We are seeing both the scope of and timeline for technological progress increasing at an unprecedented rate. The recent announcements of successful Covid 19 vaccines highlight what can be done when the international community gets focused on finding solutions to global problems. Climate change is another area where global focus is required. As highlighted by Dr. Mani Vadari in his thought piece, “Hydrogen is Making a Comeback!” hydrogen is currently enjoying a revived momentum in various projects around the world with the aim of helping address climate change.
The electricity sector’s dilemma
The electricity sector dilemma is that we don’t know what the optimal configuration is regarding green hydrogen production. Is it large, centralized hydrogen production facilities or a community-based resource? Should the facilities have integrated generation facilities similar to that planned for the Asian Renewable Energy Hub in Australia and Neom City in Saudi Arabia, or be reliant on electricity market/grid resources?
The picture is further complicated as we consider how we could operate the grid with hydrogen production. Do we use it as flexible baseload or mixed production facilities? The structure of electricity markets will be critical to addressing these issues. For example, if significant generation is available at short notice through reducing hydrogen production, how do we manage or signal that situation, and is it a positive or negative? Rather than the assumed risk placed on the power system from renewable generation’s intermittent nature, the ability to even out variations and curtail or increase green hydrogen production may actually support grid security and reliability.
Adding to the confusion are the uses for hydrogen and how they may impact production, storage and trade. Hydrogen in motor vehicles with V2H (vehicle to home) or V2G (vehicle to grid) capability begins to conflate several energy markets and systems. With more than one billion motor cars on roads around the world, the generating capacity associated with this fleet has a significant capability to disrupt electricity sector operations, investment and regulation, as well as the obvious impact on global fuel markets as we currently know them.
Cost continues to be the biggest challenge of hydrogen production, but another barrier may have a solution that would reduce the cost. A recent paper published in Nature Energy sets out a pathway for developing electrolyzers that can use low quality and saltwater instead of purified water. This can significantly reduce hydrogen production costs by eliminating the need to purify water, with the attendant capital and energy costs.
A pathway forward
All stakeholders have an opportunity, and arguably an obligation, to move forward. Today we can craft and consider realistic green hydrogen development scenarios that potentially greatly assist our societal objectives and have a positive economic impact. To ensure these objectives are realized, power-flow and market simulations need to be conducted. This will support identifying not only new business opportunities but also business risks and potential unintended consequences, along with possible mitigations to them.
Given results for selected scenarios, an assessment can also be made of whether current policy, regulations, market rules, operating tools and systems, processes, and infrastructure (including planned investments) are fit for purpose. If not, there must be clear identification of any required changes that accounts for the lead times necessary to have these in place.
The focus for this work must be on preparing a roadmap of initiatives and their associated business case. Importantly, the roadmap must be seamless, addressing all key stakeholder requirements; remembering bad policy implemented well is still bad policy.
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PSC is well-positioned to help stakeholders prepare for the imminent arrival of green hydrogen via our global team of energy experts. Contact us to find out more about how we can help you prepare for and benefit from green hydrogen.