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Green hydrogen: What’s next for the energy transition’s secret weapon?

Green hydrogen: What’s next for the energy transition’s secret weapon?

In this bonus episode of Factor This!, we introduce you to the RENWABLE +Series from Renewable Energy World.

In this +Series discussion presented by Pall Corporation, panelists from EDP Renewables, Generate Capital, and the National Renewable Energy Laboratory break down what’s next for green hydrogen— the energy transition’s secret weapon.

You can watch this +Series panel discussion on demand here, and check out the full RENEWABLE +Series archive here.

Green hydrogen’s versatility offers potential answers to some of the energy transition’s most challenging questions.

When produced from renewable energy sources, hydrogen could provide clean fuel for shipping, long-duration energy storage, and other areas that are difficult to decarbonize.

But factors such as scale, scope, and affordability remain daunting challenges. Can green hydrogen conquer these obstacles to become the energy transition’s secret weapon?

The state of green hydrogen

Today, nearly all hydrogen produced globally comes from fossil fuels.

According to the International Energy Agency, 80% of hydrogen is produced using emission-intensive natural gas reforming or coal gasification. The global capacity of electrolyzers, the key technology for green hydrogen production, stood at just 300 MW in 2020.

While clean energy deployment, primarily in the forms of wind and solar farms, has soared over the past decade, electrolyzer production is still in a “very premature stage of development,” according to Bryan Pivovar, a senior research fellow for the National Renewable Energy Laboratory (NREL) and an expert on hydrogen and fuel cells.

Electrolyzer technologies have been employed for many years, but not at scale. Current methods produce green hydrogen at around $5-10/kg. The Biden administration, meanwhile, wants to reduce the cost of green hydrogen by 80%, or $1/kg, by the end of the decade.

Global installed electrolysis capacity by region, 2015-2020

Global installed electrolysis capacity by region , 2015-2020. (Source: International Energy Agency)
Source: International Energy Agency

There are three primary types of electrolyzers: alkaline, proton exchange membrane (PEM), and solid oxide.

Alkaline electrolysis has been around for a long time but requires further research and development to allow for dispatchable green hydrogen production when electrons are cheap.

PEM electrolyzers leverage some of the technology used in fuel cell vehicles but in reverse. In the U.S., PEM receives most of the research and attention. It’s believed that PEM systems have an ability to respond dynamically better than the other systems, Pivovar said.

Solid oxide electrolyzers run at a much higher temperature and promise higher efficiency, but require either nuclear or concentrated solar power plants to provide the needed heat.

In the absence of a clear market for green hydrogen, development project development is minimal. Many companies have made commitments, agreements, or announcements that have contributed to green hydrogen hype cycles in the past.

EDP is developing a 100 MW green hydrogen project in Portugal at the site of a retired coal-fired power plant in partnership with refiner Lhyfe.

EDP remains a vertically integrated utility in some European markets and has committed to retiring its six remaining coal power plants by 2025.

Ana Quelhas, EDP Renewables’ managing director for hydrogen, said retired coal plants and ports could serve as valuable sites for hydrogen production hubs, as they are often located near industrial partners.

“For that last mile of decarbonization, if we’re truly committed to that, direct electrification will not be able to do the entire job,” Quelhas said.

As one of the largest wind energy developers in the world, EDP is also looking at pairing green hydrogen production facilities with wind projects that are nearing the end of a power purchase agreement or to avoid curtailment.

Quelhas added that industrial clients are approaching EDP often looking for information about green hydrogen, either to replace gray hydrogen with green hydrogen or substitute green hydrogen for natural gas in high-temperature industrial processes.

Still, many of those partners are not ready to sign long-term offtake agreements for green hydrogen because of inadequate market certainty and policy support, Quelhas said.

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What’s the best use for green hydrogen?

Photo Courtesy: Unsplash

Green hydrogen can be used for power generation, long-duration energy storage, heating, transportation, and more.

This versatility presents an additional challenge for green hydrogen: focusing on the best application.

At the clean energy investment firm Generate Capital, Brandon Moffatt is most focused on green hydrogen for e-methanol and ammonium production for use in shipping and transportation, as well as green hydrogen as a replacement for natural gas processes.

He remains skeptical of hydrogen use to heat homes. Hydrogen as its own molecule is difficult to handle because it’s compressed or liquefied and takes significant energy to move.

“Within each vertical, you’ve got good and bad things going on,” Moffatt said. “So, either using nitrogen to make ammonia or carbon dioxide to make methane or methanol are some areas that we’re seeing more and more pickup.”

A consortium led by NREL is working to accelerate the potential blending of green hydrogen in natural gas pipelines.

Several projects worldwide are demonstrating blends with hydrogen concentrations as high as 20%. Still, the long-term impact of hydrogen on materials and equipment is not well understood, which makes it challenging for utilities and industry to plan around blending at a large scale.

The consortium is researching hydrogen compatibility of piping and pipelines, life-cycle emissions, and the costs and opportunities of hydrogen blending.

“When you talk about this part of society that can’t be electrified, hydrogen’s got a really specific role in it,” Pivovar said. “The issue is that right now is not only is it more expensive to produce hydrogen, it’s much more expensive store and distribute hydrogen.”

Scale is another issue, Pivovar said. Natural gas is moved around the U.S. utilizing a trillion-dollar infrastructure network.

While utilizing entrenched infrastructure like the natural gas distribution network, there could be advantages to building hydrogen-specific infrastructure, too, Pivovar added.

“With a single hydrogen pipeline, you could replace 20 transmission lines in a single go,” Pivovar said.

Scaling green hydrogen

The development of electrolyzer technology is “the first domino to fall” in scaling green hydrogen globally, Pivovar believes.

“There’s still real research questions about how cheap we can make these things, and the duty cycles that they can operate on and how that impacts their durability and the overall economics of the system,” Pivovar said.

The Biden administration’s goal of producing green hydrogen at $1/kg, versus $5-10/kg today, requires cost declines for both electrolyzers and clean energy inputs.

Generate’s Moffatt says the cost of capital isn’t the biggest issue right now.

“The challenge is that with wind and solar and the pricing now and the capacity factors that they are, we can’t get below $1/kg just on the electricity to feed the electrolyzer as it stands today,” he said.

Global planned electrolyzer capacity and estimation of additional renewable capacity by country/region

Courtesy: International Energy Agency

Proactive policy is crucial to drive down costs and provide market certainty.

The Bipartisan Infrastructure Law dedicated $1 billion to electrolyzer research and $8 billion to building hydrogen hubs in the U.S.

The Inflation Reduction Act goes a step further by providing tax credits or direct payments of $3/kg of green hydrogen. This brings the Biden administration’s $1/kg target within reach.

Policies like the Bipartisan Infrastructure Law and Inflation Reduction Act could lay the foundation for a green hydrogen market to form. EDP’s Quelhas likens this moment for green hydrogen to onshore wind 20 years ago.

“There is an important competitiveness cap that we need to bridge against the alternatives: fossil fuels,” Quelhas said.