In the case of the Philippines, its energy market could draw economies of scale if it would eventually make use of the existing infrastructure of its LNG industry as pipeline support facility in transporting hydrogen to where the demand is. And for prospects of on-site hydrogen production, the traditional dilemma of grid connection problems can be eased – especially if hydrogen ventures would be aligned as storage system on its development synergy with offshore wind.
Pipelines, on-site production to help bring down green hydrogen costs
Economies of scale for PH could be linked to gas pipelines
At a glance
SEOUL – The conversion of gas pipelines as well as on-site production can help reduce the cost of hydrogen to commercially viable proportion and for it to thrive as a practicable energy solution starting in the 2030 timeframe, according to studies and assessments of UK-headquartered multinational firm Arup.
In his presentation at the recently concluded 2nd Korea Offshore Wind and Hydrogen Summit, Arup East Asia Energy Business Leader Peter Thompson indicated that “for hydrogen to be competitive as a fuel source, it must achieve a $3 to $5 per kilogram price into 2030.”
He qualified that on Arup’s own number crunching, “our techno-studies show that green hydrogen sourced from high renewable penetration potential areas – the likes of Chile and Australian markets – can be as low as approximately $2 per kilogram,” he said.
Thompson highlighted “the cost of producing hydrogen could fall 30% by 2030 led by declining costs of renewables and scaling up of production,” qualifying that the anticipated cost decline will be from current level of roughly $45 per kg, especially for green hydrogen production.
Studies show that for blue hydrogen, which is derived from gas or methane and integrated with carbon capture and storage (CCS) technology, its current price is at less than $15 per kg; while gray hydrogen (also produced from gas or methane but without CCS), is at the scale below $10 per kg.
The British firm executive emphasized that when it comes to infrastructure systems - such as pipelines and propounded on-site production of hydrogen coupled with offshore wind technologies - these have been showing great potential as investment models that may eventually pare the cost of hydrogen to cost-competitive levels.
As explained, hydrogen stored in their liquid or gaseous state can be transported through pipelines – including from the planned hydrogen hubs in the Asian market.
The use of pipelines, it was noted, could be more economical if conversion can be done from the existing gas networks – including those facilities that are being used in the liquefied natural gas (LNG) sector that are now vast across many energy markets; instead of building a totally new pipeline infrastructure network.
For on-site production of hydrogen, many investors are now experimenting on the deployment of electrolyzer stacks proximate to the site of offshore wind farm installations; and these can be supported by floating or offshore substations.
Thompson expounded there are still mounting barriers that investors would need to overcome to catalyze capital flow into the emerging hydrogen value chain – and the major one of these worrying precepts delve with cost or the economic competitiveness of hydrogen technology.
The other concerns are those on government policies, technology readiness, uncertain future demand as well as the regulatory regimes that each country will be enforcing for this innovative technology to really flourish in the marketplace.
In Arup’s estimates, the total required investment to meet potential hydrogen demand of 690 million tonnes globally by 2050 would be $7.0 to $8.0 trillion, as anchored on the Hydrogen Council’s net zero analysis.
In the case of the Philippines, Thompson separately stated in an interview that the country could draw economies of scale if it would eventually make use of the existing infrastructure of its LNG industry as pipeline support facility in transporting hydrogen to where the demand is.
And for prospects of on-site hydrogen production, he stressed that the traditional dilemma of grid connection problems can be eased – especially if hydrogen ventures would also be aligned as storage system on its development synergy with offshore wind.
“The Philippines is an island-nation which could work in your favor, but also against you. If you’re able to pipe the gas between different islands, then that’s a great solution…once you get to the LNG process, you’ll develop the infrastructure – there are some linkages between the two,” he said.
Thompson added “one of the challenges of the Philippines is grid connection – where the wind blows is not necessarily where the strongest grid connection is – like in Visayas, there’s a lot of wind there, but grid connection is not too strong, so that could be another way for hydrogen to be set up in those locations; but it would need to be combined with other industries, like steel making or other industries. You need to create a demand, otherwise, it becomes very expensive.”