Study finds potential for hydrogen industry in B.C.

The B.C. government appears to be taking a serious look at developing a renewable hydrogen industry in B.C.

A technical and economic analysis released late Friday afternoon, July 5, reveals that the B.C. government contributed $230,000 to a year-long study in partnership with two Japanese companies – Chiyoda Corporation and Mitsui And Co. – the UK’s ITM Power.

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B.C. clean energy consulting firm G&S Budd Consulting Ltd. was involved in the technical and economic analysis.

The report cautiously concludes that the potential for a hydrogen production industry in B.C. is “positive,” although it also suggests electricity costs would need to be lower than current industrial BC Hydro rates.

The demand for hydrogen is expected to grow significantly in the coming decades, especially in places like Japan and California – the two countries used for a market analysis.

A recent International Energy Agency report suggests that, despite the "false starts" of hydrogen fuel cell technology, there is significant potential for hydrogen as a low emission energy source.

"The time is right to tap into hydrogen’s potential to play a key role in a clean, secure and affordable energy future," the IEA report states.

Hydrogen can be used as a low or zero emission energy source in hydrogen fuel cells. If made from some clean electricity source, hydrogen can also qualify a renewable fuel under low carbon fuel standards to lower the carbon content of natural gas.

While anyone with some water and a whole lot of electricity can make hydrogen using electrolysis, the report notes that B.C. has some competitive advantages over many other countries:

• an abundance of fresh water;

• a “surplus of clean, renewable electricity” mostly from hydro power;

• ports and available industrial sites; and

• proximity to two key markets – Japan and California.

The question is whether “renewable” hydrogen – made from water and electricity – can compete with the much lower cost of producing hydrogen from natural gas.

Currently, it can’t, but as the cost of renewables come down – particularly wind energy – the IEA predicts that by 2030, the cost of producing hydrogen from electrolysis could fall by 30%.

Juergen Puetter, who has plans for producing hydrogen as a first stage in the multi-phase proposed Canadian Methanol and Blue Fuel Energy plants proposed for Chetwynd, said he thinks the recent study funded by the B.C. government was a waste of taxpayer dollars. He said industrial hydro power rates in B.C. are simply still too high to make hydrogen production economically viable.

The only way he sees it becoming economically viable is to build a dedicated wind farm – since the cost of wind power is now so much cheaper than hydro power.

“I think it’s a total waste of taxpayer money,” said Puetter, founder of the recently rebranded Renewable Hydrogen Canada project.

“Unless you have a low-cost clean source of electric energy, at a cheaper rate than BC Hydro, the economics don’t work here," Puetter said.

The report acknowledges that, to be economic, the cost of electricity would have to come down. It would also need government subsidies.

Based on one of the more promising markets – California – the report notes that “in order to achieve California’s target price for hydrogen, the cost of BC electricity would need to be reduced as well as the plants’ capex through support mechanisms like government incentives, grants, and more detailed FEED analysis to reduce the capital equipment costs.”

Making hydrogen from water and electricity is a fairly simple process. Any high school lab can do it. Add a catalyst to water – baking soda will do – zap it with electricity, and you get a pure stream of hydrogen and a pure stream of oxygen.

The problem is that the energy that goes into the process makes it cost prohibitive, compared with extracting hydrogen from natural gas or other chemicals.

Also, there is a transportation issue. Hydrogen is highly explosive, and requires specialized container vessels to transport.

Chiyoda Corp. has developed a conversion process that obviates the need for specialized carriers, however, according to the recent analysis. It uses a chemical called toluene to react with hydrogen to form methylcyclohexane (MCH).

Both chemicals can be stored at regular temperatures and pressures, and the chemical can be turned back into hydrogen when they reach their destinations. It could therefore be transported by conventional chemical tankers.

Blair King, a chemist who blogs about energy issues in A Chemist in Langley, thinks the Chiyoda solution is an interesting one, although he agrees that the key to making the economics work is lower electricity costs.

“The catalyst they are using saves a lot of energy in the process and essentially turns the toluene into a storage fluid that is recycled and re-used (with minor losses at each end),” he writes in an email to Business in Vancouver.

Matthew Klippenstein, a chemical engineer and clean energy consultant, thinks there are opportunities for B.C. to become a hydrogen producer. But until the costs of electricity come down, he thinks the best option will be making it from B.C.’s abundant natural gas, which is why he thinks the provincial government should be thinking about co-developing a hydrogen industry in conjunction with B.C.’s nascent LNG industry.

He said another B.C. government study on hydrogen is forthcoming in the coming weeks that will examine some of those questions.

"One of the interesting things from that study is that it's actually cheaper to take B.C.'s obscenely cheap natural gas, strip the CO2 off, dump it (the CO2) underground and then send that (hydrogen) to port than to actually electrolyze water," Klippenstein said.

He agrees with Puetter, however, that hydrogen produced from a dedicated wind farm would improve the economics of renewable hydrogen from water. He said the current industrial rate for BC Hydro power is $0.064 per kilowatt hour, whereas wind power now comes in around $0.02 per kilowatt hour.

"Juergen is correct that, if you can get a high capacity factor wind farm, and maybe supplement that with a little bit of power from the grid as necessary, then you might be able to hit those targets," Klippenstein said.

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