Are We There Yet? Hydrogen Trains and the End of the Carbon Era – Part 2

Yesterday I wrote that hydrogen trains are beginning to emerge as a genuine option for long-distance trains in New Zealand. Part 2 of this series further explores how we might solve the problem of needing to store electricity when the wind’s not blowing.

According to the Wide Spread Adaption of Competitive Hydrogen Solution -Nel Hydrogen document if electricity prices can be sourced for US$60 (NZ$90) per MWh for onsite production plus dispensing facilities then renewable hydrogen can achieve fossil fuel parity.

Electricity spot prices in New Zealand

For a hydrogen train company or another company wanting to generate renewable hydrogen using the electricity grid as the primary energy source, electricity price hedging or back-up storage capacity is likely to be the biggest cost issue. This is due to high and volatile electricity spot prices in New Zealand’s electricity market. Price volatility has corresponded to low South Island lake storage. Hydrogen can be stored but I doubt it is possible to store a whole season’s worth of hydrogen in New Zealand. Also hydrogen even if capable of storing large quantities of energy is not very efficient as a battery. The round trip efficiency of hydrogen is as low as 30 to 40%. This could increase up to 50% if more efficient technologies are developed, but this is much less efficient than pumped hydro which has a round trip efficiency of over 80%.

New Zealand Inc could overcome the high ‘dry year’ electricity spot price issue by investing nationally in the most efficient pumped hydro scheme(s) that provide seasonal storage capacity for the entire electricity grid. Fortunately New Zealand has a large potential store of energy in pumped hydro, that would be much more energy efficient than using hydrogen for long term energy storage. Consideration should be given to the benefits of ‘dry year’ security of electricity supply from Associate Prof Earl Bardsley’s Onslow pumped hydro proposal. Which alongside other benefits would assist New Zealand to grow its renewable energy economy.

Note 1000 GWh equals 1 TWh and 1000 MWh equals 1 GWh. The scheme would more than tripled the total New Zealand energy storage capacity to 14,400 GWh from the current low value of around 4,200 GWh (based on 2005 figures when the paper was first published)

Dr Bardsley describes how legislation could ensure Contact and Meridian power companies build the proposed pumped hydro scheme (at a cost of about $1billion) by mandating lake level limits for their South Island hydro lakes. This legislation would in effect stop the power companies generating when lake level storage is low and prices are high. The power companies would respond by building extra storage capacity so they could sell during periods of high demand and low supply. This would be a ‘stick’ -if it wasn’t the power companies would already have built the pumped hydro scheme, as the Onslow pumped hydro proposal was first mooted in 2005. ‘Carrots’ could be assistance with debt funding costs (the government could pay some or all of the interest costs) and assistance getting resource consents. This approach would unlock a lot of investment from relatively little government expenditure. Not just directly in building the pumped hydro scheme but indirectly through security of electricity supply leading to more investment in renewable energy production and zero carbon transport modes.

Pumped Hydro has over 80% ‘round trip’ efficiency when used as a store of energy. For the Lake Onslow pumped hydro proposal the drop down to the turbine would be between 640 and 720m depending on the water level of the upper basin. This large drop is why the scheme would store so much energy from a modest sized storage lake

Alternatively the government could create a special purpose vehicle entity, as used in the housing sector, to partner with Transpower and the Electricity Authority, to ensure security of electricity supply. This entity could invest in grid scale batteries. Ideally this entity would be 100% government owned and non-profit, as it would have the public good function of security of supply. The private sector though could provide the capital in the form of bond funding, and provide construction expertise. It would receive a commercial return for that funding and expertise.

Note South Island pumped hydro is not ideal as a grid scale battery, if it leads to North Island fossil fuel power plants being replaced by North Island renewable power, such as wind generators, because of the transmission costs from the South to North Island. North Island pumped hydro or another local grid scale battery would better manage the daily/weekly variance in North Island wind generation.

Pumped hydro would have an electricity buying price where it purchases power to pump water up to a high storage basin. Given pumped hydro is 80% round trip efficient, it would need a selling/generating price of at least 25% higher than its buying price to cover energy losses. Pumped hydro would also need to cover its civil works cost. So it would set its selling price at something like 50% above its buying price to give an adequate return on capital expenditure.

In New Zealand if pumped hydro bought power at $60MWh and sold at $90MWh then renewable transport modes like hydrogen vehicles may become economic because a ceiling price of $90MHh in New Zealand’s electricity market would effectively be created. A full engineering civil works costing of the pump hydro scheme(s) and a market analysis of electricity spot prices would be needed to determine what sort of buying and selling prices are achievable.

Australian National University researchers who have helped to scope out Australia’s pumped hydro opportunities have been awarded a leading science award — the Eureka Prize.

Prof Sadoway is looking at commercialising a process whereby liquid metal batteries have a capital cost of under $500/kWh.

There is research and innovation in the ‘grid scale battery’ field. Prof Sadoway for instance has undertaken research on liquid metal batteries (video here). My take on his research (that he is turning into commercial enterprises) is it is about producing a new type of battery for electricity grid level storage that is price competitive with pumped hydro storage but doesn’t have the geographic limitations of pumped hydro.

Prof Sadoway indicates there needs to be a price competitive ‘scalable’ solution for grid level battery storage. That way the electricity industry can build for ‘average’ not ‘peak’ prices. And that way expensive generators are not sitting idle for months at a time between electricity demand peaks.

Energy Vault has launched a new grid-level energy storage system that uses concrete blocks, stacked in a tower(Credit: Energy Vault). Each tower will have a capacity of up to 35 MWh

Swiss company Energy Vault has just launched an innovative new system that stores potential energy in a huge tower of concrete blocks, which can be “dropped” by a crane to harvest the kinetic energy. While the crane might seem big and cumbersome, it can generate power in as little as 2.9 seconds, and has a round trip energy efficiency of about 90 percent. The first 35-MWh Energy Vault system is due to be deployed in India for the Tata Power Company in 2019.

Liquid metal batteries and Energy Vault are potential future entrants into the grid level battery storage market. New Zealand though is fortunate enough to have good geographic resources in pumped hydro that can be developed immediately.

New Zealand’s 2035 goal of 100% zero carbon electricity generation is possible by building more renewable electricity generation and using pumped hydro instead of coal or natural gas as the seasonal energy back-up.

The even bigger prize though is replacing CO2 emitting transport modes with CO2 neutral modes according to University of Canterbury researcher -Tom McKinlay.

If a hydrogen train company or other hydrogen or electric battery transport mode companies had certainty about electricity prices then they are more likely to invest in renewable energy and carbon neutral transport schemes.

Unfortunately a clear headed assessment of these opportunities for New Zealand Inc is being messed up by party politics. National Party Taranaki MP -Jonathan Young, in particular, playing fast and loose with the facts in media statements about making hydrogen from Taranaki’s natural gas. Claiming a proposed scheme “is built around the world’s highest-efficiency hydrogen production process coupled with a cutting-edge natural gas power generation system that includes inherent 100 per cent carbon capture”, when carbon capture and storage technology has yet to be proven effective internationally. In the meantime any hydrogen produced from natural gas will be CO2 emitting like other fossil fuels. The standard steam methane reforming production method emits 9 to 12 tones of CO2 for every ton of hydrogen produced. Even if carbon capture and storage is successful, the infrastructure required to store and distribute large quantities of hydrogen coming from Taranaki’s distant and isolated natural gas fields is another untested technological factor.

Climate change is going to be one of the biggest political issues of 2019 according to many political pundits. Experienced pundit -Linda Clark saying.

Climate change -the recent COP24 conference in Poland underscored that it’s no longer enough to keep talking about reducing emissions. We need to change how we act. That’s a challenge for any government. National will make it very hard for the government to move (note how quickly they spooked the PM over prospective fuel taxes). Finding the politically saleable way forward is going to be a real test of the coalition’s skill and persuasion. This issue needs a bipartisan approach -but there won’t be one.

I am an optimistic fan of social democracy. Climate change will be a test of whether democratic countries can, as former Chinese Premier Deng Xiaoping said, ‘cross the river by feeling the stones’. I will be profoundly disappointed if western democratic countries like New Zealand cannot negotiate the uncertainty and exploration challenges of climate change.

New Zealand businesses want to be part of the zero carbon technological era. The New Zealand Hydrogen Association was formed in September 2018 by private sector companies with seed funding from the Ministry of Business, Innovation and Employment. The founding members include Fulton Hogan, HW Richardson Group, Hyundai, Siemens (NZ), Green Cabs, Real Journeys, and Contact Energy. Toyota joined in November.

Richard Lauder, CE of Real Journeys, one of the founders of the Association, says his company is looking forward to exploring the possibility of reducing carbon emissions by using renewable hydrogen for some of New Zealand’s most iconic tourism offerings.

“Our specially designed fleet of bullet coaches travel 1.3 million kilometres each year between Queenstown and Milford Sound and the prospect of low emission hydrogen fuel cell coaches running this route would put Real Journeys at the forefront of tourism globally,” says Richard Lauder.

Recommendations

  1. For the government to fund a trial of hydrogen trains on the Coastal Pacific route to get a better idea of whether hydrogen vehicles can be cost competitive in the heavy vehicle segment of the market.
  2. For the Low-Emission Vehicles Contestable Fund, that has been supporting the increase in electric battery vehicles in New Zealand, to be expanded to include hydrogen vehicles and different transport modes -rail, maritime or aviation as well as roads. The fund provides up to $7 million per year to co-fund up to 50% of project costs with private and public sector partners in areas where commercial returns aren’t yet strong enough to justify full private investment (correction the latest 2019 Low-Emission Vehicles Contestable Fund announcement included for the first time a hydrogen project -Ports of Auckland demonstration project).
  3. For the government to undertake a full investigation of the benefits of grid scale batteries for New Zealand. Including an engineering and hydrology examination of the geographic opportunity and costs of specific pumped hydro schemes. A full market study investigating the potential purchase and selling prices that various grid scale batteries could deploy. An analysis of the implications for the various market players (including consumers) from moving to ‘average’ pricing from ‘peak’ pricing .

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