By Jamie Frew
The obscene brutality of the land grab we are witnessing in Ukraine has sent shockwaves through energy markets. Europe now realises it has been ‘fished in’ by many years of cheap gas as a route to advance Putin’s geostrategic goals. This situation is little short of a disaster for Europe’s energy security, and it may very well get worse before it gets better. In a belated response, the EU has announced bold plans to develop renewables to cut Russo-dependency and address the climate emergency. For example, Belgium, Denmark, Germany, and the Netherlands have announced their intention to deploy 150 GW of offshore wind by 2050. The ambition of these plans is undoubtedly on a par with the scale of the challenge of building a zero-carbon energy system. However, getting this energy to the place where it is required, at the time when it is needed, is a challenge at least as big as the build-out of the generation equipment itself. Grid development is a major blocking point on the build-out of a renewable energy system, and in many cases a developer who has a shovel-ready project will be asked to wait six to ten years for a grid connection.
Enter renewable hydrogen, an energy-rich gas seen by many as a vital component of the energy transition. Generation of hydrogen from renewables has the potential to bypass grid-development bottlenecks, enable energy to be transported to the place where it is required and allow multi-day and even seasonal energy storage in the form of hydrogen gas or hydrogen carriers. These functions have led many to herald hydrogen as THE essential ingredient of a renewable energy system.
This does not please everyone, however. Many determined sceptics take a literalist approach to the energy transition mantra ‘electrify everything’. Although this is a fantastic slogan (it even alliterates), it is not very helpful in answering the complexities of reengineering the energy system. These ‘electron misers’ fret about the ~30% loss of energy on converting renewable power to hydrogen and are inconsolable because some may want to convert energy back to electricity again with around another 50% loss. They trumpet their superior command of thermodynamics and lament that ‘hydrogen fanbois’ are so blind to these laws (despite most people in the hydrogen industry knowing very well their entropy from their exergy). There are several flaws in this argument, though.
One flaw is the fact that hydrogen, along with hydrogen-based carriers, makes energy transportable, allowing us to access remote resources where renewable generators may have capacity factors that are more than double those near demand centres. By my very basic arithmetic, a 30% loss on 200% still leaves you with 140% of the energy that a local but suboptimal renewable resource may yield. Can a technology still be considered inefficient if it allows you to capture more energy just through geographic location? Does any energy consumer actually care about the efficiency with which energy is delivered if the emissions are zero and the price is right? Is it a waste of scarce minerals used in generation equipment if those resources are working twice as hard?
The second flaw is the fact that we will never have perfect electricity transmission. Even at this early stage in the rollout of renewables, we already have huge gluts and deficits of energy between regions. Energy analytics outfit LCP estimate that curtailment could cost the UK £1 billion per year by 2025, mainly as the abundance of renewable power in Scotland far exceeds transmission capacity to the populous southeast of England. As grid development plans fall woefully short of the pace of capacity additions, geographic curtailment will only rise.
Another area where this argument falls down is that, as any insightful fossil fuel fan will tell you, “the sun does not always shine, and the wind does not always blow”. You may be understandably shocked by this revelation, but you also need to realise that our exposure to supply intermittency will grow as we become more renewables dependent. A window on the future is offered by the extraordinary swings in the price of electricity seen on the 24th of April this year, when the spot price in the Netherlands swung from plus €200/MWh to minus €200/MWh over a few hours. Although it is expected that the average cost of electricity will be pushed down as cheap renewables come onto the grid, volatility will increase. Extreme price swings will become the norm for the same reason I usually wish I did, or did not, take a jacket for a day out. Yep, the weather changes.
This means we need to time-shift energy from wind and sunny periods to calm and dark periods, and we will need to do this at the terawatt-hour scale. Demand management (https://shouldibake.com is a fantastic example) and batteries are being developed, but the scale of the supply/demand imbalance will only increase as renewable generation capacity multiplies over the coming years. Admittedly, batteries have the best round-trip efficiency, but achieving such a scale would require that we build expensive and mineral-hungry batteries the size of cities. Note that the world’s largest battery (Moss Landing in California, 1.2 GWh) would power German demand for not quite a whole minute. Despite scaling difficulties, batteries will be vital for short-term smoothing. Still, it is unlikely they will ever get down in cost far enough to be serious contenders for longer-duration energy storage (>4 hrs). Instead, we see that it is hydrogen that provides the lowest cost of storage when periods get longer and the number of cycles get lower. This is because scaling hydrogen is much more straightforward, as gas tanks and caverns are of a much simpler construction and use few rare minerals, i.e., the simplest hydrogen storage tanks are basically a bit of metal with a hole in it. This has led some to propose grid-scale hydrogen energy storage or, as energy transition deity Elon Musk calls it, “the most dumb thing I could possibly imagine for energy storage” – pointing to the inefficiency in the hydrogen production process. However, what the battery billionaire fails to recognise is that we are entering a world of energy abundance based on inexhaustible but intermittent and geographically unruly fuels. Therefore, whilst undoubtedly desirable, high efficiency is only one criterion in a crowded list. Indeed, if inefficiency such a heinous crime, the efficiency police must explain why Musk’s own company starts the energy capture process with solar cells that are only 20% efficient instead of deploying more exotic technologies that convert more photons to electrons (let’s not mention the efficiency of a person going to buy a litre of milk in a three-tonne armoured car). The reason is, of course, that we are prepared to accept less-than-perfect efficiency if we can achieve lower costs (or we just watched Blade Runner a few too many times).
Another flaw in the argument against hydrogen is that perfect efficiency is not what many mainstream 100% renewables scenarios are actually aiming for. In fact, a key strategy that many future energy system modellers are employing is massive overbuilding of renewables. Researchers postulate that building, say, 150% of the renewables we actually need will be the lowest-cost solution for a zero-carbon energy system. The reasoning is that renewables such as wind and solar are getting so cheap that building an excess reduces the amount of expensive storage solutions required. If we follow this logic, we are looking at a future energy system that is (1) inherently inefficient (but lower cost than alternatives), and (2) has spare power that we could use for some other function, as long as that function can operate flexibly. Therefore, by flexibly absorbing excess electricity, electrolytic hydrogen production can increase the overall efficiency of a renewable-based energy system (less waste). Crucially, the later reinjection of stored renewable hydrogen back into the energy system can allow us the security to increase the volume of intermittent renewables we include in the system.
And so, the electron miser’s myopic obsession with efficiency, whilst mostly based on real engineering facts, fails to address this bigger picture. Our future, like our past, will involve an imperfect energy system which always aims for but never hits its most efficient point. Perfect efficiency and transmission have a cost that few will be willing to pay. Relative to this, green hydrogen offers a source of bidirectional and geographic flexibility that is available at a reasonable cost with achievable technologies. Renewable hydrogen is lossy, that is for sure, but keeping the lights on in this very challenging new world may require some real-world compromises, because the strengths hydrogen can bring make a renewable energy system a much more feasible proposition.
Therefore, when we are designing a larger energy system, we should not think in terms of gold-plated, ultra-efficient solutions but acceptably efficient solutions that contribute to reasonable costs across the whole system. Hydrogen provides unique functions that batteries and electrical transmission do not, so we should focus more on what it can do well rather than where its deficiencies lie. It is the efficiency and cost of the whole system that we want to build that should concern us, not those of any one ingredient. After all, saffron is much more expensive than rice and probably does not taste very pleasant if eaten straight, but just a pinch can transform a bland bowl of rice into a meal fit for a king.
About the author
Jamie Frew, PhD, MBA, has over 20 years of experience in the energy and chemical industries and advises on business development for industrial-scale, first-of-a-kind, hydrogen-based decarbonisation projects. He leads 12 TO ZERO, a consultancy that advises on using hydrogen technologies for a profitable transition to a zero-carbon energy system. 12 TO ZERO is increasingly focused on the new frontier of offshore hydrogen, a massively scalable decarbonisation solution that leverages the rapidly declining costs of renewables and the existing offshore-energy value chain.
