E2Tech Forum: Why Hydrogen, Why Maine, and Why Now?
I had the privilege recently of moderating a panel for E2 Tech on the topic of hydrogen. We had a fantastic two hour webinar and a stellar panel, including:
Katherine Birnie, Senior Manager, H2 Project Development, Peaks Renewables
Dr. Jack Brouwer, Professor, Mechanical & Aerospace Engineering, and Director, National Fuel Cell Research Center, UC Irvine
Jessica Mahler, Engineering Director, Bloom Energy
Caroline Colan, Solar and Storage Fellow, Maine Governor’s Energy Office
Rick Smith, Founder, Hydrogen Energy Center
In addition to moderating the panel, I gave a presentation on Hydrogen Basics, which is provided below in PDF form. Feel free to click on the cover page to pull up the presentation in a new window.
Canada Germany Hydrogen Alliance
Russia’s unprecedented and unjustified war in Ukraine, which began in 2014 and significantly broadened on February 24, 2022, has caused an extraordinary depth of pain and suffering on the part of the people of Ukraine. The scope of the war has expanded beyond the humanitarian crisis and extensive physical destruction in Ukraine, to include sanctions against Russia on the part of the west, as well as Russia shutting off supplies of energy to the west, most noticeably shutting of natural gas supplies to Europe. The curtailment of energy supplies from Russia to Europe has caused a massive disruption in energy markets across the globe, including oil and natural gas.
Before 2022, Germany was receiving as much as 55% of their supply of natural gas from Russia, representing a very large country risk exposure. Germany, because of their high dependency on Russia for their natural gas, is facing the most extreme potential set of impacts from Russia’s curtailment of natural gas deliveries.
Germany is working very hard to limit the impact of Russian energy supply disruptions on their energy system, people and economy. Germany has set a goal of being free of Russian natural gas in 2024. In response to Russia curtailing natural gas deliveries, Germany is focused principally on finding new sources of natural gas. This includes sourcing new supplies via pipelines across Europe, and securing sources of liquified natural gas from around the world.
In addition to securing additional supplies of pipeline natural gas and LNG supplies, a second order solution to securing natural gas is to secure forms of energy that will displace natural gas or reduce its use. Hydrogen is a potential candidate for several applications.
Accordingly, Canada and Germany have established the Canada-Germany Hydrogen Alliance to export hydrogen from Canada to Germany, with the objective to help Germany secure sources of energy to address natural gas shortfalls from Russia.
Download White Paper - The Canadian Germany Hydrogen Alliance
Decarbonizing Natural Gas
Many governments and organizations around the world are setting ambitious carbon reduction goals, goals that cut across broad swaths of the economy, encompassing electricity, transportation, buildings and industrial processes. In the United States, ten states with 2050 emission reduction goals have targeted close to 80% reductions in emissions between now and 2050, from 800 million metric tons in 2018 to 158 million metric tons in 2050.
To meet the aggressive carbon emission reduction goals in ten identified states with 2050 objectives, the incumbent natural gas companies would need to reduce their emissions from 224.7 million metric tons per year in 2018 to 45.6 million metric tons per year in 2050. The business and financial implications for natural gas companies are immense. Local distribution companies have a wide range of potential initiatives they can pursue to mitigate and overcome key risks to their core business and financial returns associated with carbon reduction.
Utility Energy Storage Strategies
Energy storage is quickly becoming an integral part of electric utility grids and an important resource helping utility companies meet their core mission of safely, reliably and cost effectively delivering electricity to customers. Stakeholders throughout the utility value chain are deploying energy storage for a varied and diverse set of applications:
Residential, commercial and industrial customers are deploying energy storage systems to enhance resilience and lower peak demand charges.
Wholesale electricity markets are modifying rules to enable energy storage to provide area balancing services and frequency regulation.
Wholesale market participants in power generation are deploying energy storage to firm wind and solar generation systems, and provide peaking power.
Utility companies are deploying energy storage to defer transmission and distribution investments, reduce peak power costs, stabilize their distribution system operations, enabling higher levels of variable renewable energy, among other applications.
The emergence of battery energy storage as a practical solution as only emerged in recent years due to significant cost reductions, opening up new applications and markets from a cost effectiveness perspective. There remain significant cost challenges that are limiting even broader applicability of energy storage to a wider array of potential applications. It is within this environment that utility companies are being appropriately selective on integrating energy storage into their planning processes and systems without assuming undue financial, technical and operating risks and exposures.
Download the 36 Page Velerity Report: Utility Energy Storage Strategies Here
Energy Storage: 2019 Year In Review
The United States Energy Storage industry continued to power forward in 2019, with record deployments, larger state commitments, and continued cost reductions. Systems are larger, durations are longer, and storage continues to make inroads in established portions of the energy system value chain.
The 2019 year in review is bringing to light three of the most impactful changes observed taking place in the industry. There are many significant projects, investments, technologies, regulatory changes, and acquisitions that took place. The criteria by which the three changes highlighted in this report were selected is based principally on scale impact. Energy storage is continuing to insert itself into the energy infrastructure value chain, making inroads, for example, as a real alternative to gas fired peaking plants. Twenty years ago, energy storage was not considered realistic, either for stationary power applications or in transportation applications. Available energy storage systems either were not competitive: in power systems, energy storage was uneconomic, too expensive, and did not meet the high cycle life required. For transportation applications, batteries were too expensive, did not last, took too long to charge, and were too heavy.
Energy storage economics over the intervening twenty years improved significantly, with cost reductions taking place year over year. The primary driver of this change was the continued expansion of manufacturing of batteries for battery electric and plug-in hybrid electric vehicles, and the associated investment in innovation in battery technology and performance.
Significant energy storage events of detailed in this 22 page report include:
Deployments of Large Scale Energy Storage Systems;
Increased Commitments by Automobile OEM’s in Battery Manufacturing and Procurements; and
Large Scale Wind-to-Hydrogen
Download the 22 Page Velerity Report: Energy Storage 2019 Year In Review Here
Wind-to-Hydrogen
European Wind Developers Have Announced Plans to Install 582 MW of Electrolyzers for Green Hydrogen Production
In the past year, there have been a number of large scale announcements of wind project developers integrating electrolyzers into their project plans. A summary of recent announcements in Figure 1 below illustrate the scale of these announcements, with seven projects planning to install a total of 582 MW of electrolyzers.
There are several forces driving this emerging technology, principally changing grid economics in a future with a high proportion of variable renewable energy, interest in decarbonizing heat energy, and historically high prices for natural gas.
Wind project developers are concerned about optimizing project revenues when facing increasing curtailment, more frequent negative pricing and an increasing proportion of low price power regimes. The continued expansion of variable renewable energy on European grids will further deflate power prices and increase curtailment, negatively impacting wind power economics. Developers are increasingly looking for ways to mitigate economic risks associated with downward price trends, to monetize stranded and low price electrons. This Velerity Brief looks at four recently announced and illustrative projects:
Hyport Oostende
Ørsted Hornsea Two Gigastack Project
Dolphyn
Lhyfe Bouin
Download the Wind-to-Hydrogen White Paper Here
The Hydrogen-Ammonia Nexus
A Pathway for Decarbonizing Power, Industrial Processes and Marine Transport
Ammonia production contributes 2% to global GHG emissions and marine transport contributes up to 3%, driving those industries to consider switching to green hydrogen to reduce emissions. Several countries are also considering using ammonia as a means to transport green and blue hydrogen around the globe.
Interest in ammonia as a zero carbon fuel, a target for reducing industrial emissions, and as a means for the bulk transport of green and blue hydrogen around the globe is increasing. Recent green ammonia announcements include several large scale projects and require large amounts of green hydrogen produced using renewable energy. Recent project announcements include:
Air Products $7 Billion Green Hydrogen to Ammonia – Air Products has joined with ACWA Power and NEOM to invest $5 billion in a green hydrogen to ammonia facility to be built in Saudi Arabia. Air Products is also investing an additional $2 billion infrastructure to distribute ammonia to bus and truck hydrogen refueling stations around the world.
Iberdrola & Fertiberia Green Hydrogen to Ammonia – In Spain, Iberdrola is investing $174 million to build 100 MW solar facility with 6 GW of electrolyzers to produce hydrogen for ammonia and fertilizer manufacturing.
Eidesvik and Equinor are Converting a Supply Ship to Run on Ammonia – State backed Norwegian oil and gas company Equinor has received funding to convert a supply ship from LNG to ammonia. The ship will run on green ammonia, using 2 MW ammonia solid oxide fuel cells to power the propulsion system.
H2U (Hydrogen Utility) Developing 20,000 Tons per Year Green Ammonia Plant in Port Lincoln, Australia – H2U is developing a $117.5 million project to produce green ammonia for domestic use and export, using 30-40 MW of electrolyzers operating on wind and solar energy. The system will also include two 16 MW open-cycle gas turbines that run on hydrogen and are designed to provide power to the grid.
Download the Hydrogen-Ammonia White Paper Here
Natural Gas Carbon Mitigation with Hydrogen Blending
Hydrogen is being blended with natural gas by local distribution companies to reduce carbon emissions. This Velerity Brief explores the carbon exposure of local gas distribution companies and reviews hydrogen blending as one approach to mitigating carbon risk exposure. The Brief illustrates the issues and challenges of hydrogen blending with the recent ATCO announcement of a 5% blending project planned for Fort Saskatchewan in Alberta, Canada, the first major hydrogen blending project in North America.
Download the Hydrogen Blending White Paper Here
Strategies for Generating Power with Fuel Cells in a Carbon Constrained World
Download PDF Here
1. Introduction
The developers and manufacturers of large scale stationary fuel cells for power generation have faced a myriad of challenges in achieving market traction and a sustainable book of business. Manufacturers have designed and configured their systems to overcome many barriers over the years, spanning capital costs, reliability, efficiency and fuel cost among other design considerations. One of the choices was to enable these fuel cell systems to operate on natural gas, facilitating ease of fuel availability and lowering fuel costs.
More recently, customers and regulators are more explicitly considering the implications of their decisions and regulations on carbon emissions. This more explicit inclusion of carbon implications in their decision making criteria and regulatory initiatives also includes increasing scrutiny on the effects of decisions and regulations on natural gas use. There is a growing reluctance to implement policies which expand demand for natural gas. This shift represents a potential business and regulatory risk for manufacturers, system integrators and project developers implementing stationary fuel cells for power generation that utilize natural gas.
This Velerity Brief identifies and broadly reviews some of the tactics available for reducing carbon intensity of large-scale stationary fuel cells used for power generation. It begins with some background and historical context, reviews some of the carbon shifts currently taking place, and identifies some of the potential carbon mitigation pathways.
2. Background and Context
The first fuel cell was designed, built and operated in 1839 by Sir William Robert Grove, a Welsh judge, inventor and physicist. The amount of electricity the system produced was so limited, it was not deemed useful. In the 1960s, the United State Space program used fuel cells, developed by both General Electric and United Technologies Corporation, to power the Gemini, Apollo and Shuttle spacecraft.
The promise of fuel cells for clean, compact and efficient power generation began to capture the interest of government and industry in the 1970s, with the various energy crises initiating a search for new energy technologies. Over the subsequent decades, stretching from the 1980s into the 1990s, fuel cells were designed and built for entering commercial markets, for powering cars and buses, residential combined heat and power, industrial scale power generation, portable power, and small backup power systems. During this time, the chief challenges of fuel cells remained, including the fuel cell capital cost, durability and efficiency. As the 2000s dawned, a global effort was in place to find sustainable applications and markets for this highly energy efficient technology, and to establish traction in commercial markets, shifting away from corporate and government research to commercial deployments.
One of the areas that captured commercial interest was the development of large scale fuel cells for power generation. Large scale fuel cells have been designed to find that narrow path to a commercially sustainable niche. Most of the large scale fuel cells designed for power generation are modular, quiet, efficient, can capture heat energy in addition to electricity, and, depending on the fuel, can have zero to minimal emissions, depending on the fuel source. Using fuel cells for onsite power generation also increases system resilience, providing always on backup power.
A key consideration in the development of fuel cells for power generation is addressing system economics, specifically initial costs, operating efficiencies, maintenance and fuel costs. Market adoption requires competitive economic performance relative to each customer’s options, mainly a combination of grid power paired with backup power generation. The early fuel cell systems used for power generation had high initial costs and uncertain reliability and associated maintenance liabilities, which handicapped market acceptance and adoption.
To overcome market barriers, manufacturers deployed several product strategies over time. These included:
Combined Heat and Power – Doosan Fuel Cell provides a phosphoric acid fuel cell system, which provides heat and power with a 400 kW fuel cell (460 kW delivered). Using a CHP approach, total system efficiencies of up to 90% (power and thermal) are attainable, thereby improving overall system economics. Operating efficiencies as high as 45% LHV.
Scale – FuelCell Energy offers several multi-megawatt systems based molten carbonate technology, including 1.4 MW, 2.8 MW and 3.7 MW. These systems operate at a LHV efficiency of 47% and provide thermal energy as well.
Efficiency – Bloom Energy offers a solid oxide fuel cell with rated LHV efficiency as high as 65%.
Natural Gas as Fuel – Each of these fuel cell systems, from Doosan, FuelCell Energy and Bloom Energy, are designed to use natural gas for fuel. This is primarily to simplify the availability of fuel for customers, and lower fuel costs.
One of the challenges for manufacturers, developers and system integrators focused on large scale fuel cells for power generation is the shifting customer and regulatory preferences as well as permitting, with an increasing emphasis placed on integrating carbon impacts in the decision making processes.
3. Carbon
Globally, more people and organizations are becoming aware of the importance to address climate change. This awareness is, like a pebble thrown into a pond, is creating ever widening ripples coursing through homes, boardrooms and governments across the globe, increasing the pressure and willingness to act on climate change.
This change is creating new unexpected business and financial exposure associated with carbon. This exposure is now lapping at the shores of the natural gas industry, including fuel cell manufacturers and project developers who utilize natural gas. This section speaks to the broadening initiatives coursing through the global economy associated with mitigating carbon risks and exposure.
3.1. Decarbonizing Society
Interest in and commitments to addressing carbon emissions have been increasing in recent years. This change is being realized throughout the global economy, in the development and introduction of public policies to encourage reducing carbon emissions, financial support for lower carbon fuels and technologies, and the integration of carbon in decision making criteria in commercial enterprises and public entities in procurement and capital investment decision making.
Decarbonization efforts have gone through successive stages, a trajectory that is continuing to broaden interest and efforts. The bulk of carbon mitigation policies, initiatives and investments have focused on the power sector and the electric grid. Europe and North America have been introducing a multitude of incentives and policies at the federal and local levels to encourage wind power and solar energy, resulting in billions in investment in the past two decades. Investments in energy efficiency and more efficient end-use equipment, appliances and lighting continues to be an integral policy instrument over the past three decades.
The efforts to mitigate carbon emissions associated with transportation are becoming a more central focus of policies, initiatives and investments in the past five years, which builds on efforts since the 1970’s to improve vehicles efficiency and fold alternative fuels into the transportation mix (key driver in the 1970’s was reducing dependence on foreign sources of oil).
This has been followed by the beginning stages of looking at other sectors of the economy for targeting carbon reductions including residential, commercial and industrial facilities and processes.
The Aspen Institute has identified a broad approach to deep decarbonization:
Figure 1 – Five Elements to Achieve Deep Decarbonization
Source: https://assets.aspeninstitute.org/content/uploads/2019/07/2019-Energy-REPORT.2.pdf
3.2. Efficiency
Efficiency is an on-going approach to reducing energy intensity of our economy, and reducing emissions, as well as helping people reduce their energy costs. Throughout the energy value chain, efficiency is an important first and on-going approach to reducing carbon emissions.
This includes not just end-uses, but also includes improving the efficiency of energy generation and transmission and distribution. Combined heat and power, for example, is one approach to extracting more value from a single energy source. High efficiency power generation is another approach, such as using high efficiency combined cycle combustion turbines. This approach can be an important role for high efficiency fuel cell systems.
3.3. Decarbonizing the Grid
Initial decarbonizing efforts have been focused on reducing carbon intensity of our electric infrastructure. Policies to encourage decarbonization of the power grid included:
At the federal level, investment tax credits were introduced for solar energy investments, and a production tax credit was introduced for encouraging wind energy investments.
States introduced Renewable Portfolio Standards, setting time based targets for renewable electricity supply.
States implemented Solar Renewable Energy Credit programs and Feed In Tariffs to monetize solar production.
California implemented the Small Generation Incentive Program to encourage solar.
Regional efforts including the Regional Greenhouse Gas Initiative.
The ten state Regional Greenhouse Gas Initiative, RGGI, which is a cap and trade program for reducing greenhouse gas emissions in the power sector. There also exists the Western Climate Initiative, which, although it had broader participation when formed in 2007, consists solely of California in the United States and three Canadian provinces. Similar to RGGI, it Is a cap and trade initiative focused on the power sector.
These efforts to decarbonize the electric grid, in the United States and around the world, have resulted in a significant increase in solar system manufacturing and deployments, which have also resulted in significant cost reductions. These cost reductions in wind and solar are now at costs which are being disruptive to the grid. As such, coal power plants are being shut down and decommissioned around the world, including bankruptcies of major coal mining companies. In Germany several utilizes faced bankruptcy due to being financially overexposed to natural gas, which suffered lower operating hours due to solar and wind.
The greatest success in decarbonizing economies around the world has been in shifting power generation from fossil fuels to wind and solar power, as well as shifting to cleaner burning and more efficient natural gas away from oil and coal. As the manufacturing and adoption of solar power systems have soared, and scale efficiencies have increased with wind turbines, the costs of providing grid-scale wind and solar have become competitive with existing power generation systems.
The deployment of solar and wind power systems is continuing to make significant inroads on fossil based power generation. As costs of solar and wind continue to fall, combined with continuing cost reductions in energy storage systems, is resulting in solar plus storage competing with natural gas peak power systems and baseload coal power.
The electric power grids in the United Kingdom and Denmark are already 50% carbon free, with continued advancements in the growth of renewable energy continuing. Renewable generated hydrogen powered fuel cells will have an important and expanding role in grid decarbonization to provide firming services, provide combined heat and power in end-user facilities and district heating and cooling systems, and provide energy storage for longer duration applications.
3.4. Decarbonizing Transportation
Transportation has been and continues to be a major contributor to carbon emissions. Beginning in the 1970s, policies were implemented to increase mileage requirements for fleets. Efforts were also made to find alternative fuels. These initiatives were targeting the reduction of dependence on global oil markets relative to disruptive price spikes and the risks of oil embargoes and other supply disruptions. In specific, fuel economy standards have had a large impact on reducing emissions, considering nearly a doubling in fleet average miles per gallon in the last thirty years. Unfortunately, in aggregate, considering all forms of transportation, carbon emissions have continued to grow.
Early efforts on including alternative fuels and electrification have had little impact on reducing carbon emissions associated with moving us to a cleaner transportation infrastructure. More recently, largely due to efforts by Tesla and Nissan, have resulted in relatively significant but still modest market inroads by zero and low emission vehicles.
The initiatives being pursued by states and the federal government to reduce carbon emissions include:
Corporate Average Fuel Economy – CAFÉ standards are at 3 miles per gallon for 2020, which is up from about 25 mpg in 2005.
Natural Gas Vehicles – There are about 173,000 natural gas vehicles on the road in the United States. They offer lower cost maintenance and operating costs, and are much cleaner than gasoline and diesel vehicles. Although passenger cars have not taken off in this sector, 11,000 urban transit buses and 17,000 refuse trucks run on compressed natural gas.
Propane Vehicles – There are approximately 100,000 propane vehicles on the road in the United States. Fleet applications are considered appropriate for propane, which can be used for school buses, especially in areas with no natural gas access.
Hydrogen Fuel Cell Vehicles – There about 7,000 hydrogen fuel cell vehicles currently operating in the United States, with most of those vehicles in California.
Hybrid Vehicles – Many manufactures offer hybrid vehicles, which include small batteries repowered by onboard standard internal combustion engines.
Plugin Hybrid Electric Vehicles – An innovation emerged which are plugin hybrid electric vehicles which includes the option to operate for relatively short distances on pure battery power.
Battery Electric Vehicles – Battery electric vehicles have grown significantly in the past few years, due mostly to advances in battery technology reducing cost, mileage, and the introduction of Tesla’s luxury Model S and Model X and more importantly the introduction of the “moderately priced” Model S. There are approximately 1.4 million battery electric vehicles on the road in the United States as of the end of 2019, representing 1.9% of sales.
Biodiesel – Biodiesel is a fuel that can be used in any diesel vehicle. It reduces the dependence on standard diesel fuel, using waste vegetable and animal oils and soybean as feedstocks. Approximately one tenth of one percent of the transportation fuel used in the United States is biodiesel, by energy content.
Ethanol – Ethanol is used as a blended fuel, either E10, which means 10% content by volume in standard gasoline fuels, or E85, 51% to 83% blend in standard fuels. E10 is used broadly in the United States. Approximately 4% of transportation fuel by energy content in the United States is ethanol. Ethanol is principally made from corn in the United States.
Figure 2 – Well to Wheels Greenhouse Gas Emissions for Different Fuels
Source: http://www.ijastnet.com/journals/Vol_1_No_6_November_2011/1.pdf
The various incentives and initiatives from the federal government and states to introduce alternative fuels have, for the most part, been unable to have significant impacts on the reduction of pollution or greenhouse gas emissions. The challenge is principally the scale of standard gasoline and diesel fueling infrastructure is a nearly insurmountable bulwark to overcome.
The largest impact to date has occurred only in recent years, with a quick early adoption of electric vehicles. The annual sales of electric vehicles, however, stalled in 2019, experiencing a contraction in annual sales over 2018. Electric vehicles represent about 1.9% of annual vehicles sales in the United States.
The federal government and certain states have introduced financial incentives for electric vehicles. These incentives can account for up to about 20% of a vehicle’s purchase price, depending on the vehicle and the incentive amount.
More recently, a regional initiative being pursued to reduce greenhouse gas emissions associated with transportation is the Transportation and Climate Initiative. The Transportation and Climate Initiative (TCI) is a regional collaboration of 13 Northeast and Mid-Atlantic jurisdictions, working together since 2010 to improve transportation, develop the clean energy economy, and reduce emissions from transportation. The goal of the initiative is to:
“…design a regional low-carbon transportation policy proposal that would cap and reduce carbon emissions from the combustion of transportation fuels through a cap-and-invest program or other pricing mechanism… [and]… to complete the policy development process within one year, after which each jurisdiction will decide whether to adopt and implement the policy.”
One of the key considerations in these policies is to consider the full well-to-wheels carbon emissions. This speaks to the considerations, when using hydrogen, electricity, or natural gas, among other fuels, is to consider the carbon impacts that occur on the way from the well to the pump. Both electric vehicles and hydrogen fuel cell vehicles have zero tailpipe emissions. The impact on carbon emissions, however, is wholly dependent on the source and makeup of the respective fuel sources. This is also the case with natural gas, as the Renewable Fuel Standard requires sourcing renewable natural gas in order to receive the benefit.
All of this activity in transportation demonstrates increasing efforts to reduce oil and diesel fuel dependence, reduce pollution and reduce carbon emissions associated with transportation, including alternative fuels.
3.5. Thermal Energy Decarbonization
An emerging area of consideration for decarbonization is heat energy also referred to as thermal decarbonization which embraces both heat and cooling energy decarbonization. A subset of this pursuit is the decarbonization of natural gas. This area is quite broad in scope and essentially gnarly from a solutions and execution perspective.
The initiatives under way are looking at end-use equipment, such as changing over to heat pumps for heating, and decarbonizing fuel sources. There are also multiple sectors involved, including residential, commercial and industrial sectors. This is generally a very complex problem to solve, especially as the sectors and end-uses involved are non-homogeneous, diverse and diffuse.
The role for fuel cells and hydrogen systems in this area would be for providing grid firming services and backup power, providing energy storage for longer duration storage, and using hydrogen to absorb underused electrons due to solar and wind power generation assets being curtailed. Curtailment is growing at about 60% per year, and will ultimately reach about 5% of power generation.
3.6. Decarbonizing Fuels
Decarbonizing fuels is another approach. It is noble in its form and intent, yet efforts over several decades have yielded little impact in terms of displacing much in the way of fuels, pollution or carbon emissions.
Liquid Fuels
Alternative liquid fuels are dominated today by ethanol and biodiesel. Numerous attempts have been made to develop algae based fuels, as well as cellulosic based fuels. The market for liquid fuels is so tremendously large, and the utility of energy dense liquids is so valuable, that this remains an area where there is significant investment and attempts to develop alternative liquid fuels. As a consequence there are a wide variety of approaches being taken to develop liquid fuels.
Gaseous Fuels
Gaseous fuels are not as aggressively pursued as liquid fuels, although this area is expanding quickly. There has been some success in compressed natural gas as a transportation fuel, which also has spawned a focus on renewable natural gas, principally associated with the Renewable Fuels Standard.
4. Carbon Goals Impacting Natural Gas, an Important Fuel for Fuel Cells
Decarbonizing natural gas is a specter that has been raised in different parts of the world. The approaches being considered run a wide gamut, including fuel switching and electrification, introducing renewable natural gas, new hookup bans, purposefully reducing natural gas usage, introducing hydrogen into natural gas distribution systems, and fully replacing natural gas with hydrogen.
4.1. Aggressive Carbon Targets Expanding
There has been a move afoot where a few towns and cities are not allowing new hookups for natural gas service. Cities and towns which have taken action including several in California, including Berkley, San Jose, Mountain View, Santa Rosa and Brisbane, and on the east coast Brookline, Massachusetts. A more extreme measure being considered by Bellingham, Washington is to achieve 100% renewable energy for the entire town. Their climate task force published their report in the fall of 2019 which included the following: “100% renewable energy for community heating and transportation by 2035.”
Many towns and cities around the world have established aggressive decarbonization goals. An open information company, CDP, has been gathering information on carbon emissions and commitments from cities around the world. Fourteen cities aim to be climate or carbon neutral by 2050, including the Hague, Boston and Sydney.
4.2. Cities Banning New Natural Gas Hookups
There has been a move afoot where a few towns and cities are not allowing new hookups for natural gas service. Cities and towns which have taken action including several in California, including Berkley, San Jose, Mountain View, Santa Rosa and Brisbane, and on the east coast Brookline, Massachusetts.
4.3. Cities and Countries Eliminating Natural Gas
A more extreme measure being considered by Bellingham, Washington is to achieve 100% renewable energy for the entire town. Their climate task force published their report in the fall of 2019 which included the following: “100% renewable energy for community heating and transportation by 2035.”
In addition, the Netherlands has a plan to eliminate natural gas usage all together.
5. Decarbonizing Fuel Cells
Large scale fuel cells used for power generation offer a range of benefits, as enumerated earlier. In many cases, these systems contribute to reducing carbon emissions as well. The increasing call for more aggressive reductions in carbon emissions have created one more purchasing criteria for customers considering distributed and on-site power generation.
The opportunity to integrate a suite of carbon mitigation solutions into the solution set for manufacturers and developers of on-site fuel cells for power generation offers provides the opportunity to overcome prospective customer objections.
This section provides an overview of some of carbon mitigation approaches from an introductory perspective. Each of these approaches are quite different from an execution perspective, with a few being quite novel. Some of the carbon mitigation options include:
Buying carbon credits and offsets to offset carbon emissions;
Invest in carbon capture and sequestration projects or Clean Development Mechanism projects to offset carbon emissions;
Sourcing biogas as the feedstock;
Sourcing renewable natural gas as the feed stock;
Implementing carbon capture and sequestration or reuse as part of the fuel cell solution power generation solution;
Introducing renewable hydrogen into natural gas distribution systems and accessing it elsewhere on the natural gas pipeline system with hydrogen fuel cells or to offset carbon emissions associated with natural gas; and
Converting natural gas pipelines to hydrogen pipelines and using the hydrogen to power hydrogen fuel cells.
Figure 3 – Decarbonization Pathways for Stationary Fuel Cell Power Generation
5.1. Purchasing Carbon Offsets and Credits
One option available for reducing carbon impacts is to offset carbon emissions by buying carbon offsets or renewable energy credits.
The development of hydrogen fuel cell vehicles in California has been an early test case for decarbonizing hydrogen. Toyota and Air Liquide have joined together to build out the hydrogen infrastructure for fueling hydrogen fuel cell vehicles. The interest and intent on the part of Toyota and Air Liquide, regarding sourcing hydrogen fuel, is to be able to provide consumers zero carbon hydrogen fuel. In order to deliver zero carbon hydrogen, Toyota and Air Liquide are purchasing biofuel offsets to offset the carbon emissions associated with Steam Methane Reformation (SMR), which is the current method they are using to source hydrogen in California.
The United States Environmental Protection Agency added gaseous fuels to the Renewable Fuel Standard program, included both natural gas and hydrogen. As a consequence, the US EPA requires an increasing proportion of hydrogen fuel to be renewable.
In 2014, the US EPA approved a renewable fuels pathway for participation in the program. The US EPA in its approval stated that “hydrogen fuel from biogas would be eligible for “cellulosic” renewable fuel credits”. With this specific approved pathway, market participants using biomass reformation to source hydrogen for transportation will be able to participate in the US EPA’s RIN market, generating additional revenues for green hydrogen production.
Large scale stationary fuel cells produce between a low 679 pounds of CO2 per MWH (most efficient fuel cell) to approximately 1,300 pounds per MWh for a combined heat and power fuel cell, not accounting for the benefits for heat generation. For a CHP system that incorporates 100% heat utilization, the overall carbon emissions rate falls to about 500 pounds per MWh.
To offset carbon emissions costs about $14/ton. Accordingly, if the large scale stationary fuel cell produces 700 pounds per MWh, the cost to offset that emission rate is $4.90/MWh, corresponding to about one-half cent per kWh.
There are many offset providers as well as a range of standards that govern the quality of the offsets. Depending on the source and quality of the offsets, wholesale and retail prices range from a low of $0.45 per metric ton to as much as $45 per metric ton.
For reference, Renewable Energy Credits cost about $5/MWh.
5.2. Investing in Carbon Capture and Sequestration Projects and Clean Development Mechanism Projects
An alternative to buying offsets is to make direct counterbalancing investments in projects that reduce carbon emissions. An example would be to invest in a wind power project or a solar power project, with the corresponding carbon reduction that counterbalances your carbon emissions. In this case, the Renewable Energy Credits or environmental attributes generated by the power project would have to be retired or captured by the fuel cell power generation project.
5.3. Sourcing Biogas as the Feedstock
Large scale stationary fuel cell power systems have the ability to fuel switch and use biogas as the feedstock. This is a straight forward way to reduce carbon emissions, depending on the measurement protocol and the source of the biogas.
The challenge for project developers who use biogas to feed their fuel cell systems is finding prospective customer sites where biogas is also available. Primary sources of biogas include landfills, waste water treatment plants, food waste, agricultural waste and industrial waste. The off-gas from landfills is essentially able to be piped to fuel cell power systems, with an important intermediate clean up step.
The other sources of biogas require the use of an anaerobic digester to produce the biogas. For both landfills and anaerobically generated biogas, the methane (CH4) amounts to approximately 60% of the gas by volume, and 40% CO2 by volume.
5.4. Sourcing Renewable Natural Gas as the Feedstock
The broader recognition of the need to decarbonize natural gas has resulted in a greater call for generating renewable natural gas and injecting that renewable natural gas into natural gas pipelines. Pipeline systems have standards for injecting gases into their pipeline systems. The principal source of renewable natural gas is biogas, which necessitates removal of impurities as well as the CO2. Once the renewable natural gas is injected into the pipeline, it can be bout and sold as a commodity across the natural gas pipeline network, including as a source of fuel cell power generation.
Sourcing biogas for use by fuel cells is an approach that is dominated by companies seeking to receive approval from the United States Environmental Protection Agency for an approved pathway in order to participate in the EPS’ Renewable Fuel Standard program. In these cases, cleaned up biogas is injected into natural gas pipelines, then, at another point on the natural gas pipeline, methane is withdrawn from the pipeline and hydrogen is produced using steam methane reformation. The companies that have pending approvals for this approach before the EPA include:
Air Liquide
FuelCell Energy
LytEn, LLC
Earlier, in 2014, Nuvera Fuel Cells qualified their pathway for renewable biogas before the EPA, for use with their PowerTap steam methane reforming system, with the purpose of the hydrogen being transportation fuel. In February, 2019, Nuvera sold all of their PowerTap assets and intellectual property to OneH2, basically existing the hydrogen generation business in order to fully focus on the forklift business.
These systems can also integrate an additional source of hydrogen In order to convert the remaining CO2 into additional methane. This approach is referred to as Power-to-Gas, P2G, where an electrolyzer is used to generate hydrogen, which is then combined with the excess CO2 to generate approximately 70% more methane, using a methanation step. Power to gas systems are gaining in interest, as the potential exists to use these systems to tap into the fast growing curtailed power market, to reduce the cost of hydrogen generation through electrolysis.
The source of carbon for generating renewable natural gas can be landfills, agricultural waste, food waste, wastewater treatment plants, and industrial waste.
Note that all of these pathways are focused on hydrogen for transportation, not power generation. This is due to the incentive structures currently available, one being the US EPA Renewable Fuel Standard and California’s Low Carbon Fuel Standard.
5.5. Carbon Capture and Sequestration
The opportunity exists for capturing the carbon dioxide from the fuel cell system associated with reformation of the methane feed gas. This requires additional equipment, capital and operating costs, to separate, capture and store the carbon dioxide.
CO2 capture and sequestration is integral to a plan in Leeds, England to convert the local gas distribution system to 100% hydrogen. The plan for Leeds includes generating hydrogen from renewable energy using electrolysis, as well as using steam methane reformation of natural gas. The SMR systems include carbon separation and sequestration.
The Leeds City Gate project is a study with the aim of determining the feasibility, from both a technical and economic viewpoint, of converting the existing natural gas network in Leeds, one of the largest UK cities, to 100% hydrogen.
5.6. Introducing Hydrogen into Natural Gas Pipelines
Another approach to decarbonize a fuel cell system that operates on natural gas is to source renewable hydrogen and introduce that hydrogen into the natural gas pipeline system. The renewable hydrogen would displace an equivalent amount of natural gas from a heat rate perspective. The offsetting of a natural gas fuel cell system would require introducing 3.4 cubic feet of hydrogen into the natural gas pipeline for each cubic foot of natural gas used.
Hydrogen is being introduced into natural gas pipelines in Europe and the United States, as part of what are known as power-to-gas systems. These power-to-gas systems utilize electrolysis powered by renewable energy to generate renewable hydrogen. Pipelines authorize varying amounts of hydrogen to be introduced into their natural gas systems, with the highest percentage being 20%, without having to make modifications to the natural gas system.
Keele University in Staffordshire England is currently injecting 20% renewable hydrogen by volume into their natural gas distribution network, conducting a ten month test that began in December, 2019. The Keele University project is being implemented by Cadent Gas, the United Kingdom’s large gas distribution company.
There are many projects in Europe injecting hydrogen directly into natural gas pipelines. Some of the larger projects include:
Ameland, Netherlands, 8.3 MW
Energiepark Mainz, Germany, 6 MW
Wind to Gas, Germany, 2.4 MW
The direct injection of hydrogen into natural gas pipeline systems is going to grow, as renewable energy continues to face increasing levels of curtailment, while driving down the marginal cost of wholesale power on the grid. The increasing amount of curtailed wind and solar power has created an opportunity for cost effectively producing renewable hydrogen using electrolysis.
Solar & Wind Responsible for Record 95% of US Generation Capacity Additions in the 1st Quarter, 2018, With Significant Implications for Industry Participants
Solar & Wind accounted for (wait for it) 95% of all new electricity generation capacity additions in the first quarter of 2018! This is unbelievable. With recent solar prices less than coal & nat gas, this trend will continue, with significant implications for legacy industry participants, including power companies, service and equipment suppliers, and utility companies.
New Capacity Addition Shares by Technology.
Source: Solar Energy Industry Association
The shift of the US electricity generating system away from legacy generation technology to renewable energy sources is continuing apace, with significant implications, including:
(1) New construction of coal, natural gas and nuclear power likely to limited to severe niches driven by unique system needs. Companies involved in new power plant design, engineering, permitting, suppliers, construction and financing will be significantly negatively impacted going forward.
(2) Existing operation of the electric grid, specifically the reduction of annual operating hours on natural gas, coal and nuclear power plants due to integrating zero marginal cost renewables into the economic dispatch paradigm. Legacy power plant owners and operators will see reduced returns on their existing operations and financials. The trend is inexorable and will be very painful for many companies that are unable to accelerate increasing the mix of renewables in their operations and balance sheets.
(3) Grid operators will be challenged with the shifting operating demands and economics associated with high penetrations of renewables on the grid. New technical solutions will need to be identified and incentivised, such as battery energy storage systems, expanded demand management initiatives, and new and expanded rate options for customers.
(4) Utility companies will also have to purposefully integrate these massive changes taking place into their strategic plans, understanding that accelerating cost reductions in solar energy will enable greater penetration of customers that are self-generating. With reductions in load growth and expanding off-network peak power mitigations taking place, transmission and distribution utility companies are losing their primary source of earnings growth, namely expanding their rate base.
NRStor Signs 42 MWh MOU for Storage in Ontario with IHI Energy Storage
#EnergyStorage #Ontario NRStor signs MOU w/IHI Energy Storage for 42 MWh of behind the meter C&I storage for 8 projects in Ontario worth ~$15 million. Storage driven by Global Adjustment Charge, function of coincident peak demand for C&I customers. Large C&I customers may also be able to benefit from time shifting hourly demand leveraging their energy storage asset. Small and mid-sized C&I customers may also be able to generate additional value by time shifting their demand on TOU rates. http://bit.ly/2NwVZQO
Eelpower acquires 20 MW Rock Farm energy storage facility from Anesco
#EnergyStorage #M&A Eelpower acquires 20 MW Rock Farm energy storage facility from Anesco in Shropshire, bringing their energy storage portfolio to ~ 50.4 MW. Systems provide firm frequency response to National Grid & TRIAD & VPP services through Limejump http://bit.ly/2NoxDZr
Rock Farm 20 MW Energy Storage Facility, Shropshire, England
Hyundai Invests in Ionic Materials, a Solid State Battery Start-up
#EnergyStorage 1. battery tech. will differentiate winners from losers in auto industry 2. Energy storage advances in transportation will expand opp's in stationary storage mkts 3. Hyundai invests in Ionic Materials, solid state battery startup
Amhil installs 2.34 MW/4.7 MWh BESS for Demand Response & Demand Charge Reduction
#EnergyStorage #DemandResponse Amhil North America, Mississauga, Ontario, is deploying a 2.34 MW/4.7 MWh energy storage system to expand demand response participation w/EnerNOC & reduce demand charges. Financed by EnerNOC parent Enel X http://bit.ly/2zLstVF
Amhil is a food packaging manufacturer with a manufacturing operation in Mississauga, Ontario. They have been participating in demand response with EnerNOC since 2010. They have also been a customer of Enel X, a subsidiary of Enel, which provides energy services. In 2017, Enel acquired EnerNOC.
Velerity Insight - The accretive value of the Enel acquisition of EnerNOC is apparent in this deal. Amhil was both a customer of EnerNOC and Enel X. In this particular case, the battery energy storage system, with an installed cost of approximately $1.8 million is being engineered, installed, financed and operated by Enel X, and is generating two separate value streams. One value stream is expanded participation in the demand response program operated by EnerNOC. The second value stream is Amhil's reduction of their demand charges by limiting their peak power consumption on a monthly basis. Enel X has entered into a shared savings contract with Amhil.
It is estimated that these two value streams will reduced Amhil's electricity costs by 20%.
Solar/Storage Microgrids for Energy Cost Reduction
#EnergyStorage #FlowBattery #Vanadium @CellCubeEnergy installs 1st of 2 long duration flow battery systems for a solar storage microgrid in Victor, NY. Will be used to reduce peak demand charges, self-consumption of solar energy, & resilience w/microgrid. https://read.bi/2ua8tGQ
O'Connell Electric is installing two CellCube systems at their facility in Victor, New York,, as part of testing and evaluating system integration and performance. O'Connell plans on integrating two CellCube systems as part of a solar/storage microgrid system. The system will generate benefits for O'Connell by (1) reducing their peak demand charges; (2) enabling self-consumption from the energy generated by their solar system; and (3) Providing energy during outage events.
O'Connell is also planning on representing the CellCube line of products in the Northeastern United States, and has an interest in fully understanding the performance and capabilities of the system before offering it to their customers.
Velerity Insight - The system O'Connell is implementing is ground breaking in its configuration, technology choice and application. Most innovative is O'Connell's leveraging multiple value streams to extract the most value from their investment. With an eight hour flow battery, O'Connell will be able to reliably reduce their peak energy use and reduce their demand charges. For commercial customers, demand charges can represent up to 30% of their monthly electric bills, even more when solar is installed.
The second opportunity to derive value from the flow battery is to keep solar generated electricity from going on to the grid. Depending on the net metering contract under which O'Connell is operating, the value of solar electrons that escape onto the grid are typically compensated at less than retail value. Accordingly, keeping those electrons close to home, for self-generation, is more valuable than exporting them to the grid.
The third value being provided by the flow battery is to provide backup power during outages. A fourth value, which has not been identified, is for O'Connell to go on a time of use rate, and then to time shift the use of stored energy from low value time periods to high value time periods. The use of long duration storage to provide multiple value streams for end-use customers is the true innovation of this configuration.
O'Connell Electric's Headquarters in Victor, New York with a solar/storage microgrid.
CellCube's 8 Hour Flow Battery Enters the German Storage Market
#EnergyStorage #FlowBattery @CellCubeEnergy CellCube Energy delivered its first 8 hr duration vanadium energy storage system to the German municipal utility Gelsenwasser for their EnerPrax project in the Saerbeck Bioenergy Park https://read.bi/2L71xAL
Velerity Insight - The town of Saerbeck in Germany, with 7,500 residents, has set a target of being net energy zero by 2030. As part of that goal, they have installed 9 MW of solar on their roofs, built several biogas plants, put in a renewable district heating system, installed a solar farm and built a series of of wind turbines, and installed an electric vehicle charging station. Future plans include installing a district geothermal heating system and advanced storage capabilities.
The town has repurposed a 90 hectare former army depot into an energy park, integrating wind, solar, bioenergy and energy storage. The town has installed a CellCube vanadium flow battery energy storage system to test and evaluate long term storage, targeting eight hour storage. The pressure is on globally to test and evaluate the opportunity to use energy storage to release generation and transmission and distribution pressures associated with high penetrations of variable renewable energy systems.
The second phase of the energy storage industry, running roughly from 2000 to 2015, has been dominated by energy storage systems for providing ancillary services, mostly frequency regulation. The third phase, from 2015 to perhaps 2020, has been dominated by energy storage systems used for helping commercial and industrial customers reduce their peak demand charges. The fourth phase of energy storage is likely to be the installation of energy storage systems coupled with solar energy systems in residential, commercial and utility-scale applications to monetize stranded electrons.
The fifth phase of energy storage is the integration of energy storage to time shift power on the grid, enabling high penetration of variable renewable energy without requiring conventional generation resources. This scenario requires low cost long duration energy storage solutions, which does not exist, and which will be a major focus of investment, research and development over the next ten to fifteen years. Flow batteries represent an important technical advance and are likely to play a very important part in the time shifting market for energy storage systems. The Saerbeck deployment of the CellCube vanadium flow battery system represents an important point along the line of long duration storage development.
Triple Play: Wind/Solar/Storage Optimization at the Kennedy Energy Park in Australia
#EnergyStorage : Australia continues to push the envelope on market opportunities for storage w/the solar/wind/storage Kennedy Energy Park w/ 43.5 MW of wind, 15 MW of solar & 2 MW/4 MWh of Tesla Powerpacks. Referred to as "Near Baseload" power, they are leveraging the synergistic balancing between daytime solar & nighttime wind, and using energy storage to smooth out the three technologies "clip the peak" & dispatch during times of high demand. http://bit.ly/2zd30E7
Velerity Insight: Increasing penetration of variable renewable energy resources is creating concerns on the part of grid operators and other industry observers and participants on issues regarding grid stability and economics. These concerns in some cases are chimera's where utility companies are concerned about incursive impacts on their core business models with serious and potentially severe financial implications. Increasing DER penetration also is having real and devastating impacts on the economic viability of extant generation assets and future plans for generation investment, both fossil and non-fossil.
In Germany, for example, the growth in renewable energy resulted in reduced annual operating hours for natural gas based generation resources, resulting in significant financial losses for both EON and RWE. Over the time period from January, 2008 to now, RWE lost 85.04 billion Euros in value (a 77.63% drop) and EON lost 85.04 billion Euros in value (an 80.17% drop). These losses are devastating to utilities, illustrative of the existential threat facing utility companies around the world associated with increasing penetration and economic competitiveness of renewable energy resources.
Changes in grid economics are forcing utility companies to implement a range of both defensive and offensive tactics. A number of utility companies are increasing their participation and investments in unregulated renewable energy projects, while other utilities are focusing on strengthening their positions as regulated distribution companies.
The Kennedy Energy Park in AUstralia is 50% owned by Toyota and Tokyo Electric Power Company (TEPCO), illustrating how established energy and transportation companies are participating in high growth business opportunity associated with the great energy transformation.
Tesla Powerpacks Staged for Installation at the Kennedy Energy park in north Queensland, Australia.
JLM Energy Introduces Solar Panel Mounted Phazr MicroStorage
#EnergyStorage : JLM Energy introduces Phazr MicroStorage solar panel integrated microstorage product. Capacity from 495 to 990 watt-hours. Installed with Enphase microinverters. Installed cost higher than single battery solution. http://bit.ly/2u0KNDN
Velerity Insight: The emergence of panel-mounted microstorage follows the design principle of integration and simplification, shifting on-site labor to the factory floor. The principal is to simplify installation requirements and reduce in-the-field labor costs. Part of the basis can also harken to driving cost benefits from higher volume manufacturing of smaller systems. It can also simplify the customer purchasing decision, as there is no requirement for installing inverters or battery energy storage systems within the residence or commercial facility.
As currently configured, a microstorage system can be beneficial in smaller scale installations, where the home owner can beneficially shift three to five kWh from low value/high solar production times to later in the day peak times.
The downside is that the cost of microstorage on an installed basis can be close to twice the cost of a comparable central battery energy storage system., roughly $1,700/kWh as compared to $850/kWh. These numbers are for a Powerwall installation, modelled at the lowest installation cost basis.
For smaller systems, the installed costs are comparable, thus providing an opening for the microstorage solution.
Phazr MicroStorage
Arizona Public Service Issues rfp for 106 MW of Storage
#EnergyStorage : Arizona Public Service issues RFP for approximately 106 MW of energy storage (~$100 million) to connect to existing APS solar systems to store peak solar production & feed it to customers during peak demand. Here is the link to the rfp: bit.ly/APS_Storage_RFP
Velerity Insight: The importance of this rfp is the application, time shifting stored energy from peak solar production to peak customer demand. This is one of the more challenging business cases for energy storage from an economics perspective, as historically, the combination of the pricing spread combined with annual hours of operation are typically insufficient to support the capital carrying cost of the the energy storage system.
What makes this case different? APS is regulated and vertically integrated. The cost of the energy storage system will likely be borne by ratepayers, with the justification being system resilience, reaching renewable energy goals, and evaluating the use of storage to reduce peaking plant operation, including reducing environmental impacts. It may also be that in the case of APS, they are facing stranded electrons from peak solar production, with curtailment hours increasing in step with increases in solar penetration. They also may be facing significant peaking requirements and high peaking power costs.
APS Deploys 4 MW of Energy Storage as Part of their Distributed Solar Study