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Hydrogen versus electricity; is the battle between Edison and Tesla reignited?

donderdag november 21

Second article for the Dutch website: Omgevingsweb.nl

Hydrogen versus electricity; is the battle between Edison and Tesla reignited?

Thomas Edison and Nikola Tesla fought each other in the so-called War Of The Currents (1880 -1896). Who had invented the best technology for electricity? Was that Edison, with his direct current (DC), or Tesla, who invented the alternating current (AC)? Even if you have never heard of this fight, you probably know the winner: AC is now the global standard for the production and supply of electricity.

Edison may have lost the battle back then, but in recent years DC has been on the rise, mainly thanks to the many electronic and wireless devices that operate on DC. Electrolysis (the decomposition of water into oxygen and hydrogen) also requires DC. And a fuel cell supplies DC when converting hydrogen to electricity. I wondered if there could be a parallel to the "battle" between hydrogen and electricity today, to the battle in the 19th century?

Will the cheapest win again?

Tesla won because its solution turned out to be much cheaper in the transport of electricity. But before this battle was won "on economic grounds", the discussions flared up, just like todays discussions about hydrogen. Would the winner from the 19th century be a precursor of the winner in the 21st century? Will the battle between hydrogen and electricity be won by the cheapest option?

Transport of gas versus electricity

Suppose that just like during the War of the Currents, the discussion is about the costs of energy transport. Is hydrogen transport cheaper? And do the costs outweigh the supposed low efficiency and high costs of hydrogen production? A lot has been written about hydrogen and hydrogen is not doing well in these stories.

Looking for answers

A first answer can be found in the studies of the (Dutch) network operators. Local distribution grid operator Stedin writes in her report about hydrogen in their distribution network. They estimate it is a factor of 4 to 10 times cheaper. Gasunie, the national pipeline operator, states on its website that transport costs per kilometre can be 16 to 34 times cheaper. So, there is a difference between transport (large pipes, high pressure) and distribution (small, fine-meshed pipe network, low pressure). As a result, it is not easy to determine how much cheaper gas transport can be. Let us take a closer look at a number of aspects for the price of energy transport. Think of (peak) capacity, network connection, network capacity, market value and storing surpluses.

Peak capacity
The fact that there is no clear picture about 'how much cheaper' is also due to the difference between transport capacity and transported energy. The natural gas connection at a Dutch house probably has a capacity that is at least five times higher than that of the electricity connection. However, the costs of the connection are almost the same, and these costs are almost independent of the amount of energy you use. An average Dutch household uses about four times more gas than electricity.

And this is what it's all about: the costs of an energy system are mainly determined by the peak that must be delivered. The gas connection at home must be large enough for the coldest day of the year. The connection for solar panels or wind turbines also should be large enough for the peak moments; when the wind is strong or the sun is shining brightly. And have you ever wondered with what capacity you top up your car or truck when you refuel with diesel or gasoline? This is approximately between 6 and 78 MW.

The grid connection determines how much renewable energy is supplied to the grid
The grid connection of a wind farm or solar farm is often smaller than the peak power installed. With wind this is called overplanting. This means that if the wind blows forcefully, not all energy that is produced is also supplied to the grid (a form of curtailment). The reason for this is an economic consideration: it is simply too costly to pay for a larger network connection.

The number of hours that the farm peaks, yields too little energy, so the costs do not outweigh the sales value. This principle is more or less similar for solar energy. Here, too, it is not cost-effective to transform the entire peak and deliver it to the grid. Apparently, the costs of a connection to the electricity grid limit the amount of renewable energy that is supplied to the grid. If a gas pipeline in connection capacity is much cheaper, this offers opportunities for hydrogen.

Market value limits sustainable energy yield
“If the wind blows while the sun is shining too, wind turbines and solar panels produce electricity at the same time, which increases the supply on the market. At these times, this lowers the price of electricity. The average price for electricity from sun and wind is therefore lower than the average wholesale price for all electricity generated. This is called profile effect.” As can be read in the recently published Climate and Energy Outlook (KEV) for the Netherlands by PBL, Netherlands Environmental Assessment Agency.

This effect already exists today, but it is expected that by 2030 the average value of renewable electricity will be much lower. Somewhere between 13% and 16% lower than the market price. Now you might think, we can store that cheap peak electricity nicely. But the owner of the wind or sun farm is seeking for profitability and has no incentive to generate a lot of power for a little revenue. This is an important phenomenon that I will further explore a follow-up blog.

Save surpluses?In case of electricity, supply and demand must always be exactly the same, at the same time. There cannot be "surpluses" in the network itself. Let’s assume we speak of "a surplus" when the wind blows hard / the sun shines brightly. Where do you store the too much produced sustainable energy? This can be done in a few places: at the energy source itself, at the end user or somewhere in between these two.

The most energetically efficient place for storing "surpluses" is directly at the source. Energy losses in electricity cables, due to heat development, increase quadratically with the amount of energy that passes through them. For example, at a wind farm at sea, at a "surplus moment" (= maximum load of the cable) loses more than 10% of the energy in the cable to the shore. This all due to the heat development. To prevent these losses, it is therefore better to immediately store the energy at the source during peak times.

Hydrogen production place directly at the source, bring cost advantages. For example, there are no separate costs for a grid connection for the electrolysis. Moreover, the sustainable source can cope with a much smaller or even no electrical connection at all.

With gas pipelines, surpluses can be stored in the system itself. A considerable amount of energy can be stored depending on the pressure, diameter and length of the pipes. This is especially possible with transport pipes with a higher maximum pressure. This is called line packing.

Sustainable peak power and gas infrastructure

Gas infrastructure has characteristics that are economically attractive for a sustainable energy system. Beside the overall lower transport cost per unit of energy, connecting large (peak) capacities is much less expensive and it offers inherent buffer for the same price.

An energy transition to mainly sustainable electricity requires many new high-voltage lines and large substations to connect, transport & distribute all the new renewable energy sources. But for these masts and substations, the same applies to most of us as to wind turbines and solar parks: preferably “not in my backyard”. An underground gas infrastructure, on the other hand, has far fewer social costs in terms of spacial planning.

Nowadays, the electricity grid has already capacity problems in various places in the Netherlands. Network operators must make announcements of expected problems on the short term. The study "Electricity grid of the future" outlines various scenarios for expected peak capacity by renewables in 2050.

These vary between 27 and 126 GW installed power. At the same it than estimated that storage peak-capacity is required of about 2 to 135 GW. It does not consider the battery-electric driving that we all have in mind, creating even more challenges.

To put things in perspective to the current situation of gas and electricity in the Netherlands: Tennet's high-voltage grid has 20 GW capacity. The gas transport network of Gasunie has 320 GW capacity.

Electricity transport is expensive

Tennet expects to invest 12 billion over the next 10 years, of which 5 billion in offshore wind. This to be able to transport the energy from all expected new renewable energy projects. Be aware, this is only the cost for the high voltage network.

It does not include the costs of the regional network operators. They must take care of the actual connection. The publication of the PBL shows that the transport costs of offshore wind energy (to be built by Tennet) add between 40% and 64% to the costs per MWh of offshore wind energy.

These costs are not directly reflected in the electricity price. In practice, these extra costs of offshore wind are distributed among all energy consumers via a separate “tax” on electricity use. This can be found on your energy bill.

So who is going to win the battle?

In this "battle", hydrogen seems to have a strong position above electricity, or at least at this moment in this blog, thanks to the technical and economic benefits of pipelines. To exploit these benefits maximally the hydrogen production should be placed directly at the source. As soon as the electricity for hydrogen production is first transported through an electricity grid, many of the benefits disappear.

Are these advantages fully recognized and used in "the battle"? The EU directive for renewable energy, by recital (90), requires a direct link for electrolysis to the renewable energy source. But only when hydrogen is applied as a transport fuel (directly and indirectly via synthetic fuels). At the same time, very large electrolysis plants are planned. The main principle seems to be that they must offer flexibility to the electricity grid and wind farms. But not so much is stated about locating them directly at the source. This picture also emerges from the Dutch multi-year innovation program that has just appeared in draft. Figure 1 of that report places hydrogen production explicitly with the intervention of the electricity grid instead of directly at the sustainable source:

So what does this mean, are we still at the beginning of "the battle" and do certain insights first have to be adopted more broadly? Or is there a chance that large scale grid-connected electrolysis, not located at the side of the renewable source, offer much higher benefits?

To find an answer to this I will elaborate, in next blog posts, on the costs and optimization of both wind energy and electrolysis. I will also come back to the big question in this article, who I think will win "the battle", hydrogen or electricity.

In the meantime, I would like to ask you to respond via LinkedIn on the following statement:
“If we want to stimulate the production of green hydrogen, then the electrolysis must take place at the wind turbine or the solar panel and not at the end user of hydrogen”