May-2022

Distributed hydrogen hubs

Advanced technology paired with global hydrogen production hubs can lead to lower transportation costs and fewer carbon emissions

Gabriel Olson
BayoTech

Article Summary

Achieving net-zero emissions by 2050 will require nothing short of a complete transformation of the global energy system. How can we decrease our reliance on fossil fuels while ensuring reliable and affordable energy supplies, providing equitable energy access, and enabling economic growth? It will require the deployment of a host of clean energy technologies. No one solution can meet the demand of all sectors. 

Hydrogen is an essential tool in the energy transition toolbox. Hydrogen is a flexible fuel that will fill the gaps where electricity alone cannot easily or economically replace fossil fuels. It is critical for decarbonising the steel and fertiliser industries as feedstock. Long-range ground mobility applications such as heavy-duty trucks, buses, off-road equipment, and trains require the long-range payload capabilities and quick refuelling provided by hydrogen. Hydrogen blended with natural gas reserves creates a cleaner-burning fuel and increases the renewable content of the gas delivered through our natural gas infrastructure. Hydrogen can also aid in enabling more solar and wind on the grid by serving as a seasonal energy storage solution to avoid curtailment, as well as playing other roles in electric grid management. 

The hydrogen revolution is just getting started. Deployments and investments in hydrogen are accelerating rapidly as governments commit to deep decarbonisation goals. Over 30 countries have hydrogen roadmaps, and the equivalent of $160 billion of direct investments are taking place today, according to the Hydrogen Council (Hydrogen Council, 2021a, Hydrogen Council, 2021b). 

Unlocking potential of emerging hydrogen applications
Steam methane reforming (SMR) is the most widely used method for hydrogen generation (US DOE, 2022). SMR is a process in which methane from natural gas is heated, with steam and a catalyst, to produce hydrogen. Most hydrogen is produced at a few centralised production plants for supply directly to refiners and chemical manufacturers. For customers in other regions — consuming hydrogen for emerging applications such as transport and power generation — hydrogen must be liquefied and trucked long distances. This creates a series of adoption challenges. Hydrogen’s low volumetric energy density makes it inefficient to transport. The liquefaction and then distribution via diesel truck increases the carbon intensity of the hydrogen. Furthermore, distributed customers relying on excess hydrogen from a central plant are the first to have supply interrupted. The current hydrogen supply is expensive and unreliable, with a high carbon footprint.

To unlock the potential of these emerging applications, a cost- and energy-efficient production and distribution model is required. The most competitive and low-carbon solution is to co-locate hydrogen production onsite or near emerging demand centres. Hydrogen hubs are emerging — regional clusters of hydrogen producers and consumers that will scale the industry together (BayoTech, 2022a). 

Producing hydrogen at a smaller volume at more numerous locations has many apparent benefits. It opens the door to leveraging local resources — natural gas, renewable natural gas from biogenic sources, or solar and wind combined with electrolysis — to produce cost-efficient hydrogen. This creates local jobs and helps transition the workforce to clean energy sectors. Distributed production is also much more reliable than centralised models. Recent supply disruptions due to natural disasters caused by extreme climate change have highlighted the need for redundancy (Cole Smith, 2021). With a network of distributed hydrogen production plants, consumers can be assured that even if one site goes down, another source is close at hand. There are also emission reduction benefits. Locally produced hydrogen is distributed to nearby consumers via truck from the hydrogen hubs. Shortening the distance that hydrogen is transported and avoiding liquefaction reduces the carbon intensity of hydrogen. Of course, when considering the environmental impact of hydrogen, the production method is the most significant factor.

Considering carbon intensity
Green, blue, turquoise, yellow, pink, brown, grey, black, and white — not all hydrogen production technology is the same. With rapidly growing commercial interest in hydrogen, a colour wheel classification system has evolved to help simplify the different technologies (Ivanenko, 2020). Unfortunately, the nuance and complexity of the different technologies are critical to understanding their environmental attributes. 

To accurately account for the environmental value (i.e., carbon intensity) of a given molecule of hydrogen, rather than a categorical colour scheme, we need to utilise a quantitative carbon intensity (CI) score. This score is based on the lifecycle emissions resulting from upstream, production, and downstream activities, measured in grams of CO2 per megajoule of energy content. The GREET (Greenhouse gases, Regulated Emissions, and Energy Use in Technologies) Model was developed by the United States Argonne National Laboratory to understand a variety of different energy pathways, and is one approach that is recognised and respected by many industry experts and policymakers across North America, and is integrated with the California Air Resource Board CA-GREET 3.0 Model. With this context, let us explore the carbon intensity and colours of the most common forms of hydrogen production. 

Green hydrogen is typically defined by electrolysis, using electricity sourced from renewable energy sources such as wind, solar, or hydroelectricity to split water into hydrogen and oxygen using various membranes and catalyst materials. Currently, less than 1% of hydrogen is produced with electrolysis (IEA, 2019). To effectively scale up this technology, significant renewable energy capacity is needed. Individual projects must consider local grid interconnection constraints since many electrolysis plants are grid-connected with contractual power arrangements. Electrolysis is very energy-intensive and is dependent on electricity markets to ensure that production remains cost-competitive. 

The CI score for green hydrogen is a function of the electricity used in the production process and associated additional steps required for transportation, compression, storage, and distribution of the hydrogen, each of which requires energy and potential associated emissions. Renewable electricity from solar or wind can generally be assumed to be carbon neutral (0 CI). However, compression, storage, and distribution add 10 CI points and, if required, cryogenic liquefaction of hydrogen results in 45 CI points due to its significant energy demands. Meanwhile, electrolysis produced with grid electricity (assuming a nominal 30% renewable energy mix) results in hydrogen with a net 164 CI score, higher than almost any other production pathway.

Grey and blue hydrogen utilise SMR technology, fuelled by fossil natural gas and high-pressure steam to produce hydrogen and CO2. This hydrogen has a CI score of 117-151, depending on the need for compression or liquefaction and transportation requirements. Blue hydrogen involves the use of carbon capture technology, where CO2 is captured through onsite equipment using physical and chemical processes and directed to other industrial applications or underground storage facilities. Carbon capture can effectively reduce CO2 emissions by 90%. However, the technology is still developing and relies upon long-term secure underground storage or other permanent end uses to avoid unintended future carbon emission impacts. Scaling carbon capture requires adequate storage capacity, transportation infrastructure, and additional energy inputs, which can drive cost and, in some cases, additional carbon emissions. 

In contrast to traditional centralised SMR production, next-generation SMR technology, such as that offered by BayoTech, has proven effective at a smaller, modular scale that allows for distributed, site-specific production near the point of use (BayoTech, 2022b). This helps avoid the need for compression or liquefaction (10-45 CI) and long-distance transport (1-7 CI). The production unit can be scaled to match onsite demand or integrated as part of a community-scale hydrogen production system serving a variety of end use applications. The net result of this approach is a more efficient lifecycle hydrogen value chain, with lower capital costs that result in a more economical pathway to carbon emission reduction.