewable electricity system could be cheaper than the current wholesale electricity price, even with balancing costs included. Massive hydrogen importation is unnecessary and would result in far higher electricity prices compared with locally sourced solar and wind electricity.

If electricity generation is not an issue, what about balancing? The identified storage potential of off-river pumped hydro energy storage in East Asia is two orders of magnitude more than required to balance 100 per cent renewable energy in East Asia. Pumped hydro represents 99 per cent of global stored energy and is the cheapest, most mature bulk storage method available to balance variable electricity generation. Off-river pumped hydro utilises small artificial reservoirs rather than natural lakes or rivers, minimising associated environmental and social impacts.

Solar, wind, storage and transmission together provide zero-emission, affordable electricity that could not only replace gas or coal-fired electricity but also supply the additional electricity needed to electrify land transport, heat and industry. These sources represent about three-quarters of global emissions. It is difficult for hydrogen to compete with this pathway due to its high costs and low efficiency.

But hydrogen will play a major role in sectors that cannot be directly electrified. Aviation and shipping require high energy density that batteries cannot service. Hydrogen could be used to produce synthetic jet and shipping fuel. Hydrogen could also be used to produce ammonia, which is an important fertiliser and chemical feedstock. Hydrogen might also replace coking coal in the steel industry.

It could also be helpful to produce hydrogen using curtailed electricity and reserve it for periods of continuous low wind and sunshine, and for peaking power. In a 100 per cent renewable electricity grid, small amounts of hydrogen generation from curtailed electricity could substantially reduce the need for storage and therefore reduce the cost of electricity.

Solar and wind have already won the energy race and will dominate the energy system in most countries, including countries in East Asia. Hydrogen will certainly be important in the future clean economy. But it is important to keep perspective: solar and wind will continue to be far more important.

Source: East Asia Forum.

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