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New Market Opportunities in the Hydrogen Economy
Billions in new revenue could be realized early in the transition.
In a hydrogen-electric economy, power companies could see very large market opportunities—and play a major role in enabling and accelerating implementation. So concludes a new white paper, The Roles and Opportunities for Power Companies in the Hydrogen-Electric Economy , by EPRI and the Hydrogen Utility Group (HUG).
HUG, founded in October 2005 by nine power companies, with the support of DOE, the National Renewable Energy Laboratory (NREL), EPRI, and the National Hydrogen Association, was initiated as a way to accelerate utility integration of promising hydrogen energy-related business applications.
Meeting the needs for a hydrogen-electric economy could represent an important new convergence between the utility and transportation sectors. Our analysis indicates that, under some scenarios, annual new revenue on the order of $1 billion to $5 billion could be realized during the first-phase transition period via use of distributed electrolysis systems. The long-term revenue opportunity exceeds $200 billion/year in a fully developed market with potentially higher operating margins.
The scale of the market could range from selling an additional 40 to 800 terawatt-hours (TWh) of electricity via distributed electrolysis, to the installation of 10 to 300 integrated coal gasification plants, biomass plants, or nuclear power facilities over the next 20 years. (1 TW-hour equals 1 billion kilowatt-hours.)
This opportunity may be even more attractive for utilities because a large portion of the additional electricity capacity needed for the hydrogen-electric economy can be met with the existing electric generating infrastructure through the use of off-peak capacity and under-utilized transmission and distribution (T&D) assets.
In addition, some analysts believe that the success of the transition to the hydrogen-electric economy could depend on actions taken by the electric power industry, which has been silent on this issue. Researchers estimate that a 10 percent penetration of hydrogen in the transportation market will be needed to justify the building of a new infrastructure for hydrogen production and delivery. Because power companies have existing infrastructure, they can be the prime enablers of the transition to the hydrogen economy.
The Impetus Behind the Hydrogen-Electric Economy
In recent years, heightened investment and R&D to enable a hydrogen-electric economy have been spurred by a confluence of national policy drivers. The United States is searching for ways to help ensure the country’s long-term energy security by reducing dependence on imported petroleum. The need to improve air quality and reduce emissions of greenhouse gases (chiefly carbon dioxide, CO 2) is a major national concern. Heavy dependence on imported oil threatens U.S. economic well-being.
In February 2004, the National Academies report on the DOE hydrogen program concluded: “A transition to hydrogen as a major fuel in the next 50 years could fundamentally transform the U.S. energy system, creating opportunities to increase energy security through the use of a variety of domestic energy resources for hydrogen production while reducing environmental impacts, including atmospheric CO 2 emissions and criteria pollutants.”
Specifically for power companies, a number of factors
