The weekend read: Hydrogen and the energy transition


From pv magazine 08/2020

Persistence now has a price tag. If society wants to reduce carbon dioxide emissions in the name of climate protection without having to change its ways, the economy will have to spend some €21 billion more annually through 2050 than under a reference scenario. “The additional expense mainly comes down to the fact that we would have to import more hydrogen and synthetic energy carriers in order to achieve climate targets,” says Philip Sterchele. This is one of several conclusions that can be drawn from the latest publication by the Fraunhofer Institute for Solar Energy Systems (ISE) on a range of scenarios for a virtually climate-neutral energy system, to which Sterchele was a contributor.

The amount of hydrogen necessary and feasible from a technological-economic standpoint is not set in stone; rather, it depends on the decisions of society. The researchers designed a range of scenarios to model the different courses of action that society might take.

What all scenarios have in common is that in each, energy-related CO2 emissions are 95% lower than 1990 levels. In the “Reference” scenario, the authors model a trend without pronounced social acceptance of changes or any radical shift in consumer behavior. In this scenario, people may be willing to switch to electric cars, but are not prepared to make drastic changes to their mobility and consumption behavior. These more dramatic changes occur in the “Sufficiency” scenario, which makes the energy transition easier and more cost-effective.

Whereas the Sufficiency scenario presumes a great willingness of people to change, the “Persistence” scenario points in the opposite direction, clinging to internal combustion engines in cars and gas-fired boilers in homes. Keeping these supplied with renewable energy requires a particularly large quantity of hydrogen, which drives up the cost of imports.

For each of the six scenarios considered in the study, the researchers simulate energy conversion, energy imports, and energy consumption every hour from now until 2050. “We take into account the investment costs, O&M costs for all the plants involved, and the cost of the energy sources,” says Sterchele. Based on these assumptions, they calculate the most cost-effective expansion scenarios for the energy supply – for PV and wind power plants, for instance – and of course, the demand for hydrogen.

In the Reference scenario, installing around 130 GW of PV systems in Germany by 2030 is most cost-effective. It is possible with an annual increase of 8-9 GW to reach 400 GW of solar by 2050.

Hydrogen demand

Hydrogen is needed in every sector of the energy system. Gas-fired power plants with a combined capacity of 140 GW are envisaged capable of meeting the peak load forecast for 2050 at times when there is no sunshine, no wind, and when power storage systems are empty. This also includes combined heat and power generation, which simultaneously provides heating for buildings. In the optimized energy system, these power plants are operated largely with methane, which is partly produced from hydrogen, and to a lesser extent directly with hydrogen.

Hydrogen is also used in the scenarios to produce industrial process heat, particularly exceeding 500°C, and to power some cars, trucks, trains, ships, and aircraft. In some cases, the hydrogen is processed into liquid fuels. In the case of processed heat, hydrogen boilers and electric furnaces share the work.

About 10 million of the cars in the scenarios would be powered by hydrogen and 40 million by electricity from batteries, but this is not the result of optimization. It is based on the assumption that there will always be users who decide against battery-powered cars for whatever reason – because the charging time or range is too short, for instance.

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In heating systems, hydrogen would only be used to a lesser extent in fuel cells and fuel boilers. More than 80% of heat would be provided by district heating networks or heat pumps. This is significantly different in the Persistence scenario, in which more than half of the heat would come from gas boilers and fuel cells, driving up demand for hydrogen.

Another finding follows from Fraunhofer ISE’s optimization calculations. Although it may seem obvious that fuel cells will be used in a hydrogen economy to generate electricity and heat, they are likely to account for roughly just 5% of the heating systems market. This is mainly due to the cost, which the study estimates at €8,225/kW today and €1,289/kW in 2050.

More hydrogen

According to the researchers, approximately 325 TWh of hydrogen – or roughly 8.3 million metric tons – will be needed by 2050. Sterchele and his colleagues simulated another scenario, “Reference 100,” in which CO2 emissions would not merely fall to 5%, but down to zero by the middle of the century. In that case, no less than 380 TWh of hydrogen would be needed. The hydrogen would be available for all synthetic energy carriers, the synthesis of which is often based on hydrogen.

The hydrogen demand will thus be roughly four times its current level. Added to this are the requirements for non-energy applications, such as ammonia synthesis and methanol production. The ISE study does not include these applications, which still have to be added to the 2050 figure. According to the researchers’ optimization, 60% to 70% of the hydrogen in 2050 would come from domestic production, while 30% to 40% would be imported. “This ratio is derived, among other things, from the cost assumptions we made,” says Sterchele.

The researchers expect the cost of imported hydrogen to be €0.12/kWh by 2050. The cost of production in Germany, however, depends crucially on the cost of electricity. If generation peaks that would otherwise be regulated down are used, for example, hydrogen production would be relatively cheap. If extra generation plants have to be built to produce more green hydrogen, the costs would be higher. For a mix of PEM electrolyzers and alkaline electrolyzers, the study authors assume costs of €738/kW of input power. These costs will decrease, and efficiency will increase, making electrolyzers 38% cheaper by 2050.

There are other reasons for producing hydrogen domestically in Germany. “An advantage of domestic production is that it provides additional flexibility to the system,” says Sterchele. The scenario forecasts that about 5 GW of electrolysis capacity to produce hydrogen will be built up by 2030, which is roughly the same as National Hydrogen Strategy projections. The expansion will only really get underway after that. By 2050, this figure will exceed 70 GW. However, in the Persistence scenario, the expansion will reach nearly 15 GW by 2030 to achieve climate targets, and will exceed 120 GW by 2050.

Currently, it is often stated that it is fundamentally impossible to produce all of the hydrogen Germany needs domestically. Fraunhofer ISE’s study does not reach this conclusion. In order to generate the share of hydrogen from imports, the energy of an additional 300 GW of PV systems would be sufficient. Combined with the 400 GW required in the Reference scenario, the total expansion would thus still be well below the technically possible potential, which studies estimate at between 1,000 GW and 3,000 GW. Whether this hydrogen can be produced domestically depends on how much solar and wind power is considered acceptable.

Cost of the transition

In the Reference scenario, the energy supply would cost €1,580 billion more through 2050 under the assumptions in the study than if the energy system were not restructured. If this additional expenditure is distributed equally across each year to 2050, it amounts to €52 billion a year. In the Persistence scenario, the figure is €73 billion.

The study’s authors compare these necessary expenditures with the €102 billion spent annually on Christmas shopping. Germany could gift itself the energy transition as a Christmas present and there would still be money left over for half the presents normally bought. It would be wrong to see the expenditure only as a burden on the economy. Like business at Christmas, these costs spur economic growth and value creation.

One could argue, in relative terms, that Persistence does not cost much more than a more committed transition, because the additional costs are justified by the fact that it is more socially palatable. However, these additional costs do not contribute to economic growth. Instead, they are essentially additional costs incurred by energy imports. Moreover, a 100% reduction in CO2 emissions could be achieved for the same money. That is necessary in any case if Germany wants to play its part in achieving the Paris climate targets. Incidentally, once the restructuring of the energy system is completed, spending will fall again significantly.

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