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Shipping Liquid Hydrogen Would Cost 5-7x LNG Costs Per Unit Of Energy

image credit: Kawasaki LH2 Ship designs
Michael Barnard's picture
Chief Strategist TFIE

Michael spends his time projecting scenarios for decarbonization 40-80 years into the future, and assisting executives, Boards and investors to pick wisely today. Whether it's refueling aviation...

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  • Dec 29, 2021
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Recently a former boss of mine, with whom I worked in Canada and Brazil, reached out to me with a question about a Wall Street Journal article he’d read on a proposed Namibian project to manufacture green hydrogen and ship it to the developed world. He was wondering if this was economically viable. It isn’t, of course, but it gave me an excuse to finally do the math.

Liquid natural gas (LNG) is the best comparison, as it requires liquification, which consumes about 10% of the amount of energy embodied in the LNG and oceanic shipping. A Wartsila Q-Max ship, the biggest LNG tanker I’m aware of, carries 266,000 cubic meters of LNG. The liquified gas is cheap, with average delivered import prices in the US of $109 per cubic meter of LNG, or about $0.18 per cubic meter of natural gas, although prices are obviously spiking in late 2021 around the world. Those 266,000 cubic meters amounted to about $29 million in value before the recent spikes.

The first thing to know is that while hydrogen is energy-dense by mass, it isn’t energy-dense by volume. Assuming the same-sized ship, the delivered BTUs of energy would be about 27% of the LNG. This is because even liquified, hydrogen has less energy by volume than LNG, but also because liquifying hydrogen takes about 33% of the energy in the liquified hydrogen, as opposed to the 10% required for LNG. Different gases, different temperatures required for liquification. Amazing stuff with liquid oxygen for space travel, but not so much anywhere less exacting.

The second problem is that hydrogen by itself is expensive. Using the absolute best case from Lazard’s hydrogen LCOE, with dirt cheap electrolyzers, $10 per MWh electricity and 100% capacity factors, hydrogen is projected to be about $0.78 per kilogram. These numbers are as likely as unicorns appearing worldwide and granting free rides to children. A cubic meter of liquified hydrogen masses 71 kg. That means that just the cost of the liquified hydrogen, excluding the energy costs of liquification or getting it into the ship, would be 1.9 times as high as the delivered price of LNG. And that delivered price includes extended ocean journeys with daily LNG ship charter costs averaging of $150,000 per day, currently peaking over $200,000 per day, with a high of $350,000 per day in January 2021. There’s a bit more on the cost of a cubic meter of liquid hydrogen for liquification, but as we are pretending that electricity will cost $10 per MWh, it’s not very much, about another dollar per cubic meter.

Currently, the average for trip durations, excluding loading and unloading periods, is around 23 days, and the pre-berthing, loading, and unloading add another 4-5 days. Calling it 28 days results in an additional cost of $4.2 million.

The next thing to consider is the boil off rate. LNG best of breed boil off rates are 0.1% per day. While NASA demonstrated Brayton cycle refrigeration of bulk LH2 storage with approaching 0% boil off rate, that was at great expense and with a lot of additional equipment. The projected best case for in-voyage boil off rates is 0.2% for liquid hydrogen per a recent South Korean KAIST publication. Boil off rates during transfer are also higher than for LNG. Liquid hydrogen would lose another ~5% of its total delivered energy due to that in the best case scenario, and likely more.

That brings the total costs of the delivered hydrogen to roughly $19 million for less than 27% of the delivered energy. One assumes that the people doing this would like to make a profit as well, so assuming 10%, the total price delivered will be in the range of $21 million for the load.

 

That means the price per delivered unit of energy is roughly 5 times that of liquid natural gas, in the best possible case. 

More realistic numbers from Lazard’s LCOE with still low $20/MWh electricity, still high 90% capacity factors, and more realistically priced but still cheap electrolyzers, would be 40% more expensive, around 7x the price of LNG per unit of energy. Doing the math with the numbers that most favor hydrogen shows how starkly bad the economics of using it for energy really are.

Of course, this is before the liquid hydrogen is converted to actually useful energy, at a maximum of 60% efficiency, which is about the same as a good combined cycle gas turbine.

What does all this mean for the actual sunshine falling in Namibia? Well, take 20% off for electrolysis, 33% off for liquification, 10% for efficiency losses for long-haul cooling and handling, and 40% off for conversion back into electricity, and the solar energy energy in Namibia turns into perhaps 29% of the energy being useful.

Of course, this doesn’t address the problem of distributing hydrogen in the country that imports it either, or the complete and utter lack of any large-scale hydrogen distribution network. 85% of hydrogen consumed globally is manufactured onsite because it’s so expensive to ship.

Delivering the same energy in the form of electricity through high-voltage direct current cables is vastly more efficient, with HVDC losses running about 3.5% per 1000 kilometers. Of course, Namibia being in southern Africa next to South Africa, it would make more sense for it to deliver the electricity there instead. Northern African solar, wind, and storage linked to fat HVDC pipes crossing the Strait of Gibraltar, crossing from Tunisia to Italy, and crossing the Bosphorus — as transmission lines already do today — makes much more economic sense. There’s a Moroccan project proposed with 20 GW of wind and solar firmed by storage, and a proposed 3,500-kilometer HVDC transmission line to the UK. Assuming the entire route is underwater, that would deliver about 88% of the generated electricity to market, not 29% — more than 3 times as much. Similarly, the Australian green hydrogen proposal originally ran HVDC transmission to Singapore, but has been distracted by the hydrogen hype and now proposes to manufacture hydrogen and ship it.

Of course, there are even less efficient ways to ship hydrogen. It could be chemically converted into a stable liquid at room temperature, and then extracted at destination, stepping on the electricity a few more times, at great loss of useful energy. It could be converted into a liquid hydrocarbon with the addition of CO2 from somewhere and upgraded to a useful plug-compatible fuel, then shipped, at only multiples of the cost of just running things off of electricity, and with the added “benefit” of air pollution. For those who say, "But ammonia!", this is the problem with it. It has 51% of the energy density, but has more efficiency losses in manufacturing and use, so it's a wash.

This isn’t to say that Namibian green hydrogen can’t be useful. The country is dependent on South Africa for urea fertilizer, and could be manufacturing that itself to supply the 9% of its economy dependent on agriculture. Fertilizer needs lots of hydrogen, and once manufactured is easy to distribute, unlike hydrogen. That’s part of the reason why my projection of hydrogen demand is contrarian, with it falling over the coming decades.

Yet another straightforward analysis that accounts for both the physics, the engineering, and the costs makes it clear that hydrogen is not an economically viable store of energy for our future decarbonized economy. All of the projects proposing to manufacture hydrogen where sunshine and wind are constant and cheap, and ship it to where energy is consumed, are clearly based on hand-waving, ignorance, sheer #hopium or outright larceny.


References:

A version of this article previously appeared in CleanTechnica.

Michael Barnard's picture
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Matt Chester's picture
Matt Chester on Dec 29, 2021

Thanks for sharing, Michael. I wonder how the value proposition of the 'hydrogen economy' evolves as we consider more localized production of the fuel rather than needing to always bake in its transport. 

Michael Barnard's picture
Michael Barnard on Dec 29, 2021

The value proposition of the hydrogen economy is a dead end. 

Throwing away massive amounts of energy to create a hard to store, hard to distribute and inefficient to use fuel makes no sense compared to battery electric, or grid-tied electric for trains. That's why all ground transportation will be electric, I project approaching 100% of aviation will be battery electric by 2100, and I assert that short- and medium-haul shipping will be battery electric.

The only segment of transportation where I hold out the faintest hope for green hydrogen -- and only then synthesized into an easy to transport, relatively stable liquid fuel -- is long-haul shipping. Even there, the potential is more that I haven't run the numbers yet more than I think it's a great idea.

 

https://cleantechnica.com/2021/09/19/hydrogen-demand-and-now-the-content...https://cleantechnica.com/2021/11/15/how-aviation-will-decarbonize-decad...https://cleantechnica.com/2021/11/15/how-aviation-will-decarbonize-decad...

 

Sandy Lawrence's picture
Sandy Lawrence on Dec 30, 2021

I'm thinking of the model of mining lignite coal to supply a coal-burning generator at the mine mouth. Exporting the electricity, not the coal. Lignite of course risks combustion once mined, so storage is a bit complicated. [Understand I'm totally opposed to coal mining with perhaps the exception of higher rank coal for metallurgical uses]. But commercial electrolyzers used for generation of hydrogen + oxygen with surplus electrical power from renewables could be used to store energy to run stationary generators on site for for negative + positive demand response. Avoids wheeling of electricity out of area or curtailment of generation by wind + solar now — in future wave + tidal + such. When you have free fuel sources, use it to separate hydrogen for storage value.

Hans-Henning Judek's picture
Hans-Henning Judek on Dec 30, 2021

Thank you for your insight! This is very helpful in discussions with #hopium proponents! However, I disagree with your conclusion for the maritime and aviation industry. We have the technology to convert agricultural waste that is customarily incinerated in the field into carbon-NEGATIVE fuel, and regular biomass, including purpose-grown C4 Napier varieties into carbon-neutral fuel. Why negative (climate positive)? The IEA and UNEP estimate from satellite photos that the agricultural industry worldwide burns 10.5 billion metric tons of crop waste annually. The fires release 16.6 billion tons of CO2, and emit 9.8 billion tons CO2eq, 1.1 billion tons of smog precursors, and 66 million tons of PM2.5 and other harmful substances causing approximately 1 million premature deaths. For us, this is almost unlimited potential for the production of carbon-NEGATIVE (Climate positive) biofuel.  The fuel is a diesel distillate fulfilling ISO 8217 for Marine gasoil MGO that can be used straight from the tap without any further processing. Desulfurized and further processed it can fulfill EN 590 road diesel.

So why is it carbon negative? We can theoretically produce approximately 2.5 billion tons of fuel oil from the material. One ton produces 3.16 tons of CO2, which means 7.9 billion tons of CO2 - instead of 16 billion tons in case of field incineration of the feedstock, not even talking about the other harmful gases and particles. So where do the 8.1 billion tons go? A small share goes into off-gas that we use for heat production. Of course, this is emitting CO2 as well. Nonetheless, 6 billion tons are stored as solid carbon in a byproduct, bio bitumen. As this material stores carbon for hundreds of years, for example in road surfaces, we have in principle a carbon capture unit as well.
The "avoidance" is considered in our life cycle assessment, which makes the fuel carbon negative. A ship using this fuel would, therefore, remove more CO2 from the environment than emitting from its stack.
Energy consumption for the process? 400 kWh per ton of diesel plus some for collection and transport, pre-processing, drying, disintegration, say 1.6 MWh, is much better than the 17 MWh/toe for hydrogen production.
What about the already much cleaner ship exhaust from MGO? DAPHNE TECHNOLOGY (

https://www.daphnetechnology.com

) has a smart solution that is filtering the exhaust and can produce fertilizer from it.
And that it improves the air quality in cities like Cairo and New Delhi, and benefits the poor small-scale farmers in developing and threshold countries is an additional bonus.

 

Rick Engebretson's picture
Rick Engebretson on Jan 3, 2022

Thanks for mentioning agriculture, Hans. Perhaps concerns of land use, drought, food security, etc. will drive consideration of ocean agriculture. Warm ocean water, ocean excess CO2, and sunlight might go a long way producing "Green Hydrogen" bound to "negative" carbon with high oils content.

Cleaning up the dump sites in the Pacific Ocean might already have taken the plastic lid off allowing water evaporation and cooling of the US west coast.

I'm glad many are coming to grips with implausibility of the not so clean energy transition;

https://www.theverge.com/22858437/2021-mining-critical-minerals-clean-en...

 

Nathan Wilson's picture
Nathan Wilson on Jan 2, 2022

Michael, you're comparing apples and oranges.  Air-transport is much more dependent on energy storage density than personal cars, because the distances involved are much higher.  We are seeing a few applications for battery powered airplanes today which involve travelling less than a few dozen miles (i.e. less even than a typical car): flight training especially take-offs/landings and self-launched motor-gliders.  But the majority of air-based public transport is over distances too far to drive in a half day and farther; batteries don't work at those distances, and probably never will. 

 

As battery technology has evolved, the materials have moved up the periodic table: lead, then nickel, now lithium.  Lithium is the lightest metal, so we are hitting a wall.  Scientists have speculated about air-breathing lithium batteries; that could triple energy density again (if it is possible), but no more than that. 

 

So air travel is a possible market for hydrogen or more likely ammonia fuel, but only if the cost of carbon emissions is high enough (i.e. it may be cheaper to keep burning hydrocarbon fuel and offset the emissions using atmospheric CO2 capture using machines or plants).

 

Maritime and rail transport are unique in that energy cost is relatively low.  For maritime, it is more important to provide long range and keep the ships moving fast; transcontinental travel by boat time is already too slow for many markets.  For rail, it is more important to keep the infrastructure cost down (and electrification adds more infrastructure).  So maritime and rail are potential markets for hydrogen/ammonia, again, assuming sufficiently high cost on carbon emissions.

---

To your broader question of whether renewable-rich nations can occupy the same market segments now enjoyed by fossil fuel exporting countries?  No.  End-use appliances that use hydrocarbons as energy carriers gives a market advantage to fossil fuel producers.  As end-use equipment shifts to cleaner carriers, the same energy carriers that are most useful for renewables (i.e. electricity, hydrogen, ammonia, and water-based district heat networks) are also useful for nuclear.   Nuclear plants can be built anywhere, and nuclear fuel cost is a tiny portion of the total nuclear cost.  So using either domestic renewables or nuclear, no nation need ever export energy industry jobs/dollars by importing energy (regardless of whether they have domestic uranium mines).

 

Remember Desertec (the plan to supply European electricity from renewables in the Middle East and North Africa, pitched by some German scientists)?  It was completely rejected by European countries.

 

So while we may see a few demonstration projects running on imported hydrogen, these proposals will never become a dominant contributor to national energy systems.  They are basically stalling tactics to delay nuclear projects.

Roger Arnold's picture
Roger Arnold on Dec 30, 2021

Michael, you and I are on similar pages with regard to hydrogen. I've posted a couple of cautionary pieces about green hydrogen recently (here and here), though my pieces have a somewhat different slant than yours.

In the interest of balance, however -- or perhaps just out of natural contrariness -- I feel obliged to point out that the differences in shipping costs for LH2 vs. LNG that you write about are not all that fundamental. If green hydrogen from renewables were actually to become a Big Deal in the global energy economy, then it would become worth the development effort required to bring down the cost of shipping LH2. It would not be trivial, but neither would it be terribly difficult.

I won't try to explain that here. It would be much too long for a comment. Guess you'll just have to take my word. 😎

Or not.

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