R. BHAMIDIPATI, Victaulic, Houston, Texas
The rapid growth and deployment of H2 generation projects for energy storage, decarbonization and clean energy initiatives are gaining momentum. This quest for clean energy production and storage will be ongoing for decades, as the energy transition focuses on long-term, larger-scale and clean fuel production and storage solutions. However, for this movement to truly take hold, the cost of production must be low enough to increase the investment in H2 production technologies.
Who is investing in green H2? According to a recent industry report1 from the globally led Hydrogen Council, there are more than 200 H2 projects in the works, exceeding $300 B in total investment. Approximately $80 B of this investment comprises mature projects. More than 30 countries have released H2 roadmaps, and governments worldwide have committed public funding in support of decarbonization through H2 production technologies.
In support of these initiatives, large-scale partnerships are forming to build localized H2 hubs for the emerging H2 economy. The partners who are investing in green energy production in support of net-zero emissions targets include:
One such initiative, the NEOM Project in Saudi Arabia, plans to produce 650 tpd of green H2 via electrolysis powered by 100% renewable sources. Partnerships in Europe, Australia, North America, Asia and South America have also announced large-scale H2 infrastructure development projects.
The bridge to green H2 production. Brown and gray H2—produced from fossil fuels via steam methane reforming (SMR)—account for approximately 95% of global H2 production. Blue H2 is defined as SMR with carbon capture, utilization and storage (CCUS). The International Energy Agency (IEA) has said that H2 production is responsible for roughly 830 MMtpy of carbon dioxide (CO2) each year. The increased global focus on decarbonization goals may reduce future investments in the development of SMR, thereby impacting the production of brown and gray H2. Presently, SMR will continue to remain as a primary H2 production method, with added CCUS features allowing the CO2 to be stored or utilized for industrial applications.
According to Frost & Sullivan, green H2 accounts for less than 1% of total H2 produced globally.2 A bridge to green H2 is needed, and blue H2 will likely remain as that bridge.
The power mix, and an increasing need for larger-scale energy storage. As the global power generation mix continues to grow toward wind and solar, long-term storage on a large scale is a crucial factor required to offset closures of coal, nuclear and other baseload assets.
How can utilities best store large quantities (gigawatts or terawatts) of power for longer durations than battery energy storage systems (BESS) or other short-duration methods? Historically, there has been only one primary and proven means of storage—pumped energy storage (PES) with hydroelectric plants. Therefore, there is room for more large-scale projects, but these projects can take many years to permit and develop, often requiring billions of dollars to build, and can also be limited by geographic constraints.
As history has shown with solar photovoltaic (PV) and wind technologies, when investments advance and technology use increases, then costs come down. The U.S. Energy Information Administration (EIA) has noted that 1) the cost of utility-scale battery storage in the U.S. fell almost 70% between 2015 and 2018, 2) projects from the U.S. National Renewable Energy Laboratory (NREL) have increased battery production, and 3) market competition will continue to drive costs down. The NREL also recently said that it sees mid-range costs for lithium-ion batteries falling another 45% by 2030. Similarly, several sources are predicting that costs related to electrolyzer technology will decrease by 60% or more by 2030.
What will drive down green H2 production capital costs? Although the cost of electrolyzer technology is expected to decrease over the next 10 yr, the current cost of generating green H2 via electrolysis is significantly higher than that of natural gas production. So, what can be done to improve the economics of decarbonization?
Two areas of focus to move green H2 toward parity with other fuel and energy storage measures include:
The push toward economies of scale for green H2 is driving innovation in H2 production technologies, but that is not the only way to drive down costs. As a proven technology, electrolysis systems continue to grow rapidly in scale. These plants utilize conventional utility systems such as process water, high-purity water, cooling water, inert gas, instrument air and other process fluids, and can benefit from proven technologies and workflows to reduce total installed cost (TIC), enhance construction productivity and expedite construction schedules. These benefits can be realized while maintaining world-class safety, enhancing system reliability, and reducing the capital costs associated with the installation of electrolysis systems and the critical infrastructure powering these facilities.
Based on virtual design concepts and advanced work packaging approaches, concepts like prefabrication and modularization contribute to the speed and certainty of construction projects and address the challenges associated with shrinking skilled labor and variations in the construction process. Owners and developers, as well as engineering, procurement and construction (EPC) firms, can rely on the expertise of proven technology partners and net-zero construction methods to achieve project certainty and reduce TICs.
From planning and construction through production and maintenance, reducing the capital costs associated with green H2 production requires the industry to adopt best practices from other industrial construction markets.
Proven construction best practices from the power, mining, oil and gas, and infrastructure industries include:
These proven approaches, standardized processes and reliable system solutions within the emerging green H2 industry are driving improvements in productivity, efficiency and quality. However, this different way of thinking requires a higher level of coordination among owners, engineers, EPC firms and suppliers.H2T
1 Hydrogen Council and McKinsey & Company, “Hydrogen Insights: A perspective on hydrogen investment, market development and cost competitiveness,” February 2021, online: https://hydrogencouncil.com/wp-content/uploads/2021/02/Hydrogen-Insights-2021.pdf
2 Frost & Sullivan, “Global green hydrogen production set to reach 5.7 million tons by 2030, powered by decarbonization,” January 19, 2021, online: https://www.prnewswire.com/in/news-releases/global-green-hydrogen-production-set-to-reach-5-7-million-tons-by-2030-powered-by-decarbonization-843908562.html#:~:text=Currently%2C%20green%20hydrogen%20accounts%20for,to%20handle%20production%20and%20delivery.%22
RAVI BHAMIDIPATI is the Vice President of Global Oil, Gas & Chemicals at Victaulic. He has more than 25 yr of experience cultivating strategic partnerships and implementing business development strategies for global engineering and technology licensing companies in the oil and gas sector. He is dedicated to engineering solutions that mitigate safety risks and maximize construction productivity on capital projects, including green H2 and carbon capture projects.