Hitachi Zosen Inova Etogas Gmb H Xuping Li

Hitachi Zosen Inova Etogas Gmb. H Xuping Li, Ph. D. Senior Analyst, Energy Systems and Technologies California Public Utilities Commission (CPUC) workshop May 24, 2019, San Francisco, CA What does it take for power-to-gas to happen? Confidential

Hitachi Zosen Corporation’s 2030 Vision to enable a Carbon Free Economy Hitachi Zosen Corporation (Hitz) is committed to a Carbon Free Economy Thermal and biological Ef. W processes AD, gas upgrading, and other sustainable waste management technologies Renewable H 2 & CH 4: Power-to. Gas, SOFC Offshore wind power, etc. 2013: Hitachi Zosen Inova (HZI) Etogas built the largest Power-to -Gas plant for Audi in Germany (6. 3 MW) 2017: HZI Etogas won the first Power-to-Gas project in Japan

Power-to-Gas Benefits Renewable Electricity H 2 Electrolysis H 2 Industry Transport Methanation Gas Grid & Gas Storage Power plants CH 4 Heat Enables sector coupling and decarbonization of gas grid Seasonal and long-term energy storage using existing or new gas grid Carbon recycling for gas power or other plants with renewable CH 4 Zero/near zero emission transport fuel and industrial fuel or feedstock Green H 2 & CH 4 enable deep GHG emission reduction

Asia Pacific Other Countries or Regions are ahead on Hydrogen Injection Limits New Zealand 0. 2% Japan Tokyo 5. 0% Japan West 4. 0% Australia 10. 0% Switzerland 4. 0% Sweden 0. 5% Europe Spain 5. 0% Netherlands 12. 0% Italy 0. 5% Germany 10. 0% France Belgium 6. 0% 0. 2% Americas Austria US 4. 0% 0. 2% Canada 0. 0% 4. 0% 2. 0% 4. 0% 6. 0% 8. 0% 10. 0% 12. 0% For SB 100 power-to-gas will be needed for 100% zero carbon electricity 14. 0%

States in the U. S. that are ahead of California Hawaii already has 10%-15% H 2 in its gas grid Demonstrated safe operation with this level of H 2 blending Washington state: SB 5588 Gives utilities authority to produce and distribute H 2 Gives utilities authority to provide RNG and H 2 for end use as a transport fuel Oregon: SB 98 Requires Public Utility Commission to adopt by rule renewable natural gas program for utilities Both power-to-H 2 and power-to-methane are included

Why is power-to-gas not happening in CA and U. S. ? Lack of access to the gas grid Lack of appropriate pipeline injection standards Gap between renewable gas cost & fossil gas price Lack of incentive for closing the gap for renewable gas Lack of a gas de-carbonization strategy States such as CA and Hawaii has zero carbon electricity goals No official goals for gas grid yet Lack of access to surplus renewable power Lack of access to electricity price at near production rate Lack of long term and low risk incentives on marketing renewable gas H 2 and methane from renewable electricity is not yet recognized under the renewable fuel standard (RFS) program The uncertainty of programs such as RFS and LCFS makes it hard to finance projects H 2 and methane from renewable electricity is not yet recognized for energy storage procurement

Policies and regulations that could help Renewable Gas Standards: Develop and implement a renewable gas standard for gas grid (RGS) Create feed-in tariffs for renewable gas (H 2 & CH 4), similar to renewable electricity Create Hydrogen injection standards that represent the best practice Transportation and industry sectors: Require zero/near zero emissions for hard to electrify sectors including heavy transportation and certain industrial sectors (e. g. : cement, steel, plastic, fertilizer, etc. ) Electricity rates: Provide access to surplus renewable power (full or partial exemption from grid fees, taxes & levies) for Pt. G Provide access to energy storage and grid service market for Pt. G Modify or streamline existing policies and regulations Federal RFS LCFS Other incentives (e. g. , Cap & Trade offset, Q 45 tax credit, toxic emission reduction credits)

Power-to-gas market conditions are promising despite immediate challenges Renewable electricity price keeps coming down and available in greater areas New initiatives in mandated renewable gas procurement New public and private investment in zero and near zero emission cars, vans, buses, trucks, ships, etc. Increasing public awareness of and acceptance to Pt. G Environmental credits such as LCFS credits and RINs are increasingly accessible Well designed policies and regulations can accelerate Pt. G deployment 2017_11_1 HZI ETOGAS Pt. G Introduction BEWO 8

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