Piero Lunghi Conference European Fuel Cell EFC 13 December 13, 2013 Fontana di Trevi Conference Center Roma, Italy Consideration about the LCOE of Hydrogen Fuel Cell Powertrain in the Italian Context Mario Valentino Romeri Consultant, Italy
The Levelized Costs of Generating Electricity (LCOE) Investment costs are probably the most important element in any investment decision. Overnight cost is a common unit of measure of power investments. Overnight cost is the cost of a construction project if no interest was incurred during construction, as if the project was completed overnight. The unit of measure typically used is USD/kW. The notion of Levelized Costs of Generating Electricity (LCOE) is a handy tool for comparing the unit costs of different power generation technologies. The LCOE approach is a financial model used for the analysis of generation costs. Focus of estimated average LCOE is the entire operating life of the power plants for a given technology. In LCOE financial model, different cost components are taken into account: capital costs, fuel costs, operations and maintenance costs (O&M). These costs are an average over the life of a project and for a specific technology, based on a specific and particular set of assumptions. The costs cash-flow is discounted to the present (date of commissioning) using assumed specific discount rates. The resultant LCOE values, one for each generation option, are the main driver for choice technology. The unit of measure typically used is USD/MWh. 2
EIA LCOE Data In the mid 70's the Energy Information Administration (EIA) began publishing the Annual Energy Outlook (AEO) in which, annually, presents a forecast and analysis of U.S. energy supply, demand, and prices. Since 1996 AEO considers and realizes forecast about Overnight costs and LCOE. Fuel Cells technologies were mentioned and included in EIA documents since 1994, but EIA never provided data about the Fuel Cells LCOE. Since 2010 the LCOE data for Central Production Power Plant are published in a separated document Levelized Cost of New Generation Resources from the Annual Energy Outlook and revised annually. Table 1 summarized the U.S. LCOE EIA data for the period 2010-2013. 3
EIA LCOE Data (2010-2013) 4
EIA LCOE Data (2010-2013) 5
Hydrogen and Fuel Cell (H2&FC) I chose to consider in my analysis the Hydrogen Fuel Cell Powertrain (H2FC Powertrain) as Power Generation Plant because, if the U.S. Hydrogen and Fuel Cell Program is able to meet all the 2017 technological targets fixed for Vehicle, in the subsequent year, the high volume associated with the FCVs mass production (up to 500.000 units sold per year) will permit to reduce dramatically the Fuel Cell system manufacturing costs, in order to be competitive with gasoline in Hybrid-Electric Vehicles (HEVs). Every day more than 90% of vehicles are parked, even during peak traffic hours. In this situation the vehicle power generation system H2FC Powertrain, if properly equipped, could become a new power generation source, supplying electricity to homes and to the grid like a new type of distributed generation: Vehicle-to-Grid (V2G). If FCV, properly equipped and parked in V2G mode, become a new power generation source supplying electricity to homes and to the grid, it could be useful to analyze the H2FC Powertrain relevance in the power generation sector. But, in my opinion, in mass production perspective, H2FC Powertrain will be so cost competitive to be useful adopted also for stationary power generation application as a power generation plant, smart grid connected. 6
H2&FC Legal Framework The Energy Policy Act of 2005 fixed the U.S. Hydrogen and Fuel Cell Vehicle Program goals in Sec. 805. In particular: shall be to demonstrate and commercialize the use of hydrogen for transportation, utility, industrial, commercial, and residential applications. ; For vehicles, the goals of the program are (A) to enable a commitment by automakers no later than year 2015 to offer safe, affordable, and technically viable hydrogen fuel cell vehicles in the mass consumer market; and (B) to enable production, delivery, and acceptance by consumers of model year 2020 hydrogen fuel cell and other hydrogen-powered vehicles. Sec. 811. The Secretary shall submit to Congress a report describing (4) progress, including progress in infrastructure, made toward achieving the goal of producing and deploying not less than (B) 2,500,000 hydrogen-fueled vehicles in the U. S. by 2020. The Energy Independence and Security Act of 2007 defines the electric transportation technology: it means technology used in vehicles that use an electric motor for all or part of the motive power of the vehicles, including battery electric, hybrid electric, plug-in hybrid electric, fuel cell, and plug-in fuel cell vehicles 7
H2&FC Recent Developments (1/3) With the change from the Bush to the Obama administration, there was an increase in emphasis on nearer-term technologies and, in transport sector, FCVs lost favor to plug-in hybrid and electric vehicles. In May 2009, President Obama announced the National Fuel Efficiency Policy, Secretary Chu questioned the merits of FCVs and cut funding for H2&FC research. In Jul. 2011, President Obama announced new Fuel Efficiency Standard for the period 2017-2025 with new target of 54.5 mpg by 2025 that included incentives also for FCVs and commented: These fuel standards represent the single most important step we ve ever taken to reduce our dependence on foreign oil. In Aug. Secretary Chu changed position and, arguing about the possibility to see a decade of low gas prices thanks to the domestic shale gas resources, observed that natural gas is actually a major source of hydrogen and this fact will help Fuel Cells. The 2011 DOE Hydrogen and Fuel Cells Program Plan shifted the milestone for automotive application from 2015 to 2017. 8
H2&FC Recent Developments (2/3) In Feb. 2012 President Obama launched an All-of-the-Above Approach to American Energy In Aug. DOT and EPA finalized the national standards for fuel economy 2017-2025 with the 2025 target of 54.5 mpg, with incentives for NGVs, EVs, PHEVs, and FCVs. To facilitate market penetration of the most advanced vehicle technologies as rapidly as possible, EPA is finalizing an incentive multiplier for compliance purposes for all electric vehicles (EVs), plug-in hybrid electric vehicles (PHEVs), fuel cell vehicles (FCV) and compressed natural gas (CNG) vehicles sold in MYs 2017 through 2021. This multiplier approach means that each EV/PHEV/FCV/CNGV would count as more than one vehicle in the manufacturer s compliance calculation. 9
H2&FC Recent Developments (3/3) In Mar. 2013 President Obama proposed, in the framework of the All-of-the-Above Energy Strategy, to establish a 2 billion Energy Security Trust that will support research into a range of cost-effective technologies that includes hydrogen FCVs. In May the DOE launched H 2 USA a public-private partnership, with focus on advancing hydrogen infrastructure to support more transportation energy options for consumers, including FCVs. In Jun. President Obama announced a series of executive action to address global climate change. In this context was reaffirmed that Administration will continue to leverage partnership between the private and public sectors to deploy cleaner fuels, including advanced batteries and fuel cell technologies. 10
H2FC Powertrain LCOE (1/2) In order to calculate the H2FC Powertrain specific LCOE it is necessary to know some H2FC Powertrain data: the system cost and efficiency, the expected system lifetime, the fuel cost (i.e. the H2 cost). Current Status (2012 U.S. DOE public data, based on projected high volume production): Overnight cost, 47 USD/kW; 59% System Efficiency; Lifetime, 2500 hours; H2 cost (based on natural gas steam reforming), 3 UDS/GGE. Table 2 summarizes the DOE Projected Transportation Fuel Cell System Cost. 2017 DOE technical targets (based on the same assumption): Overnight cost 30 USD/kW; 60% System Efficiency; Lifetime 5000 hours; H2 cost 2 4 UDS/GGE. In Oct. 2013 DOE revisited marginally fuel cell historic data, considering the highly platinum cost (or 55 USD/kW in 2012, not considered here). 11
H2FC Powertrain LCOE (2/2) Based on the above mentioned assumption the 2012 LCOE H2FC Powertrain is 173 USD/MWh and a value range of107-207 USD/MWh for 2017. Table 3 shows these results. Thanks to the fact that expected system life is shorter than one year (also in 2017) it is not necessary to consider any financial aspect. In a conservative perspective, I do not take in consideration the possibility to recover the heat co-produced during the electricity generation (like in a CHP power plant). 12
Main Conclusions If the current U.S. Hydrogen and Fuel Cell Vehicle Program is able to meet all the 2017 technological targets the high volume associated with the FCVs mass production will permit to reduce dramatically the Fuel Cell system manufacturing costs and the H2FC Powertrain will be so cost competitive to be useful adopted also for stationary power generation application. Using the 2017 DOE H2FC Powertrain data target the LCOE would be in a range of USD 107-207 for MWh and, in the U.S. context, for the lower value of this range it appears competitive with many of the power generation technologies considered. Observing these H2FC Powertrain data, it will be necessary to think the FCVs link to energy sector considering also the possibility to utilize the H2FC Powertrain as a Power Generation Plant, smart grid connected, with relevant and positive consequences for a rapid development of these low-carbon technologies in a Post Kyoto perspective. 13
The Italian Context Italy has a long tradition in H&FC and invested in the technology development since the early 1980s with many subjects involved. In all our studies we always utilized official LCOE data but, in Italy it is not present an institution that provides annually LCOE data, like the U.S. EIA. So it is not simple to made a direct comparison between the U.S. and the Italian LCOE data. Another relevant aspect is the difference in natural gas prices in the two areas For all the Italian studies that we use, we do not take in consideration, if present, the LCOE data referred to the possibility to recover also the heat co-produced during the electricity generation, in a CHP power plant configuration. Having in mind these warnings, let s move to Italian LCOE data. 14
The Italian Context: Main LCOE Studies Caratteristiche di costo e di esercizio degli impianti di generazione alimentati da fonti fossili, rinnovabili, assimilate, di cogenerazione e di generazione distribuita, CESI, 2004. Costi di produzione di energia elettrica da fonti rinnovabili, Politecnico di Milano, 2010. Il prossimo futuro dell Energy Generation in Europa, AIAF, 2010. Casi di studio tecnico-economici d impianti termoelettrici alimentati a biomassa. Stima della propensione alla cogenerazione, Ricerca Sistema Elettrico (RSE), 2011. Fotovoltaico Andamento del mercato nel 2010, calcolo del costo del kwh prodotto e del ritorno d investimento, meccanismi incentivanti in alcuni Paesi, RSE, 2011. Impatto dell energia nucleare su sostenibilità e economicità per varie opzioni di mix energetici, RSE, 2012; that includes 2030 scenarios. Table 4 summarized the Italian LCOE data included in studies published in 2010-2012. 15
The Italian Context: LCOE Data from Studies Published in 2010-2012 In the U.S. context the 2012 LCOE H2FC Powertrain is 173 USD/MWh and a value range of107-207 for 2017. These data in Italian context, using a cross rate of 1,35 USD for EUR, are: LCOE of 128 EUR/MWh today, and a range of 79-153 in 2017. 16
The Italian Context: LCOE Data from Studies Published in 2010-2012 For the lower value of 2017 range (79 EUR/MWh) H2FC Powertrain appears competitive with many of the renewable technologies and, in 2030 scenarios, it appears comparable with many of the power generation technologies. 17
The Italian Context: 2013 RSE Ricerca di Sistema LCOE Data Utilizing the 2013 RSE Ricerca di Sistema LCOE data, for the lower value of 2017 range (79 EUR/MWh), H2FC Powertrain technology appears competitive with all current power generation technologies (with exclusion of coal and gas combined cycles). 18
Main Conclusions If the current U.S. Hydrogen and Fuel Cell Vehicle Program is able to meet all the 2017 technological targets the high volume associated with the FCVs mass production will permit to reduce dramatically the Fuel Cell system manufacturing costs and the H2FC Powertrain will be so cost competitive to be useful adopted also for stationary power generation application. Using the 2017 DOE H2FC Powertrain data target the LCOE would be in a range of USD 107-207 for MWh and, in the U.S. context, for the lower value of this range it appears competitive with many of the power generation technologies considered. In the Italian context, utilizing the 2013 RSE Ricerca di Sistema LCOE data, we found that, for the lower value of the 2017 range (79 EUR/MWh, with 1.35 USD for EUR) H2FC Powertrain appears competitive with all current power generation technologies (with exclusion of coal and gas combined cycles). Observing these H2FC Powertrain data, it will be necessary to think the FCVs link to energy sector considering also the possibility to utilize the H2FC Powertrain as a Power Generation Plant, smart grid connected, with relevant and positive consequences for a rapid development of these low-carbon technologies in a Post Kyoto perspective. 19
Other Conclusion for Italy Today, again, I hope that something like H 2 USA will be implemented and announced soon also in Italy. Maybe the H 2 Italy Public-Private Partnership. 20
Thank you for your kind attention Contact: valentino.romeri@alice.it 21