An $11 Trillion Global Hydrogen Energy Boom Is Coming. Here’s What Could Trigger It

Some 130 miles south of Salt Lake City, engineers are working on what will become a giant cavity in the ground. It’s a geological formation known as a salt dome, a column of salt surrounded by sedimentary layers, and when it’s filled with hydrogen, it could become one of the largest renewable energy reservoirs in the world.

The historic wildfires that devastated California this year have highlighted concerns about climate change and how to make our society sustainable. The state aims to source all its power needs from clean, renewable energy by 2045, and Gov. Gavin Newsom recently said sales of new gas-powered passenger cars and trucks will end by 2035. Under a roadmap approved by the state regulator, California will need nearly 25 gigawatts in new renewable capacity, including some 8,900 megawatts of storage, by 2030. The Utah project could help meet those targets.

The Advanced Clean Energy Storage (ACES) project aims to build a storage facility for 1,000 megawatts of clean power, partly by putting hydrogen into underground salt caverns. Last year, Mitsubishi Hitachi Power Systems (MHPS), a maker of gas turbines, and Magnum Development, which owns salt caverns for liquid fuel storage, announced the project will combine technologies such as renewable hydrogen, solid-oxide fuel cells, and compressed air energy storage. The storage facility would initially have enough energy to power 150,000 households for one year. Scheduled to be operational by 2025, the first phase of the ACES project will provide 150,000 MWh of renewable power storage capacity, nearly 150 times the current U.S. installed lithium-ion battery storage base, according to MHPS.

The project will also help address a problem with renewable energy production: fossil-based energy must be used immediately because grids lack storage capacity, which can mean curtailment of renewables in times of low demand. Having large-scale renewable energy reserves on tap can accelerate the shift to clean power. If former Vice President Joe Biden is elected president next month, he may funnel up to $1.7 trillion over 10 years into measures to boost renewables and accelerate the adoption of electric vehicles.

Green hydrogen is hydrogen produced with renewable power and zero emissions. With the cost of renewables like solar power falling, green hydrogen is being touted as one part of the energy mix that will lead toward decarbonization, with applications ranging from consumer and industrial power supplies to transportation and spaceflight. By 2050, U.S. demand for hydrogen could jump to 22 million to 41 million metric tons per year, up from 10 million today, according to a study released this month by the U.S. Department of Energy’s National Renewable Energy Laboratory.

After decades of false starts, hydrogen technology is poised to take off as falling production costs, technological improvements, and a global push toward sustainability converge, according to Bank of America. The firm believes this will generate $2.5 trillion in direct revenue — or $4 trillion if revenue from associated products such as fuel cell vehicles is counted — with the total market potential reaching $11 trillion by 2050.

Major firms such as BP, Siemens Energy, Shell and Air Liquide are interested in green hydrogen production, but part of the challenge is where to store energy so it can be ready when needed. That’s where a project like ACES can help.

Making holes in the ground
“California curtailed between 150,000-300,000 MWh of excess renewable energy per month through the spring of 2020, yet saw its first rolling blackouts in August because the grid was short on energy,” says Paul Browning, CEO of MHPS Americas. “Long-duration energy storage projects like ours that are designed to shift excess energy from periods of oversupply, like California in the spring, to periods of undersupply, like California in late summer, are critical to ensure similar events are avoided as we continue to make significant strides towards deep decarbonization.”

Storing fuel in salt caverns isn’t new, but hydrogen’s growing role in decarbonization has revitalized interest in the concept. The U.S. Strategic Petroleum Reserve has long stored emergency crude oil in underground salt caverns on the Gulf Coast, and notes they cost 10 times less than aboveground tanks and 20 times less than hard rock mines. The Reserve has 60 enormous caverns, typically 200 feet in diameter and 2,500 feet tall, and one “large enough for Chicago’s Willis Tower to fit inside with room to spare.”

Caverns can be created in salt domes by drilling into the salt dome and injecting the rock with water, which dissolves the salt. The resulting brine is extracted, leaving a large cavity. The next step is storing hydrogen in the cavern. Hydrogen electrolyzers can convert water into hydrogen by using renewable energy from solar and other sources. The hydrogen can then be stored, and reconverted to electricity when needed.

In the ACES project, some will power the adjacent Intermountain Power Project, a coal-fired plant operated by the Los Angeles Department of Water and Power that will be converted to hydrogen and natural gas, which produces almost half the carbon dioxide of coal, by 2025. It’s scheduled to be all green hydrogen by 2045. If the initial phase of the project is successful, the salt dome’s vast capacity could be exploited further.

“The formation has the potential to create up to 100 caverns, each one capable of holding 150,000 MWh of energy,” says Browning. “It would take 40,000 shipping containers of batteries to store that much energy in each cavern.”

European ambitions
Despite their storage potential, low operating cost and the fact that underground salt distribution is well known, only a handful of salt caverns have been created to store hydrogen. However, the concept is quickly gaining momentum in Europe, where the European Commission sees the share of hydrogen in Europe’s energy mix rising from under 2% as of 2019 to 13-14% by 2050.

Funded by the German government, the HYPOS alliance of over 100 companies and institutions aims to build a salt cavern in the Central German Chemical Triangle in Saxony-Anhalt with about 150,000 MWh of energy from wind power-generated hydrogen. Regulators are now reviewing the plans and when filling begins in 2023 or 2024, it could be continental Europe’s first hydrogen storage cavern, according to Stefan Bergander, a HYPOS project manager. Meanwhile, French gas utility Teréga and Hydrogène de France have agreed to launch the HyGéo pilot project in a disused salt cavern in southwestern France’s Nouvelle-Aquitaine region; it will store about 1.5 GWh of energy, enough for 400 households for a year.

“Underground storage, in salt caverns or in porous media (i.e., in aquifers or in depleted oil and gas fields) is the only way to cope with big storage capacities,” says Louis Londe, technical director at Geostock, a French company specializing in underground storage. “Many hydrogen cavern projects for energy storage are blooming in Europe. At present, they are at the design stage. Not surprisingly, the leading countries are those where salt is the most present: Germany, U.K., Ireland, France, Netherlands.”

Hydrogen can be produced with renewable energy from sources like solar panels and then stored under the ground in salt caverns for future use.

Europe has enough salt formations on and offshore to theoretically store about 85 petawatt hours of hydrogen power, according to a study published this year in the International Journal of Hydrogen Energy. The figure is hypothetical, and doesn’t take economics into account, but for example, 1 PWh of hydrogen is enough to supply today’s electricity demand in Germany for an entire year, says Dilara Gulcin Caglayan, lead author of the study and a scientist at the German research center Forschungszentrum Jülich’s Institute of Energy and Climate Research.

“Our calculations show that without implementation of hydrogen salt caverns, there’s no cost-optimal pathway to achieve our climate goals,” says the institute’s deputy director Martin Robinius, a coauthor of the study. “By 2040, we will need a lot of hydrogen salt caverns, but if we don’t start building them now, we won’t be able to build them to scale to meet those goals.”

As part of its goal to be climate-neutral by 2050, the European Commission recently produced a hydrogen roadmap saying rapid, large-scale deployment of clean hydrogen is key for the European Union to lower greenhouse gas emissions by at least half by 2030, adding that “Investment in hydrogen will foster sustainable growth and jobs, which will be critical in the context of recovery from the COVID-19 crisis.”

“The issue of storage is, of course, key to delivering energy transition and in this respect hydrogen and hydrogen technologies have a critical role to play,” says Jorgo Chatzimarkakis, secretary general of Hydrogen Europe, an alliance of about 250 companies and research organizations that has called for Covid-19 recovery investment of €55 billion ($65 billion) in salt cavern storage to 2030 to build hydrogen capacity of 3 million metric tons. “Large scale hydrogen storage facilities, mainly salt caverns and possibly some empty gas fields, need to be part of hydrogen infrastructure.”

– CNBC