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Why Hydrogen?

The solution for real problems

Mark Crowther

Director

GASTEC at CRE

29th Feb 2012

1) The world is not short of renewable energy – 6,200 km2 of Sahara desert would produce all UK final energy needs

2) The world does require an energy vector – reliable and modestly priced to move this energy from its point of

production/capture and transfer it to the consumer when it is required

3) Historically, storage has enabled transparent markets - the separation of production from use improves the efficiency of both

4) Ideally the vector should not be poisonous, or of short life

5) Ideally no greenhouse gas emissions at point of use

ASSERTIONS:

© GASTEC at CRE a trading division of Kiwa Ltd

Red square shows

land area for UK

energy supply at

300 kWh/m2/y

Sahara


1) Electricity

2) Hot water/steam

3) Methane with a biologically derived carbon atom

4) Ammonia etc

5) Hydrogen

Today I will major on Hydrogen

Options for energy vectors include:


• Flammable, colourless, biologically inert gas

burns to water

• Very light gas, density ~0.08kg/m3

(about 1/8 methane, ~0.67 kg/m3 )

• Low calorific value of about 12,750kJ/m3

(about 1/3 methane, ~39,000kJ/m3)

• Flammable limits 4-74%

(methane 4-15%)

• Risk of detonation 18-?%

HYDROGEN:


Fuel gas Upper index

MJ/m3

Lower index

MJ/m3

Approximate

Molecular Weight

Hydrogen 48.23 40.65 2

Methane 53.28 47.91 16

Natural gas 53.71 48.52 Mixture

Propane 81.07 74.54 44

LPG 86.84 79.94 Mixture

Carbon monoxide 12.80 12.80 28

The Wobbe Number is an indicator of the interchangeability of

fuel gases - similar Wobbe Number indicates similar flow

characteristics on an energy basis

HYDROGEN:

Wobbe Number (CV/ √Density) of hydrogen similar to natural gas:


http://en.wikipedia.org/wiki/Standard_conditions_for_temperature_and_pressure




http://en.wikipedia.org/wiki/Hydrogen

http://en.wikipedia.org/wiki/Methane

http://en.wikipedia.org/wiki/Natural_gas

http://en.wikipedia.org/wiki/Propane

http://en.wikipedia.org/wiki/Liquefied_petroleum_gas

http://en.wikipedia.org/wiki/Carbon_monoxide

• Town’s Gas was about 50% • still used in parts of the world (Town’s Gas also contains high concentrations

of carbon monoxide, a poisonous gas - CO is also produced from poor

natural gas combustion)

• Buoyant in air • hydrogen flames ascend rapidly and cause less damage than hydrocarbon

fires

• Objections due to experience of the old airships • cause of the Hindenburg disaster unclear, probably an atmospheric-related

static spark. 2/3 of the passengers and crew survived. Many deaths were the

result of falls or burning diesel fuel.

• Essentially an energy vector (similar to electricity or steam) • rather than a source, it has to be created (often from water) using another

form of energy

Other properties of Hydrogen:


Hydrogen is not a solution looking for a problem

BUT a solution to very real and complex issues, the

principal one being:

UK inter-seasonal variation in energy

demand

HYDROGEN:


UK inter-seasonal variation

in energy demand

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14 Years energy demand


Hydrogen to replace natural gas in the existing

plastic low pressure distribution systems (some

~2barg, but principally 75-25millibarg)

As required, these would be inter-connected with a new

high pressure national/international hydrogen

transmission system at 85bar

Hypothesis of this paper


Siemens gasifier

HP electrolyser

CO2

Biomass gasifier

Underground H2

store

Rutland plastics

Domestic

Commercial Transport

Industry

Existing PE network

DC

H2


Low cost to:

• Produce (especially when credited for low emissions)

• Transport

• Store

• Distribute

• Use

Furthermore:

• Guaranteed zero carbon at point of use

• Already widely used in industry

• Well proven technologically

• Offers no chemical or biological risks other than flammability

And, it can be traded and valued like any other storable commodity

Why hydrogen?


• Currently the UK has eight gas distribution networks (GDNs):-

• each covers a separate geographical region of Britain

• always ‘local’ hence the former name local low pressure distribution zones

• fed by a local medium pressure system via off-takes from the natural gas

national transmission system.

Often a GDN itself physically comprises several almost independent gas

networks eg Bristol, Barnsley or Bournemouth

The plan offered here is to convert these local gas networks to hydrogen

on a piecemeal basis in order to provide zero carbon energy supplies for:-

• Current users of natural gas including industry, commerce and the domestic

sectors

• Transport, via the installation of hydrogen dispensing pumps at the filling

station forecourts within the zone

Overview of concept


Map showing

High pressure gas

transmission system

(mauve) for Ordnance

Survey Area SO

Gloucester,

Cheltenham, etc

are all fed by medium

and low pressure lines

Ordnance Survey Area ‘SO’


Thus BOTH stationary and transport sectors

addressed with ONE energy vector

The areas for conversion would be chosen by local

‘society’ and the utilities

The high pressure National Gas Grid would remain

unaffected

Overview of concept


• Conceptually simple

• No substantial change to the infrastructure is required either in the street,

or in the home, although appliances will need to be converted/replaced

• Transition can be locally based and locally decided

• Meets localism criteria

• No impact on international carriage of natural gas through the UK

• No impact on power generation or other very large gas users

• Gas infrastructure is inherently low cost and hydrogen is a well proven and

low cost technology

ADVANTAGES


Low cost to:

• Produce

• Transport

• Store

• Distribute

• Use

Why hydrogen?


Hydrogen production

$/GJ £/kWh

40 0.091

35 0.080

30 0.068

25 0.057

20 0.046

15 0.034

10 0.023

5 0.011

£= $1.58

kWh/kg % HHV

40 98%

45 87%

50 78%

55 71%

60 65%

65 60%

70 56%


Table I Plant Performance and costs

Coal Gasification Without With CO2 capture

CO2 capture

Electricity Electricity Hydrogen

Performance •

Coal feed, MW (LHV) 1800.8 1962.5 1962.5

Electricity gross output, MW 891.9 875 208.6

Electricity net output. MW 762.3 655.8 0.1

Hydrogen net output, MW - - 1110.7

Efficiency to electricity, % 42.3 33.4 -

Efficiency to hydrogen, % - - 56.6

CO2 emitted and stored

CO2 to storage, g/kWh, 836

CO2 emitted. g/k-Wh, 776 147

Costs

Capital cost, M euro € 1,266.00 € 1,560.00 € 1,196.00

Capital cost, euro/kW, € 1,661.00 € 2,379.00

Cost of hydrogen, euro/kWh - - € 0.034

Cost of electricity, euro/kWh € 0.052 € 0.072 -

Cost of CO-2 avoided, euro/tonne € 31.30

From co-production of Hydrogen and Electricity by coal gasification with CO2 capture. Ref IEA Greenhouse Gas Programme 2007

Currently €7/tonne

But likely to go back to

this over next 10years

Coal Gasification


0.0000

0.0100

0.0200

0.0300

0.0400

0.0500

0.0600

0.0700

0.0800

0.0000 0.0050 0.0100 0.0150 0.0200 0.0250 0.0300 0.0350 0.0400

Hyd

rge

n £

/kW

h

Natural Gas £/kWh

Real US cost of H2 Vs Nat Gas (without CCS) corrected to 2004 prices

36MW

130MW

972MW

C. E. G. Padro and V. Putsche, "Survey of the Economics of Hydrogen Technologies", NREL/TP-570-27079, 1999. http://www.afdc.doe.gov/pdfs/27079.pdf

From Natural Gas


By electrolysis from renewable sources - eg this electrolyser operates at

an efficiency of around 80% (including ancillary power consumption)

By Electrolysis


$/kg $/kWh Approx £/kWh

Central SMR 1.47 0.038

0.025

Distributed SMR 2.63 0.068

0.044

Coal gas with CCS 1.82

0.047

0.030

Coal gas without CCS

1.21

0.031

0.020

Biomass

1.44

0.037

0.024

Distributed electrolysis

6.75

0.174

0.113

Central wind

3.82

0.098

0.064

Distributed Wind

7.26

0.187

0.121

Nuclear

1.39

0.036

0.023

US Energy Information Administration ref US EIA 2008 (act 2004)

Current range of hydrogen costs


Biomass plant £ 2,600.00 £/kW

Cost of biomass £ 0.020 £/kW

Electric efficiency 45%

Cost of fuel to electric £ 0.044 £/kW

Depreciation 20 y

O&M 4%

Investor return 8%

Annual cost £ 442.00 £/kW

Cost of electricity

7500hours/y Note 1 £ 0.10 £/kWh

2000hours/y Note 2 £ 0.27 £/kWh

Note 1. Approximate base-load design Note 2. Upper end of hours to provide electric space heating +DHW

The higher the capital cost (eg nuclear power) the greater the effect Value of storage in this instance 0.17p/kWh

Comparison with electricity price


Costs of low-

carbon

generation

technologies

May 2011

CCC

Comparative costs of electricity


Evaluating the true costs of electricity from intermittent

sources is very challenging

• Hydrogen production is ONLY production constrained

NEVER demand constrained (unlike electricity)

• Maximising operating h/y substantially reduces cost/kWh

• Hydrogen production can be of considerably higher thermal

efficiency than electricity. This reduces the cost of

feedstock, and the size of any thermal dump equipment eg

cooling towers

• Carbon capture is relatively easy as the CO2 is available

concentrated, cool and at pressure. It still needs to be

transported and sequestered.

Comparative costs of electricity


Summarising these together gives the following ‘rules of thumb’ for the cost of hydrogen (£/kWh) on an ‘as and when’ required basis:-

• From fossil carbon fuels (direct) involving CCS H2 cost = £0.025 to 0.035 /kWh (8000h/y); about 50% of electricity at similar LOAD factor

• From biomass (direct) H2 cost = £0.02 to £0.04 /kWh (8000hrs/yr): <50% of electricity at similar LOAD factor

• From PV, wind and tide via electricity the economics are more complex, but the hydrogen generators know they will never be refused a market. Their business plan can be simply based on a robust sale price.

Costs of hydrogen


Low cost to:

• Produce

• Transport

• Store

• Distribute

• Use

Why hydrogen?


Low pressure H2 - broadly similar transport properties to natural gas

At 85barg it has a lower compressibility factor and is somewhat more

difficult to compress so a new hydrogen transmission system will need

slightly larger pipes and more complex compressor stations, but the

cost is still very low

Natural gas can be brought from Siberia to UK for <1p/kWh

MW Dist km Project Cost £/MW.km Ref GaC from public data

Brit Ned 1000 240 £540,000,000 £2,250 Sub-sea HVDC

Scotland wind 2700 220 £350,000,000 £589 Beauly-Denny, Scotland

S Wales NTS 24000 316 £700,000,000 £92 Milford Haven to Stroud

Anecdotally the transportation/delivery cost of fuel vectors was:

Nat gas Elecricity District heat

Relative cost kWh/km 1 X7 X49

Hydrogen transport


Hydrogen Analysis Resource Center:

European Hydrogen Pipeline Miles by Country

Country Miles

Belgium 381

France 188

Germany 242

Italy 5

Netherlands 147

Sweden 11

Switzerland 1

United Kingdom 25

Total 1001

Source for all but Germany: http://www.roads2hy.com; European Hydrogen

Infrastructure Atlas. J. Perrin. July 2007.

Source for Germany: Germany - Taking the Fast Lane to Hydrogen

Infrastructure Development. P. Schmidt. August 2008.

In summary the long distance transportation of hydrogen is well

proven and cost competitive

Hydrogen transport


• Icelandic geothermal power would most cheaply be exported

by H2 pipeline.

• For solar sources, even North Africa could be considered. The

relative low cost and simplicity of long distance hydrogen

transport makes its generation in the Sahara very feasible.

At about 3,000km, this is much nearer than Siberia or the

Middle East. (Guesstimate of cost of new pipeline for UK energy supply £100billion)

• This could be generated either via PV or solar thermal. Costs

currently debatable for the latter but it is simple low risk

competitive technology.

Costs could be in range £0.05 to £0.1/kWh

• At 300kWh/m2/year (ie about 15-20% yield) it would take an area ~6200km2 ~80km square to produce total UK end use

Alternative sources:


Low cost to:

• Produce

• Transport

• Store

• Distribute

• Use

Why hydrogen?


Compressed underground hydrogen storage is entirely proven

and new sites are under-construction today eg PRAXAIR in Texas

This last facility has the capacity of about 4mboe or 2.5% of UK

annual energy demand or 50 Cruachan pumped storage stations

Hydrogen Storage


Hydrogen storage cavern for Air Liquide at the Spindletop Dome near Beaumont

in southeast Texas

= 50 off of these:

Hydrogen Storage


http://www.scotsrenewables.com/blog/wp-content/uploads/2011/02/cruachan.gif

Upper Lower

Methane Cap Cost $ $ 25,000,000.00 $ 10,000,000.00

Depreciation 20yrs $ 1,250,000.00 $ 500,000.00

O&M 4% $ 1,000,000.00 $ 400,000.00

Return 8% $ 2,000,000.00 $ 800,000.00

Annual cost $ 4,250,000.00 $ 1,700,000.00

Ann: Storage kWh 278,000,000 278,000,000

Annual/kWh $ 0.015 $ 0.006

£/kWh £ 0.010 £ 0.004

Hydrogen BY 4 £ 0.042 £ 0.017

This is about 1/4 to 1/10 the ‘value’ arising from the intermittent

use of biomass generation (ie 0.17p/kWh).

The surest route to reducing energy production cost is to increase

operating hours of the producer and/or not restrict output.

Indicative costs of storage


Not a solution looking for a problem

BUT a solution to very real and complex issues

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14 Years energy demand


By uncoupling supply and demand a free market can exist in both

UK Annual energy (final) 159,000,000 toe

kWh/toe 11,630

UK annual kWh 1.8492E+12

91days use 4.6229E+11

GCV Hydrogen 12760 kJ/m3

GCV Hydrogen 3.54 kWh/m3

Equivalent volume of H2 at

STP 1.3043E+11 m3

At 85barg 1,534,439,425 m3

Edge of cube 1074. m

By historical standards at hole ~1km cube is small and would give

complete freedom from the inter-seasonal problem.


Low cost to:

• Produce

• Transport

• Store

• Distribute

• Use

Why hydrogen?


Most of the UK low

pressure distribution

system is now

polyethylene and

operates at

25 to 75mbar

(ie 0.025 to 0.075barg)

Gas Distribution


In summary, according to the tests performed in this study, we have found strong indications that polyethylene gas pipes PE80 and PE100 can be used for transportation of hydrogen without any adverse long-term effects on antioxidants, polymer structure or the mechanical performance of the polymer pipes. The same indications have been found for both new and old pipes that has been used in the Danish natural gas distribution network for more than 20 years.

Ref Detlef Stolten, Thomas Grube (Eds.): 18th World Hydrogen Energy Conference 2010 - WHEC 2010

Diffusion of hydrogen through PE pipelines is five times higher than diffusion of NG, but still negligible. Calculations have shown that the yearly loss of hydrogen by leakage amounts to approximately 0.0005–0.001% of the totally transported volume.

Ref The use of the natural-gas pipeline infrastructure for hydrogen transport in a changing market structure Dries Haeseldonckx,William D’haeseleer∗ Division of Energy Conversion, University of Leuven (K.U. Leuven), Celestijnenlaan 300A, 3001 Leuven, Belgium

Suitability of polyethylene widely studied


• 1967 to 1977

• 13m homes & 40m appliances

• Cost then £563m (£42/customer)

• Now equivalent to £6b (based on RPI) or

£14b (based upon % UK GDP) or

£70b based upon on-going conversion of the

Isle of Man to Natural Gas from Towns Gas

(above costs exclude hydrogen production)

• Very competitive against the all electric world

Town’s Gas to Natural Gas

conversion programme

(ref Leicester Gas Museum)


Low cost to:

• Produce

• Transport

• Store

• Distribute

• Use – Space Heating

Why hydrogen?


Dramatic reductions in energy use from improvements in efficiency is

very challenging. (Ref Tadj Oreszczyn UCL - Our innate ability to think of new ways to use energy)

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Energyconsumption perhousehold

Energy Efficiency?


The use of hydrogen in boilers, fuel cells, hybrid units of fuel cells and heat

pumps offers potential for good COP values especially during spring and autumn.

By not taking carbon into the community we can immediately have total

confidence in the true extent of carbon saving.

Hydrogen versions of many appliances already exist or are relatively simple to

transform.

Existing

Appliance

Replacement H2

technology Cost implications Available

Boiler Boiler Little change Yes

Boiler Fuel Cell Increase but with benefit Yes

Boiler + Heat Pump Hybrid unit Increase but with benefit Yes

Cooker Gas under glass Modest increase Yes

Gas fire Catalytic heater Little change Yes

Hydrogen Appliances


Using fuel cells instead of boilers offers on-site electrical generation

rivalling central plant efficiencies plus some heat

Hydrogen Appliances


A fundamental problem of ASHP is their performance in the coldest

weather or with high water temperatures.

Fuel Cell

Hydrogen In 2.000 kW

Electricity OUT 1.300 kW

Heat out (80-60C) 0.300 kW

Overall FC Eff: HHV 80%

ASHP COP (55-?C) 2.3

Power system loss 10%

Heat from ASHP 2.691 kW

TOTAL Heat out 2.991 kW

Overall COP 1.50

This gives the possibility of hydrogen hybrid fuel cell/ASHP

Such a unit is currently under development in the UK

In practice it will still need a hydrogen boiler for winter loads

Hybrid Appliances

Ref Mitsubishi

literature


ON A ZONE-BY-ZONE BASIS and supported by the locality and

gas distribution company:-

1) Construct local hydrogen production facilities (or extend those

available)

2) Construct local hydrogen storage

3) Reinforce local network where necessary

4) Replace current appliance stock with new boilers, fuel cells,

cookers and fires

5) Change over current LDZ systems to hydrogen

6) Install hydrogen filling pumps on garage forecourts

This is almost the exact reverse of Town’s Gas conversion!

MORE PRACTICAL DETAILS


Low cost to:

• Produce

• Transport

• Store

• Distribute

• Use – Transport Sector

Why hydrogen?


• 28m vehicles on UK roads

• About 9,000 filling stations in the UK

• Would equate to £9bn at £1m/station (ref California today about

£1.6m/fill point including generation)

• Compares with £30bn for HS2 rail-line

• Hydrogen vehicles are available now with similar performance to

existing gasoline/diesel stock

• Hydrogen seems to be the preferred fuel for the future of the

world automotive industry

• Connecting these filling stations up to the existing LDZ would be

relatively easy

• This would ensure the UK stayed in the world league in this important manufacturing sector.

Use in Transport


Hydrogen is a realistic avenue to low carbon personal

transport

Battery vehicles have problems with cab heating in cold

climates, and realistically offer only short range

Slow charging of vehicles is expected to require >40million

sockets plus their infrastructure

Boost charging requires either massive new electrical

infrastructure and/or battery swopping infrastructure

Both electric approaches requires a substantial change in

culture

Comparison with Batteries


Stuttgart/Munich, 1 June 2011 – Car manufacturer Daimler and the technology company The Linde Group are pressing ahead with the development of an infrastructure for hydrogen-powered fuel-cell vehicles. Over the coming three years, the two companies plan to construct an additional 20 hydrogen filling stations in Germany, thereby ensuring a supply of hydrogen produced purely from renewable resources for the steadily increasing number of fuel-cell vehicles on the roads. The initiative links in with the existing H2 Mobility and Clean Energy Partnership infrastructure projects, which are being subsidised by the National Innovation Programme for hydrogen and fuel-cell technology (NIP). This places Germany at the international forefront of hydrogen infrastructure development.

News


Wolfgang Tiefensee, Minister for Transportation, Building and Urban Affairs Germany, with its excellent ideas from all over the country, is to become the market leader for modern drive technologies. This will secure and create new employment in the markets of the future. Our aim is to continue consistent and systematic promotion of electromobility based on batteries and fuel cells. Today we can see that Germany is setting the

pace when it comes to hydrogen and fuel cell technology. We are aiming at establishing the nation-wide supply with hydrogen in Germany at around 2015 in order to support the serial-production of fuel cell vehicles.”

Most of the large automotive companies have large hydrogen vehicle development programmes. By way of example…….

News


Mercedes

GM

Honda


Source: Peter Froeschle, Daimler AG, WHEC2010, Essen, May 2010

Fuel Cells


Use in Transport


Low cost to:

• Produce

• Transport

• Store

• Distribute

• Use – Industry

Why hydrogen?


For many years UK manufacturing has been moving towards

higher added value products. A generous supply of low cost

hydrogen would greatly assist this.

The existing petrochemical use of hydrogen is widespread. The

addition of low carbon hydrogen as a chemical feedstock will

expand the commercial possibilities, across a wide range of ‘low

carbon’ goods eg low carbon copper, steel or other metals.

The market for low carbon manufactured goods will grow.

Those companies who wished to remain on Natural Gas could

be assisted to run dedicated medium pressure lines to the existing (and remaining) National Grid.

Industrial uses of hydrogen


The next slides pull the whole of the hydrogen chain together

Thus:-

• Hydrogen generation by Petroleum Coke gasification and

CCS

• Hydrogen storage

• Conversion of a town the size of Bristol plus immediate

environs (about 600,000 persons)

• Without and with free appliances to the space heating sector and filling stations to hydrogen

The way forward


• With a subsidy of 1.7p/kWh (ie modest by FIT and RHI

standards) it should be possible to convert the WHOLE

ENERGY SUPPY CHAIN of a city (eg Bristol) to a zero

carbon fuel, including appliance conversion.

• It must be noted that current FIT subsidies (eg solar PV) are

only addressing one part of the energy supply system; they

omit any support to the necessary back-up supply, upgrading

of the electrical infrastructure or installation of heat pumps.

• This subsidy is ‘end to end’ and provides a package solution.

The way forward


expecting householder to pay conversion cost of appliances (ie similar to other micro-generation) -

carbon subsidy £14/t (ref Nat Gas +oil)

Cost of H2 £/kWh £ 0.030 £/kWh INCOME

Cost of storage £/kWh £ 0.015 Road fuel £/kWh £ 0.0900

Billing etc £/kWh £ 0.008 Income £ 216,000,000.00

TOTAL Hydrogen £ 0.053

MW 1000 MW Space Heat £/kWh £ 0.0550

Annual hrs 8000 hrs Income £ 308,000,000.00

Annual demand 8,000,000,000 kWh

% Space heat 70% TOTAL INCOME £ 524,000,000.00

% transport 30%

kWh to space heat 5,600,000,000 kWh Cost of hydrogen £ 0.053

Av demand/prop 19,000 kWh/yr Total cost H2 gas £ 424,000,000.000

No of dom prop equiv 294,737

Av conv cost per prop £ 750 Gross Margin £ 100,000,000

Total cost of prop £ 221,052,632 Annual H2 bill/house £ 1,045

No of filling stat(FS) £ 121

Av cost per FS £ 1,000,000 Carbon saving tonne 1,720,000

Total cost of FS £ 120,574,163 Carbon subsidy £14

Total value £24,080,000

Investment £ 341,626,794 Sub £/kWh £0.0030

O&M at 4% £ 13,665,072 TOTAL INCOME £124,080,000

Deprec 25 yrs £ 13,665,072 TOTAL: MARGIN £69,419,713

Return 8% £ 27,330,144

Ann: capital charges £ 54,660,287 MARGIN % 13.25%

Conversion economics


free issue of appliances to householder carbon subsidy £80/tonne

Cost of H2 £/kWh £ 0.030 £/kWh INCOME

Cost of storage £/kWh £ 0.015 Road fuel £/kWh £ 0.0900

Billing etc £/kWh £ 0.008 Income £ 216,000,000.00

TOTAL Hydrogen £ 0.053

MW 1000 MW Space Heat £/kWh £ 0.0550

Annual hrs 8000 hrs Income £ 308,000,000.00

Annual demand 8,000,000,000 kWh

% Space heat 70% TOTAL INCOME £ 524,000,000.00

% transport 30%

kWh to space heat 5,600,000,000 kWh Cost of hydrogen £ 0.053

Av demand/prop 19,000 kWh/yr Total cost H2 gas £ 424,000,000.000

No of dom prop equiv 294,737

Av conv cost per prop £ 3,500 Gross Margin £ 100,000,000

Total cost of prop £ 1,031,578,947 Annual H2 bill/house £ 1,045

No of filling stat(FS) £ 121

Av cost per FS £ 1,000,000 Carbon saving tonne 1,720,000

Total cost of FS £ 120,574,163 Carbon subsidy £80

Total value £137,600,000

Investment £ 1,152,153,110 Sub £/kWh £0.0172

O&M at 4% £ 46,086,124 TOTAL INCOME £237,600,000

Deprec 25 yrs £ 46,086,124 TOTAL: MARGIN £53,255,502

Return 8% £ 92,172,249

Ann: capital charges £ 184,344,498 MARGIN % 10.16%

Conversion economics


Hydrogen is currently receiving little attention in the UK except

in the transport sector – Why?

• Little UK owned hydrogen industry

• UK hydrogen industry currently in retraction eg closure of

Bristol fertiliser plant ~2008

• No incentive from Government

• Pipes and wires companies were not incentivised to be truly

innovative except in cost cutting

• Energy sector dominated by companies who know and

wish to promote the electric option

• Only modest interest in CCS, and pre-combustion route not

currently popular

BUT:

• Some significant indication that the situation may be changing

Current state of play


• Establish a hydrogen working party (under independent chair) with a

budget and support from:-

o HMG (DECC /DoT/BIS/OFGEM)

o Gas infrastructure providers

• Compare the electric and gas routes to low carbon space heating

bearing in mind:-

o Gas (natural gas or hydrogen) pipes exist & are fully written off

o Electricity needs complete new infrastructure

• Devise a regulatory framework for local decision making of

hydrogen conversion and address outstanding safety issues,

especially regarding the GS(M)R and GS(I&U)R

• Allow the carbon credits currently directed towards the nuclear

industry to be equally available to hydrogen products

• Announce that zero carbon hydrogen in the transport sector will be tax exempt for the next 25years

What to do?


Hydrogen has a future because it is low cost to:

• Produce. As production is never demand constrained, reducing the risk

premium compared to that associated with future electric plant

• Transport. Because it is a gas of reasonable Wobbe No.

• Store. Because it a compressible flammable gas of reasonable CV.

• Distribute. Because it is compatible with current PE pipe and was >50% of

Town’s Gas.

• Use. It has excellent and proven potential in all three sectors (space

heating, transport and industry) either directly or via fuel cells.

and

• Compliments electricity as an energy vector and addresses the inevitable

intermittency issues for electricity generation (especially renewable)

To return and validate my

original hypotheses


• Electricity is most efficiently used when supplied as and when the customer

demands

• This requires stand-by generating plant that will be only infrequently used and

thus must produce electricity of high unit cost

• This effect must be magnified with the principle generators wind, wave and

solar power where there may be little correlation between supply and demand

• Hydrogen plant, however, can always generate 8,000 hours/y and the product

can be stored

• This can then be transported to consumers as and when they demand. On-

site fuel cells of excellent power to heat ratio can give flexibility to this

process.

This is reflected in the current gas system that has almost zero grid management

charges compared to the electricity grid that has substantial system management

fees to keep stations warm etc. Hydrogen would reflect the current gas system.

Relative cost and value of generating

electricity or hydrogen is complex:


Mark Crowther

GASTEC at CRE

Questions


This presentation was complied specifically for delivery to a private audience – it is strictly copyrighted to Kiwa Ltd.

All of the information is or has been derived from freely available public domain sources,

however specific permission has not been gained in all instances.

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