Place image in this area TK RENEWABLES WPT

Place image in this area. TK RENEWABLES WPT 2 EIBHLIN MARSH & KIERAN MC LAUGHLIN

TK RENEWABLES GENCOMM MEETING 20 TH/21 ST MARCH 2018

TK RENEWABLE ROLE DEVELOPMENT OF A HYDROGEN BASED ENERGY MODEL (COMMERCIAL AND ECONOMIC ANALYSIS)

The main objective of WPT 2 is as follows; To develop a Financial Decision Making Model (FDMM) which will be used to project, evaluate and optimize the financial performance of a communityscale hydrogen-based energy matrix

The model will comprise the following elements: • A full analysis of the Hydrogen Market • CAPEX and OPEX figures identified for the investment projects • A full cost analysis for hydrogen production with an estimated cost per kg for hydrogen • An analysis of projected revenue streams • A presentation of the financial indicators

The data for the models will be derived from the outputs from the Investment Packages. WPI 1 Hydrogen to Heat and Power Pure Energy Biogas CHP plant with hydrogen storage and methanation WPI 2 Hydrogen to Transportation Fuels IZES Solar Powered Hydrogen Refuelling Station WPI 3 Hydrogen to Power VIRIDIAN Wind Farm with hydrogen storage and products

PROGRESS TO DATE DELIVERABLE 1. 1 Market Analysis of Renewable Hydrogen This market analysis is now complete

HYDROGEN ECONOMY REPORT STRUCTURE 1. The Properties of Hydrogen 2. The Production of Hydrogen and Associated Technologies 3. Hydrogen Storage and Transportation 4. The Technical and Affordability Issues for a Hydrogen Economy 5. The Environmental Issues 6. The Cost Factors associated with the Hydrogen Economy 7. Renewable Hydrogen Opportunities and Appropriate Production Strategies 8. The Future for Hydrogen on a Global Basis 9. Relevance for Gen. Comm – Wind to H 2, Solar to H 2, Biomass to H 2 10. The Commercial and Economic Modelling of the Hydrogen Technology 11. Final Conclusions

1. The Properties of Hydrogen • Hydrogen costs need to be as low as possible • An additional issue is that a completely new distribution network is required for hydrogen. • The purpose of Gen. Comm is to demonstrate that the hydrogen economy can be used to provide cheap alternative energy options for regions which are interested in exploring and utilising these alternatives So for a hydrogen economy to be viable the energy consumed in the production, packaging, transport, storage and transfer of elemental hydrogen needs to be compared to the energy content of the delivered hydrogen.

2. The Production of Hydrogen and Associated Technologies The Production Processes of Hydrogen • Electrolysis • Reforming • From Fossil Fuels • From Nuclear Energy • From Renewable Energy Sources An analysis of Production Costs from the various methods

At today’s energy prices, it is considerably more expensive to produce hydrogen by water electrolysis than by reforming of fossil fuels. According to many sources, it costs around € 5. 60 for every GJ of hydrogen energy produced from natural gas, € 10. 30 per GJ from coal, and € 20. 10 per GJ to produce hydrogen by electrolysis of water. Before taxes, gasoline costs about € 3. 00 per GJ.

It is very difficult to get a fully accurate feel for the cost of hydrogen production from wind as there are so many variables. It has been found for example that connecting wind/hydrogen systems with the electrical grid improves the economics of production. In the USA, the NRC (National Research Council) estimates and projects hydrogen production costs from solar PV including estimates of € 28. 19 per kg (€ 198. 81/GJ) for current technology and stand-alone production, € 6. 18 per kg (€ 43. 58/GJ) for future technology and stand-alone production Both agricultural residues and manure from livestock as well as specific energy crops can be used to produce hydrogen. These are very viable economically with costs of € 2. 65 per kg (€ 18. 80 per GJ) for production from agricultural residue with € 2. 30 per kg (€ 16. 32 per GJ) for production from manure

3. Hydrogen Storage and Transportation Hydrogen Packaging • The Compression Process • Hydrogen Liquefaction • The use of Hydrides Delivering the Hydrogen • Delivery by Road • Delivery through a pipeline • Generation on-site An analysis of the costs for delivering/transferring Hydrogen In general, it was found that for the centralised options researched, the costs of hydrogen are lowest for liquid hydrogen distribution by tanker truck, followed by tube trailer delivery, followed by delivery by pipeline.

For small scale, distributed systemss (about 500 kg of hydrogen produced per day), estimated delivered costs of hydrogen are: € 4. 40 per kg (€ 30. 99/GJ) for natural gas SMR € 12. 12 per kg (€ 85. 35/GJ) for water electrolysis (using grid power at € 0. 07/k. Wh). SOME INTERESTING INVESTMENT FIGURES Distribution - New 230 bar tube trailer Capex £ 300 k New 500 bar tube trailer Capex £ 1 million 3 X 500 bar tube trailers with 1. 1 ton capacity each could support 50 buses Vehicles -1 st Gen OEM FCEV £ 120 k -2 nd Gen OEM FCEV £ 50 k Suggested pump sale price £ 9 - £ 12/kg

. Infrastructure Costs Up front costs of local HRS between £ 0. 5 to £ 1 million HRS Capex £ 0. 8 million 80 kg/day £ 1. 4 million 500 kg/day £ 2. 2 million 1000 kg/day

4. The Technical and Affordability Issues for the promotion of a Hydrogen Economy Formidable technical and cost challenges will need to be overcome for hydrogen to be able to compete with, and eventually replace, existing energy technologies. The biggest advances are needed in transportation and storage of the fuel, as well as in fuel cells in vehicles. • • • Issues with Production, Distribution and Storage Carbon Capture and Storage Fuel Cells However hydrogen is produced, its widespread use will require large-scale infrastructure to transport, distribute, store and dispense it as a fuel for vehicles or for stationary uses.

There is plenty of evidence that, with proper handling and controls, hydrogen can be as safe as the fuels in use today. Indeed, hydrogen has a long history of safe use in industry. But, for it to become widely accepted in other applications, it will become increasingly important to develop and implement internationally agreed rules, regulations, codes and standards covering the construction, maintenance and operation of hydrogen facilities and equipment safely.

5. The Environmental Issues • • The Implications for the Environment of an increase in Hydrogen use. The Implications for the Environment of Production Methods for Hydrogen Replacing fossil fuels with hydrogen in providing energy services could bring major environmental benefits, on condition that hydrogen is used in non-polluting fuel cells and that the carbon dioxide and noxious gases emitted in the hydrogen-production process are reduced or eliminated.

The basic appeal of hydrogen – and the main driving force behind current research and development – is its environmental advantages over fossil fuels. But hydrogen is only as clean as the technologies used to produce and use it.

If nuclear or renewable energy sources, such as wind, solar and biomass are used to generate the hydrogen then it would be carbon free which is an advantage. However substantial reductions in the costs of renewables-based electricity and nuclear power are needed to allow them to compete with conventional sources of energy on a large scale

6. The Cost Factors associated with the Hydrogen Economy • • • Costs associated with developing a Hydrogen Infrastructure within the regions concerned Government support required Analysis and Projections of Hydrogen use

The main issue now and it is an important one that will be stressed throughout the lifetime of the Gen. Comm project and that is because of the increased growth in installed capacity of renewable energy technologies and the decreased costs then data which is only one or two years old can result in significant overestimation of the costs of electricity from renewable technologies.

This is a key point for the Gencomm project as the key outputs are the development of tools that will look at all of the costs associated with Wind to Hydrogen, Solar to Hydrogen and Biomass to Hydrogen. The point has been made above that with the advances in technology data from development projects regarding CAPEX and OPEX costs can be obsolete within 1 or 2 years so it is difficult to plan accurately.

7. Renewable Hydrogen Opportunities and Appropriate Production Strategies • Regional strategies for hydrogen production need to take into account the regional renewable hydrogen potential along with production potential from other sources. • Success in lowering the costs of electrolyser-based hydrogen could therefore be important to complementing imports of hydrogen from other sources

8. The Future for Hydrogen on a Global Basis • The ultimate success of a hydrogen economy depends on how the market reacts: For example does emerging hydrogen technology provide more value than today’s fossil fuels? • Although the market will ultimately drive the hydrogen economy, government plays a key role in the move from fossil fuel to hydrogen technology.

9. Relevance for Gen. Comm – Wind to H 2, Solar to H 2, Biomass to H 2 • • Each of the 3 main development work packages will be generating datasets which will feed into both the Technical Models and the Commercial Models and ultimately the Decision Support Tool. The research which constitutes the Hydrogen Paper will be ongoing as further opportunities are identified in the regions.

10 The Commercial and Economic Modelling of the Hydrogen Technology In this section there will be recommendations on what format the Modelling aspect of this work package will be. Again it will be driven by the outputs from the 3 Development Work Packages and the associated research. As a starting point for the modelling process we will be reviewing a model which has been produced in the USA which comprises four different but relevant models which will be of use to us. From these investigations we can begin the process of developing our own commercial modelling tools.

These four H 2 A Excel-based models for hydrogen technology analysis are as follows. • H 2 A Distributed Forecourt Production and Refuelling Model (50 kg/day to 6, 000 kg/day production) • H 2 A Central Production Model (≥ 50, 000 kg/day production) • H 2 A Delivery Components Model • H 2 A Delivery Scenario Analysis Model (HDSAM)

11. Final Conclusions • Efficient and effective system design is key to profitability and those which demonstrate flexibility with a number of market application will be more profitable and will have a shorter payback period. • The use of electrolysers is key to the process and there is clear evidence that there is an increasing interest in further research in electrolyser technology. • The point has been made that with the advances in technology data from development projects regarding CAPEX and OPEX costs can be obsolete within 1 or 2 years so it is difficult to plan accurately • A critical market mass to be achieved for hydrogen to be considered as a viable energy option. • Curtailment is one of the most serious of the issues that has led to the development of the Gencomm project

QUESTIONS