Perth’s Resources Technology Showcase 2019: Why clean hydrogen cities are no longer a pipe dream

Green hydrogen is often referred to as the clean energy equivalent of the holy grail ... and for good reason.

In a nutshell, here’s how it works: Renewably produced electricity is used to split water molecules into hydrogen and oxygen, with the hydrogen storing the electrical energy in a form that can be stored and easily transported. Just 1kg is the energy equivalent of three litres of petrol.

It can be used in the existing gas network, as an industrial feedstock, as a back-up for the energy grid, in cars and other forms of transport, and Australia has the potential like no other country in the world to produce and export it to nations already transitioning to a clean energy future.

And the best bit? Not only is hydrogen the most abundant element in the universe, but by using renewables the process emits nothing but water vapour.

Sure, today’s hydrogen is predominantly produced from natural gas, but in the absence of carbon capture, hydrogen produced in this way is not a carbon neutral alternative.

Such is the potential of green hydrogen that Woodside recently signed a deal with the Korea Gas Corporation to take a serious look at its large-scale viability. German conglomerate Siemens and Hydrogen Renewables Australia have already identified WA’s Murchison Station near Kalbarri as the ideal site for a 5000MW wind and solar farm to produce green hydrogen for potential export to Asia.

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The State Government has also launched a $10 million fund to attract private investment in new green hydrogen projects, offering grants of between $300,000 and $3 million for feasibility studies, demonstration or capital works projects that could kick-start an industry in the State.

On the surface, green hydrogen is the silver bullet to curb our reliance on fossil fuels and start us on the path to decarbonising our biggest polluting economies. But even its most ardent advocates agree it’s a tough sell, with plenty of hurdles yet to clear to bring industrial-scale production online.

KPMG partner, energy and natural resources, James Arnott is optimistic, believing that as the cost of producing renewables falls we will edge closer to a tipping point.

“It is becoming so affordable that we can start to theorise how much it would cost to convert and run significant aspects of a medium-sized metropolis on hydrogen — from the manufacturing plant right down to the engine in your car,” Mr Arnott said.

Last month, he helped to launch the H2City tool — developed in collaboration with KPMG, ATCO, the CSIRO and the Australian Renewable Energy Agency — which is set to significantly advance the Australian hydrogen debate in a practical way.

“Some believe that the ultimate path to decarbonisation could lie in gradual transformation to a hydrogen-based economy, starting with conventional technologies such as steam methane reforming and coal gasification, which could include carbon capture, since these technologies are proven and commercial processes,” Mr Arnott said.

“Over time, this can be complemented by green technologies such as electrolysis which is developing rapidly. The current low cost of producing renewable energy, and rate of development of technologies such as electrolysis to use this cheap form of green energy to produce hydrogen could play an important role in such an economy.”

GREEN H2 AND RESOURCES

Along with new, more efficient technology that will help deliver our natural resources to the rest of the world, green hydrogen for power generation and its mobility will offer mining, oil and gas companies an alternative energy source to reduce emissions across the value chain.

Having another, potentially cheaper, source of power may also help them make strategic decisions on downstream operations or investment in their own hydrogen generation.

The high cost of petrochemical fuels also drives a strong business case for a switch to hydrogen, especially in remote areas where fuel is more expensive, and in cases where vehicle fleets consume a lot of fuel.

Hydrogen fuel cells are also more suited to use in heavy vehicles because of the higher energy density of hydrogen compared to batteries. In Germany, forklifts running on hydrogen are already a commercial reality, demonstrating the potential for hydrogen in niche applications.

There will also be a local example of its potential when 18 garbage trucks in Moreland City Council, Melbourne, are converted by next year.

WE’LL POWER THE WORLD

WA’s biggest energy companies already have existing commercial relationships with global customers through LNG exports and would be able to re-use certain infrastructure to become an exporter of green hydrogen.

Woodside chief executive Peter Coleman last month explained his company’s appetite for cleaner energy projects.

“We are considering all options for managing and reducing emissions from our facilities,” he said.

“As Woodside heads into a growth phase in northern Australia, we are looking to integrate renewable and gas-fired generation to power our facilities, with environmental and commercial benefits.”

Diversifying into other areas of energy production also opens the door to finding commercial value in large tracks of land in WA that are not suitable for agriculture but can be used for solar and wind farms.

Mr Arnott said the export market for hydrogen was driven by energy policies, and associated pricing structures in those countries. It meant they were willing to pay a premium for hydrogen, in particular blue or green hydrogen, in the long term.

“With its abundant resources, this opens up a significant opportunity for Australia to export hydrogen or hydrogen-derived energy carriers,” he said.

“The Hydrogen Energy Supply Chain (a world-first pilot project to safely and efficiently produce and transport clean hydrogen from Victoria’s Latrobe Valley to Japan) is an example of such an opportunity that is currently being developed and plans to use brown coal gasification with carbon capture and storage.

“The methods and forms in which hydrogen can be exported is currently a significant area of focus in research and development and this is expected to be commercial by 2030, though it may be sooner.”

There are countless opportunities for all applications of hydrogen in Australia and the gradual conversion of natural gas pipelines to hydrogen will allow the use of existing infrastructure to store and transport hydrogen. Work is being done on the business case to modify infrastructure instead of building new assets.

SO, WHAT’S STOPPING US?

As well as concerns about commercial viability, the main hurdle is the supply infrastructure for the hydrogen, including production facilities, transportation and refuelling stations.

It was a perfect solution for NASA which fitted hydrogen fuel cells to the Gemini and Apollo spacecraft to rocket them into space in the 1960s but there’s still a few obstacles to overcome to ensure more practical, everyday uses today.

The cost to produce hydrogen is high in comparison with other fuels and there are also higher efficiency losses in its production compared with other energy sources. Then there’s the added cost to compress the hydrogen to make it transportable.

But Mr Arnott maintains the costs will reduce over time as renewables become cheaper and hydrogen technology develops.

A CLEANER PERTH

ARENA says green hydrogen has the potential to power everything from cars to cooktops and ultimately change the way we consume energy.

The agency is already funding Australia’s first green hydrogen innovation hub at the Jandakot operations facility of ATCO — which owns 14,000km of gas pipeline in WA.

What could a green hydrogen-powered Perth look like? Quieter, cleaner, lower energy costs over the long term and different types of fuelling stations powered by solar panels scattered across the suburbs.

KPMG has modelled a scenario, with input from CSRIO’s hydrogen adoption curves, where up to 8 per cent of Perth’s passenger cars and buses could be running on hydrogen by 2030. While the cars are currently more expensive, advances in green hydrogen production could wipe out the cost gap between conventional cars by as early as 2037.

“Within the next 30 to 40 years, half of Perth could be powered by hydrogen — but this is only the beginning,” Mr Arnott said.

“With many other cities and countries integrating hydrogen into their energy mix, there is potential for Australia to replace our current high-emission liquefied natural gas and coal exports with cleaner liquefied hydrogen.

“If we play our cards right, hydrogen can help solve our internal and external clean energy problems and bring that world closer.”