Hydrogen Hubs Can Help Scale the Green Hydrogen Market

As the pandemic, rising inflation and the Russian invasion of Ukraine converge to sow volatility into the global oil and gas market, the need for domestic clean energy solutions is more apparent than ever. Countries around the globe are reevaluating how they might develop their domestic renewable and clean energy resources to insulate their energy prices from future crises and accelerate their decarbonization efforts.

In the United States, the Biden administration recently released an executive order to boost domestic clean energy manufacturing and remove barriers to solar deployment. As part of the initiative, the White House is authorizing the Defense Production Act to accelerate domestic production of clean energy technology. The decision places green energy solutions in a framework of national security — a bold move that likely will get us closer to the elusive “energy independence” we’ve been chasing for decades while repositioning the energy transition as crucial to our long-term success as a nation.

Although renewables will make up an increasing portion of the U.S. energy mix, the longstanding issue of intermittency remains. To develop a dependable network of clean distributed energy resources (DER), renewables will need to be carefully matched by long duration and long-term energy storage technologies. For this task, the administration – and the energy industry itself – is eyeing green hydrogen.

But to enable wide-scale adoption of green hydrogen storage, green hydrogen costs need to decrease while trust in the technology increases. Hydrogen hubs — working micro-economies of hydrogen producers, transporters and users — may provide the answer.

The Need for Storage

Acceptance of renewable energy generation sources as a cornerstone of the clean energy transition is now a matter of fact. Growth of renewable capacity is expected to accelerate over the next five years, accounting for almost 95 percent of the increase in global power capacity through 2026.

Unfortunately, barriers to efficient renewable generation remain. Amid the tensions of a complicated global solar market and concerns about renewable asset lifecycles, intermittency continues to be one of the largest obstacles that renewables will need to overcome if they are to efficiently provide the bulk of national energy generation. Energy storage can fill the gap. 

The concept is simple: store excess energy from periods of peak renewable generation for deployment at another time, when demand exceeds the availability of the resource. Though short duration (e.g., 4 to 8 hours) and short-term intermittency (e.g., day to day) has a well-established solution in lithium-ion battery energy storage, this technology falls short in attempts to stretch it over longer durations (e.g., 8 hours to several days) and the long term (e.g., multiple days, weeks or months).

In California, where renewables are high priority and deployed at scale, solar generation booms in the summer months. But when the shorter, often cloudier winter days roll around on the West Coast, the dip in solar generation leaves gaps in supply and demand. Closing these gaps with renewable energy would require months-long storage, so the excess output from July can be deployed in February. This is referred to as seasonal load shifting. Because battery energy storage only can offer storage over a period of about eight hours, it fails to support the seasonal load shifting that will be crucial to the overall success of a net-zero economy. It will never be economical to charge a battery in July to discharge in one afternoon in February.

Green Hydrogen’s Potential

The advantages of deploying hydrogen as a large portion of the clean energy transition are not new to those familiar to the energy industry. But green hydrogen shines as a method for decarbonized chemical energy storage due to its abundance in the natural world and the practicality with which it can be integrated into existing systems.

For one, hydrogen can be stored in huge quantities. Underground salt caverns are the gold standard for storing hydrogen economically as a gas. It can also be converted to “green ammonia,” making it easier to transport and store, especially when using existing liquefied natural gas (LNG) infrastructure. That ammonia then can be used as a carbon-free energy source or “cracked” to convert it back to hydrogen with mitigation of NOx emissions factored in.

It’s the sheer adaptability of hydrogen that makes it so attractive. In the same chemical form by which it can store energy indefinitely, it also can be used as a feedstock in the hard-to-abate cement, steel, chemical and petrochemical industries; as a zero-carbon fuel in fuel-cell vehicles; and to create synthetic fuels. This range of potential revenue streams makes hydrogen even more valuable.

Hydrogen Hubs

Though hydrogen has potential in a variety of end-use applications, cost remains a barrier, as does the current existence of such end-use applications. Though many hard-to-abate industries could decarbonize with hydrogen, relatively few currently are dedicated to making the switch. Pilot programs focused on zero-carbon steel and other energy intensive applications abound, but infrastructure upgrades will be required, and incentivizing such investments requires enthusiasm for the technology and demonstrated cost-benefit. 

To create economies of scale for green hydrogen, and to position the United States as a leader in the still-nascent global hydrogen market, we must ensure that green hydrogen development efforts are carefully planned and executed, offering the proof needed to create confidence in the technology and the entities developing it. Hydrogen hubs will be integral to this effort by demonstrating the potential for larger hydrogen markets while supporting private sector development of hydrogen infrastructure.

A hydrogen hub can be thought of as a grouping of facilities that together create a small hydrogen economy. It might include clean hydrogen production plants, demand centers, transportation pipelines, a port with hydrogen-equipped vehicles or any number of other hydrogen-centered businesses from producer to end user.

To lower the cost of green hydrogen, especially to meet the Biden administration goal of $2 per kilogram hydrogen by 2030, we must build facilities at scale sooner rather than later. We must build many facilities to gain economies of scale in manufacturing, efficiencies in design and construction, and expertise in operations and maintenance.

The already-underway Advanced Clean Energy Storage project in Delta, Utah, is building a hydrogen hub that will become the world’s largest industrial hydrogen production and storage facility, serving as proof of hydrogen storage’s potential. The project, for which Black & Veatch is providing engineering, procurement and construction services, is designed to convert 220 megawatts (MW) of renewable energy daily to 100 metric tons of green hydrogen that will be stored in two sprawling salt caverns. Backed by a $504.4 million loan from the Department of Energy’s Loan Program’s Office, this hydrogen hub may act as a bellwether for the U.S. hydrogen market, setting the tone for our domestic development of the technology.

More projects must follow, with commercial operation beginning in the middle part of this decade, if we are to come close to the Biden administration’s cost goal. Research, technology development, and demonstration projects alone will not achieve $2 per kilogram hydrogen production.

Putting Hydrogen to Use

As the Biden administration continues to execute on its plans for clean energy development, hydrogen hubs will continue to pop up around the nation. In fact, the administration recently earmarked more than $8 billion in infrastructure funding to build out clean hydrogen hubs across the country through the Department of Energy.

But just because we can use hydrogen to decarbonize an industry or process does not mean we should use hydrogen to do so. It is not efficient, for example, to heat and cool homes with hydrogen. As the U.S. hydrogen market evolves, we must be prudent about what we invest in and where we plan to use the hydrogen. Offtake should be a top priority.

Developing hydrogen hubs as experimental areas to test and prove the benefits of hydrogen in various end-use applications could provide the body of proof needed for wider, successful adoption of the clean technology. In turn, this will enable the economies of scale needed for green hydrogen to really take off. Once we have unlocked the cost-efficient availability of green hydrogen, and therefore green hydrogen storage, the U.S. renewable energy generation landscape will be significantly more efficient.

We need these hubs to move with speed and purpose to lower the cost of hydrogen and build out the overall value chain.

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Jason Rowell is a Black & Veatch associated vice president who leads the company’s new energy solutions.