Gniewomir Flis Profile picture
Sep 28, 2020 22 tweets 16 min read Read on X
Everything you wanted to know about the #hydrogen economy but were too busy to research.

Part 2: International hydrogen markets could be a thing, but don’t bet on hydrogen shipping

1/18
In February I argued green H2 could undercut fossil H2 as early as 2030, conditional on two points:

1) Driving electrolyser capex below $250/kW, but more importantly

2) 1,500 hours per year of zero-cost green power per electrolyser

2/18

If the recent EU Hydrogen strategy comes to fruition, the first point should be easy.

But as hydrogen scales, 1,500 hours per year of free power per electrolyser would become increasingly hard to find.

3/18

The thing is, free power is not a hard requirement. The variables you need to optimise for are capacity factor as well as price. As electrolyser capex falls driven by economies of scale, the range of competitive price points increases.

4/18
All the while renewable energy is getting dirt cheap, recently as low as 1.1 euro cents for kWh in Portugal!

There are many places in the world which are blessed with plentiful and cheap renewable resources; Australia, Chile, Morocco, U.S. etc.

5/18

reuters.com/article/portug…
But in places like Germany, there is limited potential for domestic green hydrogen. The German hydrogen strategy estimates only 14 TWh of local electrolytic potential vs. expected demand of >100 TWh by 2030.

The remainder is to be made up with imports. Where from and how?

6/18
The idea of international hydrogen markets has been at the centre of EU and German hydrogen strategies. At the moment, the spotlight is on Iberia and North Africa. Two transport options exist:

1) Shipping
2) Pipelines

Let’s delve into the economics!

7/18
First, shipping, in form of liquid hydrogen (LH2) or using a vector such as ammonia or LOHC.

Former is similar to LNG, but LH2 has lower energy density and needs to be cooled to a chilling -252C. Ammonia and LOHC are easier to transport, but need expensive reconversion.

8/18
If you believe my calculations, it would be cheaper to produce hydrogen locally in Germany than to ship it from Iberia, whatever the shipping method. The economics favour local production even more over time!

9/18
But forget about ammonia as a vector for a second, and treat it as a commodity instead. For instance, in Germany alone 22 TWh of ammonia are consumed per year.

Importing green ammonia from Iberia or North Africa is cheaper by 2035 than producing it domestically from gas!

10/18
So the first takeaway is that hydrogen as an end product does not lend itself well to shipping.

What about pipelines? In July a group of European TSOs came out with their suggestion of an European Hydrogen Backbone.

11/18
If the Backbone were all new-build, local production would be just slightly cheaper than Iberian imports. But repurposing the current European gas transmission network is, economically speaking, the cheapest of all.

So is the second takeaway pipelines are here to stay?

12/18
That’s one way of looking at it. But the energy transition is more than just economics. One of my concerns is the amount of energy lost along the way.

Additionally, Backbone remains unfinished until 2040. Will Europe wait this long to unlock full potential of hydrogen?

13/18
I’d like you to consider an alternative pathway, one where hydrogen plays a more distributed role. In my thinking, I am guided by this amazing animation from @BloombergNEF which shows how the average size of plant is shifting.

list.solar/news/bnefs-new…

14/18
First, distributed plants like this Siemens project could satisfy local industry and power markets while relieving electrical grid bottlenecks. The benefits are more likely to remain local rather than exported. So important for a just transition.

15/18

And what if the demand for hydrogen from building heat simply won’t materialise, even in North Europe? I’m not a heating expert, so take it from @heatpolicyrich : out of currently available options for heating, H2 is the most dubious.

16/18

Finally, fuel cells might have the potential to outcompete gas turbines. I can imagine MW scale fuel cells scaled with local electrolysers to decarbonise power, and, where networks are available, district heating, well before the completion of the Backbone.

17/18
#H2 future looks good regardless. Ultimately time will tell if we end up with more distributed or centralised system. There are good arguments for both, which I urge you to consider next time you hear about H2 economy. Just don’t count on H2 shipping, at least in Europe.

18/18
If you liked this thread and want to stay ahead on hydrogen, I recently partnered with @terradotdo for a short course, starting October 5th. Scholarships available!

An honourable mention here for @JustinHGillis who made the connection which led to this 😌

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More from @gnievchenko

Aug 20
A real masterclass in competition among electrolyser manufacturers from BNEF's Head of Hydrogen Martin Tengler during a recent Hydrogen Europe webinar.

Here's what you need to know to be up to speed.

1) Electrolyser demand is not keeping up with planned mfg capacity. Image
2) Chinese electrolyser systems are 3-6 times cheaper than Western competitors. Key factors:

🧑‍🏭 Cheaper labour
🏭 World's most developed supply chains
🔩 Lower quality materials
🥵 Overestimating product specs (remember this one it's important!)
Image
Image
3) Electrolyser systems (stack + balance of plant) accounts less than half of final project capex in China, and less than a third in US/EU.

🚢Electrolyser systems are the most likely candidates for CN exports. Image
Read 9 tweets
Dec 11, 2023
Pursuing lax rules for accessing hydrogen production tax credits under the IRA might result in more electrolyser sales domestically.

However this would come at a cost of ceding U.S. potential to become the world's green chemical exporting superpower to CN. Thread 1/10
You see, US has loads of land and good renewable resopurces, but China has some of the world's best renewable resources to produce electrolytic hydrogen. 2/10

Map taken from: iea.org/data-and-stati…
Image
So what's stopping CN from taking the crown of renewable molecules exporter?

They haven't managed to produce electrolyser that can follow intermittent energy supply.

Despite strong upcoming demand from EU, CN cannot export as their molecules don't fit EU's renewable definition.
Read 11 tweets
Dec 3, 2023
Will green hydrogen cost declines follow a solar-like pathway? Or are they more like batteries? Perhaps something else entirely?

In an excellent report Ramboll - an EPC firm - makes the case that electrolyser plants could be a mix of all 3.

Here's what that means for H2 capex: Image
Most of the public forecasts of electrolyser plant costs use learning curves to determine future costs. This has worked well for predicting solar and battery prices in the past, and learning curves can. be constructed for electrolyser stacks too. However... Image
A green hydrogen plant will be much more than the stack. Ramboll divides it into 3 work packages

1) The electrolyser stack
2) The electrolyser system which integrates stack with electrical and gas balancing equipment
3) The H2 plant, which integrates the electrolyser system Image
Read 14 tweets
Nov 16, 2023
Most discussions of electrolysis revolve around the competition between alkaline and PEM technologies.

But what about solid oxide (aka SOEC)?

Proud to announce the release of my technology deep dive in collaboration with @cleanaircatf ! A couple of key findings: Image
Solid oxide electrolysers are also known as 'high-temperature' electrolysers because they operate at >500C, and take steam, rather than an aqueous solution, as an input. Image
With access to an external source of process heat to generate steam, such as from ammonia, chemicals, and steel plants, SOECs gain a potential 20% electrical efficiency advantage over competing architectures. Image
Read 11 tweets
Oct 25, 2023
Ever wondered what is the true cost of an electrolyser system?

Electric Hydrogen - the most funded startup to emerge in the last two years - just released a super interesting white paper. They claim to be twice as cheap as incumbents.

How will they do it? 🧵 Image
While other manufacturers might provide just the stack (1/2 the cost of a system), EH2’s offer includes the stack, the balance of plant, and commissioning services. This close integration likely allows EH2 to pass on the margin of EPC contractors as cost declines to the customer. Image
Another important feature is the smart design of the system. Systems engineered for large stack sizes of 100 MW reduce the required balance of plant. Additionally, EH2’s stack has an output pressure of up to 30 bar, which reduces the need for external compression. Image
Read 5 tweets
Aug 31, 2023
Slow than expected demand ramp up, and massive overcapacity - that's the state of today's electrolyser industry.

BloombergNEF expects just 5 GWs of shipments next year against 30+ GW of manufacturing capacity. And yet, lead times for bankable electrolysers are 2+ years!

Short🧵
Image
Image
Some electrolyser manufacturers like ITM have already pared back their gigafactory ambitions. I suspect many others will be running their factories at low utilisation.

hydrogeninsight.com/electrolysers/…
From supply side, two major reasons:

1) Many banks and customers are unwilling to take on technology and counterparty risk of up and coming electrolyser manufacturers.

2) Electrolyser OEM's haven't yet formed strong partnerships with EPCs to provide H2-Plant-as-a-service.
Read 6 tweets

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