converting cost to revenue - decarbonate.fi
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Electrolyser market outlookDecarbonate Co-Innovation projectConverting cost to revenue
11/06/2020 VTT – beyond the obvious
11/06/2020 VTT – beyond the obvious
Hydrogen
State-of-the-art
Future view
Why hydrogen?Promising versatile substitute for fossil fuels
11/06/2020 VTT – beyond the obvious
11/06/2020 VTT – beyond the obvious
Hydrogen has potential to replace
fossil fuels in many applications
and can be with low or zero CO2
emissions
Promising versatile substitute for fossil fuels
1 MW electrolyser 200 Nm3/h H2
18 kg/h H2
55 kWh of electricity 1 kg H2
8 kg O210 kg demineralized H2O
1 kgH2
11.1 Nm3
33.3 kWh (LHV)
39.4 kWh (HHV)
3.77 dm3 of gasoline
Hydrogen comes in many colours
11/06/2020 VTT – beyond the obvious
Hydrogen production sources are often described in colours:• Green: H2 produced from renewable electricity
• Blue: H2 produced from fossil fuels combined with CCUS
• Grey: H2 produced from natural gas
• Black: H2 produced from coal
• Brown: H2 produced from lignite
Other hydrogen producing sources like biomass and nuclear/grid
electricity varieties have not established any specific colour
11/06/2020 VTT – beyond the obvious
Today dedicated hydrogen production volume is around 70 Mt• 76 % from the natural gas and almost all the rest from the coal
• Around 205 billion m3 of natural gas (6 % of global use) and 107 Mt of
coal (2 % of global use) is consumed
• Annual CO2 emissions 830 Mt from the (fossil) H2 production
Green hydrogen production (via water electrolysis) is competitive
today only in very particular situations• Currently 2 % of global hydrogen production
• Producing all current dedicated hydrogen via water electrolysis would
require: 3 600 TWh electricity and 617 million m3 water consumption
Still major share of H2 is producedfrom fossil fuels
Hydrogen applications
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Current main applications for pure hydrogen are oil refining and
ammonia production
The Future of Hydrogen, IEA, 2019
Hydrogen storage
11/06/2020 VTT – beyond the obvious
https://hydrogeneurope.eu/hydrogen-storage
Safety concerns• Non-toxic
• Highly flammable
• Protocols for safe handling already
exists as a result of many decades
industrial use
• Incidents have happened on hydrogen
fuelling stations in South Korea and
Norway
Hydrogen storage technologies
11/06/2020 VTT – beyond the obvious
https://hydrogeneurope.eu/hydrogen-storage
Compression• Low pressure tanks
• High pressure tanks
• Undergound storage
• Line packing
Liquefaction• Cryogenic tanks
• Cryo-compressed
Material based• Ammonia
• Liquid organic hydrogen carriers (LOHC)
• Metal hydrides
11/06/2020 VTT – beyond the obvious
Underground storage• H2 is injected and compressed into underground salt cavern
• High volume storage but availability is geographically specific
Line packing• Using the gas grid to store hydrogen by alternating the pipeline pressure
• Used technique in natural gas industry
LOHC• Organic liquids are hydrogenated and dehydrogenated via heat or catalysis
• Liquid can be re-used after the dehydrogentaion
Metal Hydrides• Metals bond to hydrogen forming a new compound
• Niche role due to temperature requirements, weight and slow dehydrogenation
Hydrogen storage methods explained
11/06/2020 VTT – beyond the obvious
Storage method Required energy Density (kg/m3)
Low pressure
30 – 35 bar
25 °C
Electrolysers can generate
hydrogen at low pressure without
compression
2.77
High pressure
50 – 150 bar
25 °C
0.2 – 0.8 kWh/kgH2 3.95 – 10.9
Very high pressure 350 bar,
25 °C4.4 kWh/kgH2 23
Liquefaction
1 bar, -253 °C10 – 13 kWh/kgH2 70.8
Liquid ammonia
1 bar, -33 °C 2 – 3 kWh/kgH2 + additional 8
kWh/kgH2 to recover H2 from
ammonia
121
Liquid ammonia
10 bar, 25 °C107
Storage energy demand and H2 density
(CSIRO, 2018)
11/06/2020 VTT – beyond the obvious
Good renewable energy resources are usually located far from the
energy demand centers. On-site hydrogen production can offer
solution to transport the renewable energy more economically
than conventional electricity transmission via cable• Electricity transmission by cable is 10 – 20 times more expensive than
the cost of hydrogen transportation by pipeline (Vermeulen, 2017)
• Capacity of an electricity cable is between 1 – 2 GW and hydrogen
pipeline can have capacity of 15 – 30 GW
• The losses of hydrogen transportation in a pipeline are also significantly
smaller (Hydrogen Europe, 2020)
Hydrogen transportation
11/06/2020 VTT – beyond the obvious
Pipeline transportation has two
scenarios to consider• Blending the hydrogen into existing natural
gas grid up to limited concentration
• Transporting 100 % hydrogen via (new or
existing) suitable pipeline network.
Globally 5 000 km of hydrogen pipelines
and 3 million km of natural gas pipeline
already exists
Pipelines have high capital costs but low
operational costs and long lifetime
between 40 – 80 years
Utilisation of the gas grid
IEA 2019
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Ships to transport pure hydrogen are
still under development• Kawasaki Heavy Industries (KHI) is
building the world’s first ship with
possibilty to transport liquefied hydrogen
• If such ships will be powered by
hydrogen, they could use the boiled off
hydrogen from the cargo (around 0.2 %
consumed daily)
Other possible storage types for ship
transportation: • Ammonia (most mature in
intercontinental transmission)
• LOHC
Hydrogen transport via shipping
IEA 2019
11/06/2020 VTT – beyond the obvious
Hydrogen distribution for shorter distances
via compressed gas trailer trucks• Theoretically 1 100 kg of compressed
hydrogen can be transported in a single trailer
but such mass requires high pressures which
are limited in transportation regulations
• Steel tubes allow around 280 kg loads of
hydrogen
• Liquefaction in insulated cryogenic tanks can
offer load capacity of 4 000 kgH2 for longer
distances
Transportation via rail is similar as trucks
but for longer distances
Truck and rail distribution
IEA 2019
11/06/2020 VTT – beyond the obvious
Hydrogen transportation methods
Method Distance (km) Storage type
Pipeline 1000 – 4000 Compression
Shipping > 4000Liquefaction,
ammonia
Rails 800 – 1100 Compression, liquefaction,
ammonia
Trucks < 1000Compression, liquefaction,
ammonia
State-of-the-artView on recent Power-to-X projects
11/06/2020 VTT – beyond the obvious
11/06/2020 VTT – beyond the obvious
Scale-up the whole hydrogen value chain• Demand for green hydrogen must be created to scale-up production,
transportation and storage
Comprehensive policies and regulations to support investements• Reduce market uncertainty
CO2 pricing• Even with policy and scale-up measures, high CO2 emission allowance
prices for fossil production are likely to be needed
Additional revenue from by-products• Oxygen
• Grid services
• Waste heat
Ways to make green hydrogen feasible
By-product oxygen
11/06/2020 VTT – beyond the obvious
For 1 kg of generated hydrogen, 8 kg of oxygen is produced
Oxygen has the largest global industrial gas market with
estimated demand of $19.2 billion in 2017 and expected to
grow to $22.7 billion in 2023.
The price for oxygen varies significantly depending on end-
use application
Grid services
11/06/2020 VTT – beyond the obvious
System-wide oversupply and limited electricity grid causes renewable
electricity curtailment• In Germany 2018 on- and offshore wind electricity curtailed was worth to
around €1 billion (Bundesnetzaentur, 2019)
Hydrogen production via electrolysis could help to reduce curtailment
but it is not likely viable to operate electrolysers exclusively with that
due to short utilisation rate. In addition, there several other methods
to balance electricity system.
However, electrolysers can quickly ramp up and down the production.
According to Energiepark Mainz report, the fast response times are
well achievable also in large (MW scale) systems.
Waste heat
11/06/2020 VTT – beyond the obvious
Particularly interesting revenue source in Nordic countries
Alkaline and PEM electrolysis systems operate around 45 – 80 °C
temperature range, usually 50 °C. Waste heat generated from the
operation could be utilized in suitable applications. Higher operation
temperatures are challenging due to material issues.• Project Pretzel is developing PEM system with operation temperature up to 90 °C.
Some electrolyser manufacturers offer possibility for heat utilization in their
systems• H-TEC Systems, heat extraction max 65 °C and return temperature 55 °C
• ITM Power
11/06/2020 VTT – beyond the obvious
Capacity by commisioning year
and intented hydrogen use• As megawatts of electricity input
(MWe)
Year 2020 values based on
publicly stated commisioning
estimates in 2020
Over 600 MW could be
comissioned through 2021
Installed electrolyser capacity trend from10 years
Wolrd Energy Investment 2020, IEA, 2020
11/06/2020 VTT – beyond the obvious
Capacity (MWe) by
commisioning year and region
Year 2020 values based on
publicly stated commisioning
estimates in 2020
Installed electrolyser capacity trend from10 years
Wolrd Energy Investment 2020, IEA, 2020
11/06/2020 VTT – beyond the obvious
Development by IRENA
Power-to-Hydrogen projects
by electrolyser technology
and average scale
(IRENA 2019).
https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2019/Sep/IRENA_Hydrogen_2019.pdf
11/06/2020 VTT – beyond the obvious
Alkaline PEM SOEC
Advantages+ Mature technology
+ Lower capital costs
+ Small footprint
+ Flexible operation
+ High pressure and purity H2
+ Fast dynamic operation
+ Low material costs
+ Possibilty for reverse
mode operation (FC)
Disadvantages
- Larger footprint
- Oxygen impurity in H2
stream
- Expensive catalysts cause
higher capital costs
- Least mature technology
- Needs heat source
Electrical efficiency
(%, LHV) 63 – 70 56 – 60 74 – 81
Operating pressure
(bar)1 – 30 30 – 80 1
Operating
temperature (°C)60 – 80 50 – 80 650 – 1 000
CAPEX ($/kWe) 350 – 1 400 800 – 1 800 2 800 – 5 600
Electrolyser technology options
Alkaline electrolyser system cost projections
11/06/2020 VTT – beyond the obvious
CAPEX decrease of alkaline
electrolysis will benefit from
developing and increasing
manufacturing volumes
https://www.agora-energiewende.de/fileadmin2/Blog/2019/Electrolysis_manufacturing_Europe/2019-11-
08_Background_paper_Hydrogen_cost.pdf
PEM electrolyser system cost projections
11/06/2020 VTT – beyond the obvious
PEM electolysers can benefit
from steep learning curve and
like alkaline technology, from
developing and increasing
manufacturing volumes
ITM POWER Graham Cooley, World energy council 19.5.2020 presentation
Electrolyser manufacturing capacity
11/06/2020 VTT – beyond the obvious
Company Technology
NEL1 Alkaline
McPhy Alkaline
ThyssenKrupp Alkaline
ITM Power2 PEM
Hydrogenics PEM
Siemens PEM
Sunfire SOEC
1 Production capacity 360 MW/year, potential to grow to 1 GW/year
2 Production capacity of 300 MW/year and 1 GW/year by 2024
Project examples 1/6
11/06/2020 VTT – beyond the obvious
Bécancour Green Hydrogen plant, 20 MW, Canada• Construction of 20 MW PEM electrolyser plant has started in Air Liquide’s
Bécancour plant site. The electrolyser is planned to be in commercial use by
the end of 2020 with hydrogen output of 3 000 tn/year.
• Project will reduce CO2 emissions by 27 000 tn/year
Refhyne, 10 MW, Germany• Shell and ITM Power will build 10 MW PEM electrolysis plant at Rhineland
refinery for processing and upgrading the products.
• Project’s total investment is estimated to be €20 million including integration
to the refinery and the plant is scheduled to be in operation in 2020
• Refinery currently uses annually 180 000 tn of hydrogen which is produced
by steam methane reforming. New plant will produce hydrogen 1 300 tn/year
Nikola Corporation purchased from Nel Hydrogen Inc.• 85 MW alkaline electrolysers (40 tnH2/day) with order value of $30 million
• Hydrogen for five large-scale hydrogen fueling stations (8 tn/day)
Fukushima Hydrogen Energy Research Field, Japan • Solar energy powered 10 MW electrolysis system, (Toshiba, 2020)
• Balancing power grid adjusting hydrogen production
• Hydrogen will be mainly transported via tube trailers for mobility and industrial
use
Project examples 2/6
11/06/2020 VTT – beyond the obvious
HySynergy, Fredericia, Denmark• Partnership between Everfuel and Shell to establish PtX plant with approximate
cost of €20 million
• First phase consists of building an electrolyser capacity of 20 MW by 2022-2023
• Possibility to expand facility capacity to 1 GW
Yara Pilbara renewable ammonia feasibility study, Australia• Feasibility study to investigate opportunity for multi-megawatt green hydrogen
production (50 – 60 MW)
• Plant’s ammonia production capacity is 840 000 tn/year (5 % of global ammonia
market) and facility uses currently steam methane reforming process for
hydrogen
• The investigated electrolysis capacity would produce enough hydrogen for
28 000 tn/year ammonia production and operation would start earliest in 2021
Project examples 3/6
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Project examples 4/6
11/06/2020 VTT – beyond the obvious
Nordic Blue Crude, Norway• Industrial scale Power-to-Liquid project aims to build ”E-Fuel 1” plant in
Herøya industrial park with capacity of 10 million liters of synthetic
hydrocarbons by 2022. Expansion potential to 100 million liters.
• Product mix consists of kerosene, diesel, wax and naphtha
• Electrolyser planned to be SOEC type
Hydrogen Hub Mo., Norway• Aim to study a 2 – 4 tn/day capacity electrolyser to replace fossil fuels in
Celsa’s steel production process
• Electrolysis facility would also have capacity to produce hydrogen for other
companies in the industrial park
Project examples 5/6
11/06/2020 VTT – beyond the obvious
Nouryon and Gasunie, 20 MW, the Netherlands• 30 bar high pressure alkaline electrolysis with hydrogen production
capacity of 3 000 tn/year
• Hydrogen for biomethanol production to reduce CO2 emissions by up
to 27 000 tn/year
Hybrit, Sweden/Finland• Massive project to decarbonise steel industry. 10 % CO2 reduction in
Sweden and 7 % in Finland
• First pilot stage alkaline electrolysis hydrogen production capacity
4.5 MW to operate 2021 - 2024
• Demonstration phase in 2025, electrolyser capacity around 400 MW
Project examples 6/6
11/06/2020 VTT – beyond the obvious
Multiplhy, The Netherlands• First high temperature electrolysis project in MW-scale (2.6 MW) for industrial
refining process
• Hydrogen production 60 kg/h, with 20% higher efficiency than conventional low-
temperature electrolyser
Hychico, Agentina• Wind energy to hydrogen, two alkaline electrolysers with capacity of 120 Nm3/h
(0.6 MW). Hydrogen is blended with natural gas (up to 42 %) to feed 1.4 MW
gas engine for re-electrification.
• Oxygen production capacity 60 Nm3/h. Sold to industrial gas market at high
pressure.
Post Covid-19 and the hydrogen sector
11/06/2020 VTT – beyond the obvious
https://www.niagarafallsreview.ca/opinion-story/9892635-editorial-cartoon-for-march-11/
According to Hydrogen Europe analysis Post
Covid-19 recession may cause significant delay
on clean hydrogen commercial roll-out
If clean technology takes a backseat in
economic recovery plans the investment plans
will likely abandon or scale-down• Total planned electrolyser capacity in
70 projects is over 22 GW. Total value of affected
projects by the crisis is around
€120 – 130 billion.
Supporting economic recovery and investing in future clean energy
technologies
In line with the European Green Deal
Green hydrogen investment and support report from Hydrogen Europe
estimates that the total needed private investments to 2030 are €430 billion
with governmental support of €145 billion (combined €575 bn)• To enable enough clean hydrogen production for 2 °C climate change target
• For competitive hydrogen manufacturing start-up, build up and scale-up
”Next Generation EU” recovery package
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Future viewNational hydrogen strategies and scale-up to GW size hydrogen plants
11/06/2020 VTT – beyond the obvious
Alkaline water electrolysis plants were in used to produce hydrogen
already in the 20th century in very large scale (Godula-Jopek 2015)• 1927 hydro-power supplied 125 MW electrolysis in Rjukan, Norway
• 1947 hydro-power supplied 135 MW electrolysis in Glomfjord, Norway
• 1970 Aswan Electrolyser 165 MW in Egypt (Sasaki et al. 2016)
Less expensive hydrogen production method, petroleum reforming, took
over in 1980s and many water electrolysis manufacturers were forced to
stop production.
Historical aspect on water electrolysis
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Roles and interests in hydrogen utilisation vary in different countries• Germany will kickstart the electrolyser capacity with the targets of 5 GW by
2030, 10 GW 2035, 15 GW 2040. €7 billion support for the strategy.
• Australia’s key element in National hydrogen strategy is mentioned to be
hydrogen hubs for large-scale demand and exports to Asian markets.
• Japan is commited to pioneer the world’s first ”Hydrogen Society”. The
country leads the way in fuel-cell vehicle development with car
manufacturers as Toyota and Honda.
• The Netherlands strategy on hydrogen targets to build 500 MW capacity by
2025 and 3 – 4 GW by 2030.
• United Kingdom focuses to decarbonise heat in buildings. 90 % of
customers are connected to gas network and conversion of 12 million homes
to hydrogen could be done by 2050.
• And several other countries : Portugal (2 GW target for 2030), China, France,
South Korea, Austria, U.S. (California), Norway, Denmark, etc.
National hydrogen strategies
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11/06/2020 VTT – beyond the obvious
Project Location Year Capacity Application
The Murchison Renewable
Hydrogen ProjectAustralia 20191 5 GW
For own use and export
to Asia (Japan/Korea)
NorthH2The
Netherlands
2030-
2040
3 - 4 GW 2030
10 GW 2040For industrial customers
H2-Hub Australia 20252 3 GW
Copenhagen decarbonisingCopenhagen,
Denmark20303 1.3 GW E-fuels for transport
Hyport Duqm Oman 20214 0.25 – 0.5 GW
(first stage)
For chemical industry in
Oman and H2 and its
derivatives to Europe
Early stage plans for GW scale PtX plants
1 A comprehensive communications and stakeholder engagement process is being planned to commence for November 2019
4 The final investment decision can be expected in 2021.
2 Initial operations beginning in 2025
3 First phase includes the electrolyser (10 MW) and is ready by 2023. In second phase H2 is combined with CO2. Fully expanded plant by 2030.
EU with North Africa and Ukraine can together build world
leading industry for renewable hydrogen production• Europe and Ukraine have good renewable energy resources, existing
gas infrastructure and Europe has also leading industry for electrolyser
manufacturing.
• North Africa has vast renewable energy sources
40 GW electrolysis capacity in the EU by 2030 and 40 GW
electrolysis capacity in North Africa and Ukraine• Total investments would be €25 – 30 billion
• 140 000 – 170 000 jobs would be created
• 82 million ton of CO2 emissions would be avoided
Green Hydrogen for European Green DealA 2x40 GW Initiative
11/06/2020 VTT – beyond the obvious
Green Hydrogen for a European Green Deal A 2x40 GW Initiative,
Hydrogen Europe, 2020
11/06/2020 VTT – beyond the obvious
A scaled-up green hydrogen production
According to BloombergNEF, 2030 $2/kg and 2050
$1/kg (delivered hydrogen) in China, India and Western
Europe• 20 – 25% lower cost in countries with best RE and hydrogen
storage capacities: U.S., Brazil, Australia, Scandinavia and
the Middle East.
• 50 – 70% higher cost in countries with weaker RE and
storage availibility: Japan, Korea.
11/06/2020 VTT – beyond the obvious
A scaled-up green hydrogen productionrequires massive amounts of renewableenergy
Different estimations for hydrogen’s share of total final energy use in 2050• IRENA
• 6 % (6 600 TWh)
• Hydrogen Council
• 18 % (20 000 TWh), 6 Gt annual CO2 abatement
• BloombergNEF• 7 % (7 500 TWh) with weak policy
• 24 % (27 500 TWh) with strong policy, 31 320 TWh of renewable energy
required
Bundesnetzaentur, 2019
CSIRO, 2018
Godula-Jopek, Agata, Hydrogen Production: by Electrolysis, 2015
Hydrogen Council, 2020
Hydrogen Economy Outlook - Key messages, BloombergNEF, 2020
Hydrogen Europe, 2020. Green Hydrogen for a European Green Deal A 2x40 GW
Initiative, Hydrogen Europe, 2020
IRENA, 2019
Post Covid-19 and the hydrogen sector, Hydrogen Europe, 2020
Reuters, 2019
Sasaki et al. 2016
The future of Hydrogen, IEA, 2019
Toshiba, 2020
Vermeulen, U. (2017). Turning a hydrogen economy into reality. presentation at 28th
meeting Steering committee IPHE, the Hague. World Energy Investment 2020, IEA, 2020
Reference list
11/06/2020 VTT – beyond the obvious
