NEWS: Energy and environmental policy
E3 Evaluates Hydrogen Opportunities in a Low-Carbon Future

Featured Image

July 21, 2020

Hydrogen as a zero-carbon fuel has generated renewed interest recently as an option to drive progress towards ambitious decarbonization targets across the globe. In a recent study performed for Mitsubishi Hitachi Power Systems Americas, Inc. (MHPS) and Magnum Development, LLC (Magnum), E3 evaluated potential opportunities for renewable hydrogen in the Western United States in a deeply decarbonized future.

Using a suite of in-house tools, E3 investigated a broad range of questions to assess the potential of renewable hydrogen in the Western U.S. The tasks included an evaluation of the costs of hydrogen production, an assessment of the economy-wide outlook for hydrogen in a deeply decarbonized future, using a US West version of our US PATHWAYS model, and a deep dive into the potential role of hydrogen as long-duration storage within the electricity sector. The study also performed a high-level evaluation of the hydrogen supply chain in the West.

Key findings from this study include:

  • The most promising and realistic opportunity for carbon-neutral hydrogen in a deeply decarbonized Western U.S. is in the electricity sector to provide long-duration energy storage. The firm energy provided by hydrogen will be especially valuable in a high-renewables future during multiday periods with low wind and solar generation. Cost-competitive long-duration hydrogen storage could be enabled by declining costs of electrolysis and renewables, inexpensive underground storage, and leveraging existing infrastructure such as thermal power plants and natural gas pipelines.
  • Carbon-neutral hydrogen could play a role in decarbonizing the transportation sector, especially heavy-duty ground transportation. Hydrogen fuel cell vehicles have certain advantages for heavy-duty trucking, including their high load carrying capacity relative to battery electric vehicles. Opportunities for carbon-neutral hydrogen in buildings and industry exist but face cost and policy uncertainties. Realizing the potential of hydrogen in transportation, buildings, and industry would depend on stringent decarbonization targets and supportive policy.
  • The most economic means of producing carbon-neural hydrogen in the long run remains uncertain and will be sensitive to technology costs. In a scenario where electrolysis costs decline rapidly, and inexpensive renewables are available, renewable hydrogen production could become more cost-competitive than fossil fuel-based hydrogen production (steam methane reformation) with carbon capture and storage (CCS).
  • When on-site underground storage is available, centralized hydrogen production from renewables is lower in cost than distributed hydrogen production from renewables supported by distributed hydrogen storage. Geologic hydrogen storage is substantially cheaper than storage in compressed tanks and compensates for pipeline distribution costs. Locations with underground storage may thus serve as cost-effective “hubs” in a centralized hydrogen supply chain.

More details of this study can be found in the full report.

Tools: PATHWAYS, RESTORE, AURORA

Hydrogen costs by production method using MHPS electrolyzer capital costs with E3 learning curves. Renewable hydrogen production (either with on-site solar and wind, or with curtailed renewables) could become more cost-competitive than steam-methane reforming (SMR) with carbon capture and storage (CCS) at a 90% capture rate of CO2 if inexpensive electrolysis and renewable energy are available. Hydrogen production cost estimates using E3 electrolyzer capital costs and learning curves are slightly more conservative in the near term but are similar to results using MHPS electrolyzer costs in the long run. See details in the full report.

filed under: Energy and environmental policy


Scroll Up