Hydrogen has again hit the headlines this week. The focus increased with the convening of an international conference on hydrogen safety in Adelaide, the release of a hydrogen action plan by the South Australian Government and an assessment by Geoscience Australia of “Prospective hydrogen production regions of Australia”[i].
SA’s Hydrogen Action Plan has five planks:
Under the area of integration into the energy system, the SA Government is looking to link hydrogen with its renewable energy developments. It has trial and small hydrogen projects under development, pointing to a 30MW hydrogen electrolyser in Port Lincoln and Australian Gas Network’s Tonsley Park, which is a demonstration project comprising a 1.25 megawatt (MW) electrolyser.
The action plan also includes the possibility of constructing a renewable hydrogen production facility at the Crystal Brook Energy Park, which is proposing up to 125MW of wind generation, 150MW of solar and battery storage, as well as a proposed 50 megawatt (MW) “Hydrogen Superhub”. The SA Government provided development approval to the energy park earlier this year with construction yet to begin[ii]. There is also a “test-bed” at the University of South Australia which will incorporate solar power, flow batteries, a hydrogen fuel cell stack and thermal energy storage
SA has also said it will also identify any changes that might needed to the National Energy Market Framework to ensure “the efficient integration of hydrogen into energy systems”.
It is intended that SA’s initiative will dovetail with the COAG Energy Council’s Hydrogen Working Group chaired by Australia’s Chief Scientist, Alan Finkel. The working group is considering five areas[iii] for hydrogen development:
In the case of hydrogen from electrolysis, renewable energy potential and the availability of water were the most important factors in GA’s assessment, while various infrastructure considerations playing a secondary role.
Differences between the three renewable hydrogen scenarios were based on whether hydrogen is produced near the coastal areas, where infrastructure and water are not issues, or whether hydrogen can be produced in inland areas provided water does become a constraining factor. Assumptions about proximity to the current electrical grid to transport renewable energy also played a role in the scenarios. (The maps and the detailed scenarios can be found here.)
GA’s key findings included:
GA did not assess the economic considerations around whether and when renewable and CCS hydrogen may become commercially viable in its latest work.
“Cost factors will have a significant influence on the timeframes over which large-scale markets for Australian hydrogen production emerge,” Geoscience Australia noted. In other words, while hydrogen may have substantial prospects, we still have a way to go and we may not achieve all the outcomes.
Elsewhere the Boston Consulting Group has flagged that along the “very real” potential of hydrogen is “some dangerous hype” and companies and governments need to become strategic or risk “burning billions to fulfil grand visions”.
BCG argues that companies need to focus investments on use chases where cheaper technologies are not suited and where hydrogen can be employed at scale using existing infrastructure, while government needs to focus on regulatory regimes that encourages deployment at scale in the right areas.
According to BCG the most promising applications over the next decade are: industrial processes and potentially heavy transportation. While applications such as use in passenger vehicles, heating and power generation are those where low-carbon hydrogen is unlikely to become cost competitive.
“In space heating and warm water generation, a wide-range of potentially low-carbon technologies, such as electric heaters, heat pumps, solar thermal, biomass, and green district heating, will most likely remain much cheaper than low-carbon hydrogen. This is true even if one were to take the often-touted approach of setting up an electrolyser to run only when there is excess renewable – and therefore free – power.”
Despite this, BCG concedes that these applications might be viable in certain countries such as those that stick with gas for heating, where low-carbon hydrogen blends of gas could be used to limit emissions.
[iii] National Hydrogen Strategy Issues Papers; “Hydrogen could do a power of good, Safely”, Alan Finkel, The Australian, 25 September 2019
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