Siemens’ senior vice president of energy and electronics, Professor Dr Armin Schnettler, believes that new ways of integrating renewable energy into the electricity system are required and that green hydrogen will become cost-competitive with grey
Late 2019 saw three industry-leading companies – Shell, Siemens and TenneT – call for accelerated development of the production of green hydrogen using electricity from offshore wind. The companies asked the German Government to consider wind-hydrogen tenders. They believe that implementing a programme of tenders for offshore windfarms combined with power-to-gas would enable the country to accelerate the roll-out of renewable energy and achieve climate policy goals. Hybrid power projects would enable more offshore wind to be built in German waters, without over-burdening the electricity grid on land, and help facilitate the energy transition, they argued.
The companies are proposing a new tendering model for offshore wind coupled with hydrogen production. In this way, they said, additional offshore wind capacity could be developed in a short period of time and power-to-gas technology could be developed to market maturity. The model they are proposing is based on a study by the consulting firm E-Bridge, which was commissioned by the three companies. According to E-Bridge, between 2026 and 2030 offshore windfarms with a capacity of up to 900 MW coupled with hydrogen production could be built in Germany, but in the long term, said Professor Schnettler, the potential of green hydrogen produced from renewable energy is “almost limitless.”
“If we manage to drive down costs for green hydrogen as a feedstock there is practically no limit to how widely it could be used. It’s all about efficiency and environmental benefits on a huge scale”
Speaking exclusively to OWJ in early February 2019, he said green hydrogen – produced from water via electrolysis – is the most promising way to make the energy transition happen. If the cost of green hydrogen can be reduced to a level where it is competitive with grey hydrogen produced by reforming or ‘cracking’ natural gas “we could open up all kinds of industries and the mobility sector to green energy,” he said. “If we manage to drive down costs for green hydrogen as a feedstock there is practically no limit to how widely it could be used. It’s all about efficiency and environmental benefits on a huge scale.
“If we are to achieve climate change targets, we need to do more with renewable energy sources, mainly wind, PV and biomass,” Professor Schnettler said. But without a way to get more energy from wind into the system there will be a growing problem with curtailment or redispatch (when a transmission system operator asks generators to reduce the amount of electricity they dispatch to avoid or eliminate congestion).
“Apart from accelerating the introduction of renewable power and avoiding congestion, we need to think about new ways to manage the integration of renewables,” said Professor Schnettler. “Power-to-gas is a way of doing so and could provide a way to reduce grid congestion and enable sector coupling.”
But if power-to-gas and green hydrogen is to be made to work, advances need to be made in electrolyser technology, in order to reduce costs. “To master the energy transition and be able to do without fossil fuels we need to decouple the generation of renewable electricity from consumption,” said Professor Schnettler. “For me, proton electrolyte membrane hydrogen electrolysis is the key technology doing so”.
As he explained, Siemens is working on a new generation of hydrogen electrolysers, as are other companies, and he believes that with a greater understanding of stability, degradation mechanisms and reliability, green hydrogen produced using them can become competitive with grey. In fact, the company has gone on record that green hydrogen could be cost-competitive with grey in five years.
Siemens has hydrogen electrolysers in the MW class and is building 10-MW class units using its next-generation ‘Silyzer’ technology. “We have a lot of expertise and know-how gained over many years of operation, but we need to continuously optimise our design and the materials used in it in order to develop large-scale hydrogen systems in the 100-MW class and in the 1-GW class.” Professor Schnettler said. He believes that a 100-MW hydrogen electrolyser is possible by 2025 and a 1-GW unit by 2030.
Asked about the extra costs associated with wind-hydrogen tenders, Professor Schnettler said it is more important to understand what we need to enable more renewable energy to introduced into the system. “It’s not about extra costs – it’s about new, smarter ways to manage system integration,” he told OWJ.
“The combination of more offshore wind, storage and power-to-gas technology provides a lot of potential synergies. These synergies are the basis of what we proposed with Shell and TenneT. In the long term we envisage huge offshore windfarms and artificial islands with electrolyser platforms. It’s about technology and total cost of ownership. Everything is too expensive initially,” he said, as offshore wind was once deemed to be, but economies of scale and cost reduction will come with greater volumes.”
Questioned about the economic model for wind-hydrogen tenders and how they compare with pure wind tenders, Professor Schnettler said “it’s not about the economic model or how much more expensive wind-hydrogen tenders might be, it’s about how to integrate more renewables into the existing grid and how to increase the reliability of supply from renewable energy while enabling sector coupling by producing hydrogen and feeding it into the gas grid or hydrogen pipelines.”
Professor Schnettler told OWJ, “There is a growing market for green hydrogen even with a price tag that is above that of grey hydrogen. However, if an off-taker does not value green hydrogen, then the price for grey hydrogen is the benchmark.”
Professor Schnettler said that there are few regulatory issues that would get in the way of the more widespread production and use of green hydrogen, but said that, to bridge the gap between the current electrolyser capacity and the large-industrial scale industrial electrolysers that would be required, pilot projects are needed to share technical and commercial risks.
With this need in mind, Germany’s Ministry for Economic Affairs has initiated the so-called ‘Reallabor-Initiative’ (real world ‘laboratories’ for industrial sized pilot projects). “We are in discussions with the government about how to implement this kind of project,” Professor Schnettler concluded, noting that for Germany, integrating electrolysers into the asset base of grid operators would have several potential advantages. “This is under discussion as well,” he concluded, as are discussions about wind-hydrogen hybrid tenders.
The offshore windfarm of the future could produce hydrogen rather than electricity (photo: Vattenfall/Bel Air Aviation Denmark)
Not cost-competitive – yet
E-Bridge principal consultant Vigen Nikogosian told OWJ that its analysis of wind-hydrogen tenders indicates that it costs 50% more to produce green hydrogen via electrolysis than it does to produce hydrogen by cracking natural gas. But he expects that to change.
“At the moment, there isn’t any incentive to produce hydrogen from offshore windfarms if they have a grid connection,” he told OWJ, “but where you have wind but no grid connection a different model might one day play an important role. Hence the interest in the new kind of tender.”
Dr Nikogosian said the cost of grey hydrogen depends to a large extent on the price of natural gas and might be influenced by a carbon price floor of the type that has been proposed in the EU, given that CO2 is a by-product of cracking methane to produce hydrogen. “Roll-out of electrolysis on a larger scale would provide the kind of economies of scale that could really make a difference,” he said.