HYDROGEN-BASED ENERGY STORAGE SOLUTIONS Electrolysis & Flexibility

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1 LEADING THE ENERGY TRANSITION HYDROGEN-BASED ENERGY STORAGE SOLUTIONS Electrolysis & Flexibility SBC Energy Institute IEA Workshop on Hydrogen Technology Roll-Out in Europe 10th July,

2 More than a storage carrier, hydrogen is a bridge between energy systems SIMPLIFIED VALUE CHAIN OF HYDROGEN-BASED ENERGY CONVERSION POWER GRID POWER-TO-POWER SURPLUS Water Oxygen Refueling Stations POWER-TO-MOBILITY Wind Turbine Solar PV Electrolysis Optional Hydrogen Storage Upgraded & synthetic fuels Electric Vehicle Fuel Cell Vehicle Fuel cells Combustion turbines Refineries Blended gas Internal Combustion Engine Vehicle Natural Gas Vehicle POWER-TO-GAS Carbon Capture CO 2 Methanation Injection of hydrogen in the natural gas grid Chemical plants POWER-TO-CHEMICAL Petroleum Products Ammonia GAS GRID Note: Simplified value chain. End uses are non-exhaustive. Note that the power and gas grids are the main supplier to the residential and commercial end-uses (lighting, heating and cooling, cooking ) SBC Energy Institute analysis 2

3 Electricity price spreads are too small to enable significant hydrogen production cost reductions through price arbitrage LEVELIZED COSTS OF HYDROGEN FOR A GRID-CONNECTED ELECTROLYSIS PLANT $/MWh ch, Reference plant with price arbitrage strategy CAPEX - 20% with price arbitrage strategy Efficiency + 10% with price arbitrage stragegy Reference plant buying electricity at annual spot mean Assumed electricity price distribution ($/MWh e ) Annual spot mean: $77/MWh e % -40 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Hours of the year (in % of the year) Hourly prices ranked in chronologic order Hourly prices ranked in ascending order 140 Cumulated average of the hourly prices ranked in ascending order 0 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Production excess monetization Plant load factor / utilization rate (operational hours in % the year) Baseload Note: Illustrative example based on 8.5MW ch electrolysis (5 alkaline stacks of 1.7MW ch each), with total installed system CAPEX: $765/MWh ch, Efficiency: 79% HHV, Project lifetime: 30 years and real discount rate after tax:10%. SBC Simulation based on US DoE H2A Model 3

4 Injection of hydrogen into gas networks provides a large end-market in the short to mid term for electrolytic hydrogen HYDROGEN INJECTION INTO THE GAS NETWORK: GERMAN POTENTIAL AT 5VOL.% BLENDING 0.04 TWh 7.6 GW e Current Electric Storage Capacity* Electric grid: 550TWh e /year (65GW e on average) Electrolysers 1.1 to 2.2 GW e H 2 (1.7 TWh ch ) Existing gas caverns 212 TWh ch total incl.109 TWh ch in salt caverns Gas plants 20 GW e (installed) 1.5 GW e (flexible reserve) H 2 Injection GW ch average 2.25 GW ch in winter Gas grid capacity 1,000TWh ch /year (114 GW ch on average) Note: Order of magnitude for 5% blending in volume (i.e. ~1.5% in energy) where it does not affect the grid nor the end-use applications. It takes into account the dynamic of the seasonality of the grid (lowest demand in summer of 58 GW ch ) for the injection rate (58 GW * 1.5% = GW). Electrolyzer could act as negative control reserve (9GW in Germany currently, including 7.6 GW of Pumped Hydro) Current Electric Storage capacity corresponds mainly to Pumped Hydro Storage capacity, on top of the Hunthorf Compressed Air Energy Storage Facility. SBC Energy Institute analysis 4

5 Synthesis of methane is promising but constrained by affordable CO 2 sources SIMPLIFIED MASS FLOW CHART OF HYROGEN-ENRICHED BIOMETHANE PLANT kg/h Electricity (1MW e ) Electrolysis Waste Heat (230kW th ) Oxygen 156 kg/h O kg/h H ha. of land 140 dry kg/h of biomass Biogas unit kg/h of CO kg/h of CH 4 Methanation 87.2 kg/h of H 2 O 77.7 kg/h of CH 4 ~ x2 60 kg/h water 54.5 dry kg/h of biomass residues 4 Recycled heat for the biogas reaction Biogas generates an excess of CO 2 mixed with Enriching biogas with methane doubles the output while methane increasing the efficiency and mutualizing the injection costs Notes: 1: Biomass feedstock is a maize silage of 5kWhch/kg of dry matter, cultivated with a land yield of 0.63MWch per km². 2: The anaerobic digestion of maize silage requires heat and has an total efficiency of 68.7%; 3: Thermochemical methanation at 300 C and 77.7% hydrogen-to-methane efficiency SBC Energy Institute Analysis 5

6 Fuel synthesis from water, electricity and carbon, extends the market potential for electrolysis POWER-TO-SYNFUELS 1 PATHWAYS FOR H-C-O SYNFUELS PRODUCTION CO 2 HYDROGENATION OXYGENATED SYNFUELS CO 2 ELECTROLYSIS H 2 O electrolysis H 2 CO 2 + H 2 Formic acid synthesis Methanol synthesis Dehydration Formic acid (HCOOH) DME (CH 3 OCH 3 ) Methanol CH 3 OH Electricity Water (H 2 O) Reverse Water Gas Shift CO 2 Methanation Methanol-togasoline (MtG) Methane CH 4 CO 2 + H 2 O co-electrolysis l CO O 2 Biomass Gasification CO Coal H 2 CO + H 2 (syngas) CO Methanation Fischer- Tropsch (FT) Alcohols synthesis C n H 2(n+1) liquid hydrocarbon HYDROCARBON SYNFUELS CO HYDROGENATION SBC Energy Institute Analysis 6

7 Hydrogen is an essential energy carrier to facilitate the energy transition Hydrogen is an enabler for high intermittent renewable penetration: Balance deficit (directly or coupled with gas) Ensure security of supply with massive storage Monetize intermittent surplus Hydrogen facilitates the decreased carbon intensity of fossil-fuel based energy systems: Hydrogenate fossil fuels and maximize land use for biofuel / biogas production Recycle carbon captured from CCS Leverage current infrastructure Hydrogen business cases are not yet profitable in the absence of green supports except for a few early markets: A few early markets can provide short-term business cases (e.g. back-up for telcom towers) Costs reduction on electrolysis side are a pre-requisite (learning curve, manufacturing ) SBC Energy Institute analysis 7

8 SBC Energy Institute is a non-profit organisation that promotes understanding of key global energy issues INSTITUTE IDENTITY Focused on crossover technologies related to the energy space Registered as a non-profit organization: all studies publicly available Governed by its own Board Members, including external people: Claude Mandil, Former Executive Director of the International Energy Agency HYDROGEN STUDY One year effort on electrolytic hydrogen Release expected Q For more information: Benoit Decourt BDecourt@slb.com +33 (0) Dr. Adnan Shihab-Eldin, Former OPEC Acting Secretary General. SBC Energy Institute website & reports: 8

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10 Wind and Solar PV are challenging to integrate on the power grid WIND & SOLAR GENERATION VS. DEMAND IN NORTHERN GERMANY MW, December 2012 on the 50Hertz Operated Grid 14,000 12,000 VARIABILITY & NON- CONTROLABILITY GENERATES SURPLUS & DEFICIT 10,000 12,000 10,000 8,000 8,000 6,000 6,000 4,000 4,000 2, h 6h 12h 18h 24h 2,000 Focus on 27 th December Solar PV Wind Demand SBC Energy Institute Analysis based on 50Hertz data archive (Wind and Solar Actual In Feed 2012, Control Load 2012) 10

11 Electricity price spreads are too small and not frequent enough to enable significant hydrogen production cost reductions through price arbitrage LEVELIZED COSTS OF HYDROGEN FOR A GRID-CONNECTED ELECTROLYSIS PLANT /MWh ch, based on EPEX Spot price 2012 for Germany Note: % 10% 20% Price arbitrage strategy Fixed elec. cost at annual mean 30% 40% 50% 60% 70% % 90% 100% German electricity price distribution ( /MWh e ) 0% 20% 40% 60% 80% 100% Hours of the year ranked by increasing order of prices (in % of the year) utilization rate (in % of the year) Spot price arbitrage leads to an optimal plant utilization rate of 80% and LCOH only reduced by 4% compared with baseload. EPEX SPOT intraday trading index price for each hour of Intraday SPOT and day-ahead SPOT auctions have been found to give very similar price duration curves. Electrolysis assumptions is based on the US for a 10MW alkaline plant with total installed system CAPEX: $848/MWh ch. Efficiency: 78%. Project lifetime: 30 years. Real discount rate after tax:10%. SBC Simulation based on EPEX Market Data, US DoE H2A Model 11

12 Due to a poor round-trip efficiency, power-to-power is likely to be limited to niche applications LOSSES ALONG THE RE-ELECTRIFICATION VALUE CHAIN OF A H 2 -BASED STORAGE In MWh, based on a 100MWh storage system, with no hydrogen transport 100 MWh 84% eff. Underground storage 95% eff. Electricity input Process energy loss (mid-term achievable efficiencies) Additional losses of current technologies (low range) 77% eff. Pressurized tanks 85% eff. Turbine 60% eff. 75% Pumped hydro storage (today) 55% Compressed air energy storage (today) 48% Hydrogen, forecast Fuel Cell 30% eff. 20% Hydrogen, today, low range Round-trip efficiency Intermittent electricity Electrolyzer Hydrogen storage Re-electrification electrification Notes: Mid-term (<10 years) realistic target for efficiencies. SBC Energy Institute Analysis; NREL (2009), Lifecycle cost analysis of hydrogen versus other storage options 12