Hydrogen for power needs nearly $800bn investment says BNEF

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By Clarion Energy Editors

Carbon-free hydrogen production could significantly lower greenhouse gas emissions in power generation and manufacturing, but it will require a mammoth and long-term financial commitment to become cost competitive.

This is according to a new report by BloombergNEF, the research wing of media giant Bloomberg that focuses on next-generation energy technologies which also reduce carbon emissions.

Hydrogenà‚ can be a zero-carbon substitute for fossil fuels. Companies such as Mitsubishi Hitachi Power Systems (MHPS), GE, Siemens and Ansaldo Energia already are working on programs to blend hydrogen into their turbine fuel mixes.

In fact, the BNEF report says, clean hydrogen deployment could cut about one-third of global greenhouse gas emissions from generation, à‚ heavy duty transportation and industrial manufacturing such as steel making. The concept of clean or green hydrogen requires that renewables such as wind or solar power the electrolysis plants which would create the hydrogen by separating that molecule from water.

Hydrogen for power generation needs $800bn investment says BNEF

“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 and solar power, to store it underground for months, and then to pipe it on-demand to power everything from ships to steel mills,” said Kobad Bhavnagri, head of industrial decarbonization for BNEF and lead author of the report.

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This vision will not come cheap. Bhavnagri’s report estimates that a hydrogen scale-up would require close to $150bn in subsidies on the global level. It also factors in a cost applied to carbon such as a tax or allowance policy.

If these policies are put in place, the BNEF report suggests that renewable hydrogen could be produced at between 80 cents to $1.60 per kilogram in most of the world by 2050. That production cost is equivalent to natural gas priced at between $6 to $12 per million British thermal units (mmBtu), according to the report.

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Such a price would be competitive with current natural gas prices in Brazil, China, India, Germany and Scandinavia. The cost of electrolyzer technologyࢀ”which splits water in hydrogen and oxygen componentsà‚­à¢€”has fallen by 40 percent in the past five years, according to BNEF.

Hydrogen does have its competitive challenges elsewhere. For one, US natural gas is abundant and currently costs below $2 per mmBtu in several markets, according to reports. Companies are building liquified natural gas (LNG) export terminals along the US coasts for future delivery to global customers.

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Storing and transporting hydrogen also is financially challenging. The BNEF report calculates that an infrastructure investment in storage might cost around $637bn by 2050.

Hydrogen for power generation needs $800bn investment says BNEF

Putting a price on carbon would help in steel, cement and chemicals production, too. Many countries, particularly in Europe, have a carbon tax policy but the U.S. does not.

Numerous European business leaders have expressed support for the notion of a hydrogen-based industrial economy. Marco Alveràƒ¡, chief executive of Italian energy infrastructure firm Snam, has said that existing gas infrastructure networks and that hydrogen can be blended into gas-fired power generation at relatively small investment up front.

“Europe can turn the hydrogen revolution into a reality and make it affordable for consumers and industry worldwide, while also reaping the industrial benefit of climate leadership,” Alveràƒ¡ wrote in an op-ed to the London-based Financial Times.

In the US, MHPS recently was awarded a contract by Intermountain Power Agency to supply two of its M501JAC gas-fired turbines for aà‚ long-term hydrogen transition projectà‚ in Utah. The M501JACs will utilize a 30 per cent mix of hydrogen in only five years, with the long-term goal to burn 100 per cent by 2045.

Maria Joàƒ£o Duarte, Mitsubishi Hitachi Power Systems’ representative to the EU Institutions, recently told PEi in an interview that “Europe’s focus is on accelerating the production of green hydrogen from renewable sources, but there’s still a long way to go and most likely this will not happen at scale until 2030”.

Maria Joàƒ£o Duarte

“In the meantime, it will have to rely on large-scale conventional production methods combined with carbon capture technology ” otherwise known as ‘blue’ hydrogen.” Read the full interview here.

Jorgo Chatzimarkakis, Secretary General, Hydrogen Europe, also told PEi that “it’s high time to come up with a coordinated approach at EU level that allows national specificities but that also has the overall capacity of hydrogen for decarbonisation in mind”. Read his interview here

A Japanese consortium including Toshiba and Iwantani Corp is working together on a renewable energy-powered 10 MW class hydrogen production unit.à‚ The FH2R projectà‚ is under construction in the Fukushima Prefecture region.

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