Hydrogen will have to leap a significant hurdle to compete with other long-duration energy storage options as the transition to renewable electric power generation accelerates.
While the production and storage of hydrogen have the potential to store excess renewable electric power over long periods of time, the process is far less efficient than other storage technologies, according to Arjun Flora, director of energy finance studies for Europe at the Institute for Energy Economics and Financial Analysis, or IEEFA. This means that the costs for hydrogen production will have to fall substantially before it becomes competitive, Flora said during a June 23 panel at IEEFA's virtual Energy Finance 2021 conference.
"The coming decade will be a development race between hydrogen and all the other long-duration technologies to see who can bring down costs and demonstrate large-scale feasibility," Flora said.
Government and industry stakeholders have lately ramped up efforts to produce green hydrogen, a zero-carbon gas produced through the electrolysis of water powered by electricity from renewable power generation. The idea is to "store" renewable electricity as hydrogen during periods when the electricity is not needed, rather than curtailing generation.
Green hydrogen can then be used as a fuel to generate electric power in a turbine or fuel cell. This application has been gaining momentum in the emerging hydrogen economy. However, Flora noted that converting power to hydrogen and then using the fuel to generate power has a relatively low round-trip efficiency. Round-trip efficiency is the percentage of electricity retrieved after being stored.
The technology to convert power to hydrogen and back to power has a round-trip efficiency of 18%-46%, according to data that Flora presented from the Massachusetts Institute of Technology and scientific journal Nature Energy. In comparison, two mature long-duration technologies, pumped-storage hydropower and compressed air energy storage, boast round-trip efficiencies of 70%-85% and 42%-67%, respectively. Flow batteries, a rechargeable fuel cell technology that is less mature, have a round-trip efficiency of 60%-80%.
Still, pumped hydro and compressed air energy come with geographic and environmental constraints, Flora noted, adding that pumped hydro requires a water reservoir, while conventional compressed air energy requires burning fossil fuels.
Achieving the economics that will drive the adoption of storage technologies at scale will require low up-front capital expenditures and ongoing operating expenses that can be recouped quickly through future revenues, Flora said. "To attract investment, it is important that revenues are as visible and predictable as possible, and this is really where storage has struggled," Flora said. "Technology costs have been high and the revenue streams are not always clear or predictable, even if the technical benefits are there."
Aligning technical benefits with economics will call for market or regulatory frameworks that compensate the operators of storage assets for the benefits they provide, including flexibility, deferral of network investment and ancillary services like frequency control, Flora added.
There are a number of attempts underway to drive down the cost of green hydrogen production from roughly $5/kg to $1-$1.50/kg over roughly a decade. This will require low electricity costs and electrolyzer price reductions. The U.S. Energy Department recently launched a program to cut green hydrogen costs, and price reduction is a core goal for a partnership aiming to develop a green hydrogen hub in Los Angeles.