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Australia's Hydrogen Economy - fact or fiction?

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The first part in this series looked at why there is so much interest in hydrogen now, particularly in Australia. Just last week for example there was news of two renewable hydrogen projects planned in Queensland and this week we have had this news about a new 5 GW renewable hydrogen facility for Western Australia.

This second part will examine the opportunities in detail along with some of the challenges, focusing on the domestic opportunities of heating and mobility.

To recap, the opportunities are summarised in the diagram below. 

Hydrogen opportunities Australia

Source: Hydrogen for Australia’s future briefing paper for the COAG Energy Council – Hydrogen Strategy Group

To achieve deep decarbonisation of the Australian economy, a transition to low-carbon generation of electricity will not be enough. It will be necessary to decarbonise heating and transport, as well as industrial processes. Hydrogen can play a significant role in this.

1. Heating

Domestic heating includes space heating, water heating and cooking. In Australia this is currently provided by combustion of fossil fuels or by electricity mostly generated from fossil fuels. Almost 70% of Australian homes now use mains natural gas or bottled propane gas.

Electrification using renewable energy is one option to decarbonise this sector, however hydrogen can be stored, distributed and used in a similar way to natural gas, using much of the same infrastructure. The transition to hydrogen can be followed gradually: small amounts of hydrogen can be injected into the existing gas grid.

Hydrogen enrichment of the natural gas network provides an early market for hydrogen and a short-term option for decarbonisation of the sector. Gas networks have built in storage – Australia’s existing natural-gas pipeline infrastructure stores and transports an amount of energy equivalent to 5.4 billion Tesla Powerwall 2 batteries (73 TWh).

Household appliances are certified to run with a gas mix of up to 13% hydrogen. A transition all the way to 100% hydrogen would require modifications to domestic appliances, gas meters and the transmission pipelines. This is something that the UK is currently investigating and would likely not be cheap.

At least in the short term, converting to hydrogen instead of natural gas would likely see an increase in gas bills. According to the CSIRO National Hydrogen Roadmap, direct combustion of hydrogen for generating heat is unlikely to compete commercially with natural gas before 2030. Policy incentives would therefore be required to drive the transition. 

Hydrogen vs electrification

To decarbonise the sector, electrification using renewable energy is another option. The problem is that in the colder states such as Victoria the heating demand is highly seasonal.

As the graph below shows, the combined gas + electricity maximum hourly demand in Victoria is around 25,000 MW. To meet this with full electrification would require an overinvestment in transmission and distribution infrastructure that would ultimately lead to higher power bills. 

Daily maximum demand Victoria gas and electricity

On the other hand, if the gas network were decarbonised using hydrogen, a large part of the increase in electrical demand would be used to produce the hydrogen. This could then be distributed in the gas network, removing the need to upgrade the electricity networks. (This assumes the hydrogen is produced at the source of renewable electricity generation.)

Modelling from the Australian Gas Infrastructure Group suggests conversion to hydrogen would cost about 40% less than full electrification. The additional cost of electrolysis and gas network investment is more than outweighed by the required upgrades to the electricity networks and the additional electricity storage required. 

Decarbonisation hydrogen vs electrification

Industrial heating

Industrial processes such as alumina, cement, iron and steel production require high temperature heat. For these applications, hydrogen provides the most viable means of decarbonisation, replacing natural gas using existing equipment with minimal retrofit required. However, it is complicated where there is a need for integration with other systems on a single site. Upgrading from natural gas to hydrogen in this sector is therefore likely to be more ad hoc.

2. Transport

Transport is another significant contributor to Australia’s carbon emissions, with road transport alone responsible for about 15% of emissions. Electric vehicles (whether battery or fuel cell) offer a way to decarbonise this sector.

Two flavours of electric vehicle

Battery electric vehicles (BEVs) use a battery to power the electric motor. The battery must be charged externally (whether at home or on the go). In Fuel Cell Electric Vehicles (FCEVs) the electricity for the motor is generated by a hydrogen fuel cell.

FCEVs have longer ranges and can be recharged faster, whereas BEVs are more efficient, there are more models to choose from and charging infrastructure is less expensive. BEVs are expected to dominate the market for private light passenger vehicles where the disadvantage of longer recharge times is offset by the ability to charge at home or at destinations such as workplaces and shopping centres. 

Efficiency

Another word on the efficiency of hydrogen fuel cell EVs vs battery EVs. As the diagram below outlines, there are substantial losses in the conversion of electricity to hydrogen, storage of that hydrogen and then conversion back to electricity to drive the motor.

Efficiency BEV vs FCEV

Source: “Does a Hydrogen Economy Make Sense?” – proceedings of the IEEE, Vol 94, No 10, Oct 2006

While a BEV might use 69% of the original source energy, the FCEV will at best use just 23% (if the more favourable compression pathway is taken). This means that the FCEV will use 3x as much electrical energy per km driven than a BEV.

And it doesn’t end there! Due to the cost to produce hydrogen and build out the charging infrastructure it will likely cost significantly more to refuel a FCEV with 100 kWh worth of energy than a BEV, which can be plugged in at home. The cost to purchase a FCEV is also still significantly more than a BEV. 

FCEV opportunities

In spite of this, there are some opportunities for hydrogen powered transport where fast refuelling or payload / range is a priority.

One example would be commercial fleets and other vehicles in near-continuous use, where the faster refuelling leads to higher vehicle availability. Hydrogen powered forklift trucks are already in use today.

Another example would be in the heavy vehicle market, particularly long-distance trucks, where the weight advantage of hydrogen over batteries translates into larger payloads and ranges. Increasing the range of an FCEV only requires increasing the size of the hydrogen tank, which has less effect on total vehicle weight than increasing the size of the battery in a BEV.

One study estimated the battery in a Class 8 truck with a 960km range would need to have a capacity of 2 GWh and would weigh around 15 tons, consuming approximately half of the potential payload of the truck. While this weight might be expected to come down as battery technology improves, hydrogen is still leagues ahead.

The Nikola One truck delivers a 1900km range using 100kg of hydrogen (plus the weight of the hydrogen tank of course, I have struggled to find a reliable number, perhaps around a ton or two). And some see the value in this – America’s leading brewer, Anheuser-Busch has placed an order for 800 Nikola One trucks.

Conclusions

While not clear cut, there may be some opportunities for hydrogen to decarbonise space heating although it will face competition from electrical heat pumps as well as biomass (whether biomass is carbon neutral is another story). In transport, hydrogen fuel cell vehicles have applications in fleets and long distance trucks but it is hard to see them competing with battery powered electric vehicles at least in the short to medium term.

The third part of this series will look at the role of hydrogen to support energy system resilience in Australia as well as the export opportunity. 

Gavin  Mooney's picture

Thank Gavin for the Post!

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Discussions

Matt Chester's picture
Matt Chester on Oct 21, 2019 9:48 pm GMT

Great article, Gavin-- thanks for sharing this terrific research.

Household appliances are certified to run with a gas mix of up to 13% hydrogen. A transition all the way to 100% hydrogen would require modifications to domestic appliances, gas meters and the transmission pipelines. This is something that the UK is currently investigating and would likely not be cheap.

This is something I wonder when people talk about starting by blending hydrogen into gas-- it's still de facto investing in the existing gas infrastructure (maybe building out even more) and I wonder if it makes it a bit short sighted compared with pulling off the bandaid more quickly? 

Gavin  Mooney's picture
Gavin Mooney on Oct 23, 2019 5:19 am GMT

Yes that's a good point Matt. I don't think storing hydrogen in the gas network is the big use case the proponents are gunning for. That said, if you believe that hydrogen is essential for decarbonising heating (and some may beg to differ) then reusing as much of the existing gas infrastructure as possible makes sense. 

William Hughes-Games's picture
William Hughes-Games on Oct 28, 2019 6:20 pm GMT

The real core problem here is the Australian reliance on fossil fuels to generate their electricity.  Arguably, Australia has the best resources of wind and sun in the world.  All the mentioned uses of hydrogen are probably valid with the exception of transport.  It is just too energy costly to compress or liquify hydrogen, transport it and then equip vehicles with suitable high pressure or highly insullated tanks when compared with simply transmitting the electricity via the existing grid to the battery in the vehicle.  On the other side, Hydrogen gains feasibility due to the by-product, Oxygen that is produced during electrolysis.

Rami Reshef's picture
Rami Reshef on Dec 5, 2019 1:28 pm GMT

Hi Gavin,

So what do you say, fact or fiction? As you note, there are pros and cons, some sectors make more sense than others. Now that Australia has announced its national hydrogen strategy, it is clear that Australian Chief Scientist Alan Finkel is confident that Australia can and should capture the hydrogen opportunity and play a leading role in developing the global hydrogen economy, including exporting to Japan, South Korea and other Asian countries. And by maximizing the production of hydrogen from renewable energy via electrolysis and other innovative technologies, many of which are being developed in Australia but also in other places, the more Australia will contribute to global decarbonization reducing GHG emissions. Clearly there are efficiency issues so not every sector makes sense, but there are opportunities.

Fuel cells play an important role in the hydrogen cycle by storing and generating emission-free electricity in diverse applications across industries, with virtually no limitations in terms of weather or time of use.  Hybrid energy generation sites combining wind and solar and other intermittent renewables, electrolysis and fuel cells will operate as carbon-free power plants that mitigate the impact of climate change. Although initially the costs of green hydrogen are high, over time demand will grow, costs will level out, standards will be set, the supply chain will scale up and infrastructure will be added, such that gradually the economics will make increasingly more sense. And as you rightly point out, in parallel to building out the green hydrogen infrastructure, fossil fuel producers such as the natural gas industry while transitioning their businesses will be able to supply hydrogen using traditional methods that will be phased out as newer, cleaner sources are developed.   

With a bold national strategy now in place, Australia is taking a welcome leadership role in the global hydrogen economy. Although it will be costly and in certain industry sectors more problematic than others, with the needed natural resources, a strong history of developing large-scale energy industries and an existing trade mechanism serving the large energy importers in Asia, it is reasonable to assume that Australia’s hydrogen market will expand rapidly, a step that will have a positive impact globally, both for the industry and for climate action.

Matt Chester's picture
Matt Chester on Dec 5, 2019 5:00 pm GMT

Although it will be costly and in certain industry sectors more problematic than others, with the needed natural resources, a strong history of developing large-scale energy industries and an existing trade mechanism serving the large energy importers in Asia, it is reasonable to assume that Australia’s hydrogen market will expand rapidly, a step that will have a positive impact globally, both for the industry and for climate action.

For sure will be expensive in some industries, but that's why at this early stage it's important to take the low hanging fruit that is most prepared for hydrogen energy. And Australia will serve well to be at the forefront of this movement, preparing to export the technologies and the lessons learned to the rest of the world!

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