Industry, government test waters as hydrogen hopes face scale, price challenges

Public and private sector partnerships will be needed to realize the potential that hydrogen could play in a clean energy future, amid challenges to scaling up the resource, a top hydrogen technology advocate said Sept. 1.

The comments came as a panel on an S&P Global Platts Energy Transition webinar discussed the outlook for bringing down costs and scaling up use of new forms of the resource, including green hydrogen, derived from renewable energy used in electrolysis, as well as blue hydrogen, stemming from natural gas followed by carbon capture and storage.

"When we look at really enabling the broader use of hydrogen, we will need large-scale investment and research and deployment of these technologies," said Kristine Wiley, vice president of the Hydrogen Technology Center at Gas Technology Institute.

Wiley pointed out that the US Department of Energy's "Hydrogen Shot Summit," held the same day, brought together stakeholders from federal and state agencies, industry, universities and nongovernmental organizations that are starting to build coalitions to foster innovation.

"I do think that we'll start seeing this common theme around the necessity to collaborate because addressing decarbonization, really economy-wide, and being able to leverage hydrogen as one of the solutions can't happen without this collaboration," she said.

Pricing disparities

Jeffrey McDonald, hydrogen pricing specialist Platts, highlighted current cost discrepancies between hydrogen and other conventional fuels.

"You see pricing right now, for the Gulf Coast [steam-methane reforming] without CCS including capex are around $1.16/kg, and that's double the price of Henry Hub gas on an MMBtu basis," McDonald said. "Compare that with $4.54/kg for [proton exchange membrane] electrolysis, which is around eight times the cost of gas."

"So, there's no doubt electrolytic hydrogen faces an uphill battle versus conventional hydrogen or natural gas," he added. While shippers might be focused on costs, he suggested that end users, however, might be more focused on how many tons of CO2 per kg of hydrogen are saved, as pressure continues to mount on governments and industry to reduce emissions amid challenges surrounding climate change.

Several panelists pointed to a need build scale to help drive costs down.

Cynthia Hansen, Enbridge executive vice president, said that as her company examines where it can try to get the costs down first, it looks toward "those places where you have the cheapest renewable electricity possible, and that the storage value of hydrogen provides the best opportunity."

Wherever possible, she said it was necessary to leverage the natural gas infrastructure that already exists, "making sure we're coordinating wherever we can to get the best outcomes for our customers."

Carbon storage challenges

Angela John, director of business development for new energy ventures, at Williams, asserted that hydrogen meets the criteria of being clean, but "we need to work on the affordable and reliable" principles.

"We need a breakthrough in the cost of production for green and blue hydrogen," John said. For green hydrogen, that would be on the electrolysis side, while for blue hydrogen, the challenges might relate to CCUS.

"We know how to remove carbon from a lot of these streams but we don't have figured out or great solutions for storage or use," she said.

Both Williams and Enbridge are companies with extensive gas transportation assets that have set carbon emissions reduction goals and are kicking off initial hydrogen projects. For instance, Williams is looking at creating hydrogen hubs in places where there is excess renewable power and then distributing that through its pipeline systems, and has a partnership to study the feasibility of green hydrogen production with the University of Wyoming.

Among other steps, in Ontario, Enbridge in September expects to blend hydrogen from a renewable power-to-gas plant in Markham into a portion of its gas distribution network that serves about 3,600 customers, Hansen said.

As for the acknowledged pricing challenges for hydrogen, Wiley sought to set the conversation in the context of the greater challenges of reducing carbon emissions beyond the near term.

"The technologies we need to deploy post-2030, they are all expensive now, which is why we need to make the investment today to advance those technologies to accelerate them so we can get them to scale," Wiley said. She suggested the US could apply lessons from aggressive goals and pilots in other parts of the world, including the UK and Germany.

McDonald also suggested that growing interest in a carbon price could be one way of bringing hydrogen to parity with gas. He also noted several companies are claiming to be making advances to bring hydrogen costs down in a short period of time.