How Much Hydrogen Helps


Southern Co., GTI Energy

Fortnightly Magazine - October 2022

The day hydrogen becomes a ubiquitous energy source eagerly is awaited by all in the energy and utilities industry. The devil is indeed found in the details, but the good news is that much research and development is going on.

That is why PUF brought together a team of experts to examine the latest with this colorless, odorless, tasteless, flammable gaseous substance that is the simplest member of the family of chemical elements, with an atomic number of 1. Tech expert, check. Utilities expert, check. Regulatory expert, check.

PUF's Steve Mitnick sat down with Southern Company's Joanne Mello, GTI Energy's Kristine Wiley, and former Idaho PUC Chair Paul Kjellander. Strategies, costs, early projects, technologies, hydrogen hubs, you name it, and you will find that it's talked about here.

PUF's Steve Mitnick: Why is there so much interest in the potential for hydrogen to serve as a major energy source?

Joanne Mello: We're excited about the opportunity for clean hydrogen to support decarbonization. It's about opportunities in support of our net-zero objectives at Southern Company and Southern Company Gas, but also looking at opportunities to support our customers in their decarbonization objectives.

Joanne Mello: Southern Company is currently engaged in R&D efforts focused on driving down the cost of hydrogen, understanding end uses, and understanding the potential for blending with natural gas – especially within existing infrastructure.

Hydrogen has the potential to support lower emissions across a variety of sectors, including industrial customers like steel, cement, and chemicals, as well as power, transportation, thermal and others, which is key to economy wide decarbonization.

I work on the natural gas utility part of our business, so we're thinking about how hydrogen presents a potential pathway to decarbonize our natural gas infrastructure as part of our broader portfolio approach to decarbonization.

The interest is first, the environmental benefits of utilizing hydrogen because it can be stored and used without greenhouse-gas emissions, and it can be produced from a diverse range of low-carbon energy sources. There's quite a bit of flexibility in hydrogen production. With its high-energy density, it can be used in a wide range of applications.

Kristine Wiley: There's been a number of cycles of interest around hydrogen over the past couple decades. It is different now because we see more pressure around the importance of reducing emissions and decarbonizing globally.

Kristine Wiley: From the various net-zero analyses, we’re not going to be able to get to net zero without low-carbon sources like hydrogen. Acknowledging that fact has increased interest around the question of how we build this hydrogen economy.

Some of those drivers are pushing us to look at other low-carbon energy sources. We're doing a lot as an industry with companies like Southern leading the way to reduce emissions with strategies such as improving energy efficiency, integrating renewables like wind and solar, and electrification. On the gas side, we're focused around reducing methane emissions.

From the various net-zero analyses, we're not going to be able to get to net zero without low-carbon sources like hydrogen. Acknowledging that fact has increased interest around the question of how we build this hydrogen economy.

Another reason we're interested in hydrogen is around its use as an energy storage vector. To integrate more wind and solar, to manage that imbalance and intermittency associated with renewables, we need large-scale, seasonal energy storage. We have batteries, and pumped hydro, but need other solutions like hydrogen to balance that.

PUF: Batteries just may be able to last four hours, but hydrogen could be stored for months. That could be a game changer.

Paul Kjellander: They’re targeting 2025 to be starting up a project to use renewable resources to create hydrogen that will be stored in a salt cavern and distributed to a converted coal-fired generator. That’ll go a long way toward trying to ease some concern regulators and utilities have as they look at hydrogen as a resource.

Kristine Wiley: Absolutely. Hydrogen offers the ability to leverage our existing infrastructure assets, whether we're talking about storing it in pipelines or in geologic formations, similar to how we store natural gas.

PUF: Paul, is hydrogen a topic among the regulatory community?

Paul Kjellander: It is. Regulators are interested for a variety of reasons. Among them is reliability. Also, natural gas as a fuel resource because there's a lot happening on that front. Many in the regulatory environment believe natural gas is the next big target as it relates to carbon issues.

But we need to find 24-7 dispatchable baseload resources to help firm up some of the renewables and that ties back to reliability. We need to address growing loads in the customer base with cleaner resources. Customers are demanding that with their own net-zero targets.

With the resources coming on board, hydrogen looks to be one that can be dispatchable. It's firm, and green hydrogen helps address a lot of issues. A lot of those net-zero and carbon-free targets, whether mandated or voluntary by utilities, are catching the attention of regulators, so they're trying to learn more.

But what we have to address is risk, and the role risk plays as it relates to regulators and utilities they regulate.

PUF: To clarify, with hydrogen, you can produce energy kind of like with natural gas. You can intermix it, but it's not emitting carbon dioxide. Who's the scientist?

Kristine Wiley: It doesn't emit carbon dioxide when you're combusting it in the same way that you would combust natural gas in those types of applications. But the carbon intensity associated with the production process depends on the feedstocks you're using.

Traditional forms of hydrogen production utilize hydrocarbon-based feedstocks like natural gas. When you put it through the steam methane reforming process, one of the byproducts is carbon dioxide. The carbon intensity is typically associated with production technology.

PUF: What's a hydrogen hub?

Kristine Wiley: DOE has put out a notice of intent around regional hydrogen hubs, which you can define as a local or regional supply and demand of hydrogen. That's where you're able to utilize feedstocks in a local or regional way, and you're coupling that with consumption while also leveraging infrastructure.

That infrastructure could come in the form of pipelines, storage facilities, and the soft infrastructure around workforce development or leveraging innovation systems like research organizations,  startups, and accelerators to commercialize emerging technologies around hydrogen production.

It's to further develop the hydrogen economy and market. DOE is investing eight billion to build out regional hydrogen hubs.

PUF: Does Southern Company Gas want to be a hydrogen hub or maybe have two or three or ten?

Joanne Mello: Overall, we are excited about the potential to leverage our expertise in pipelines and customer service to provide affordable clean energy to the communities we serve. We are particularly excited about hydrogen because it is a clean-energy vector that holistically serves the customer energy needs.

There is funding coming from the federal level in the form of this hydrogen hub effort to test out the opportunities to leverage hydrogen from a production and supply perspective, and hopefully drive down the cost of hydrogen over time.

Government funding of research and development, and collaboration among a lot of stakeholders are critical to facilitating the widespread adoption of hydrogen. The opportunities around the hydrogen hubs and other things we've seen around hydrogen pilots and R&D are exciting.

So, yes, we're engaging in conversations with a number of our stakeholders and collaborating with others around the potential for this. For example, Nicor Gas recently supported the development of the Midwestern Hydrogen Summit, an event aimed at raising awareness of Illinois' emerging hydrogen economy among a range of stakeholders — including customers — hosted by Hyzon Motors. It'll be interesting to see how these opportunities unfold.

PUF: The question is the timeline because this could be a major transformation to a hydrogen economy, so to speak. What is the research you are looking at?

Joanne Mello: Hydrogen is used commercially in applications today, but there is potential for its use to be more widespread. With the DOE and what they're doing with the hydrogen shot, they have ambitions to reduce the cost to a dollar for one kilogram in one decade.

If you're able to achieve that type of objective, that's where you make it cost competitive with other fuel sources, and that's the key to the timeline of reaching that kind of scale.

It remains to be seen how hydrogen will be deployed within certain applications and regions. This activity getting underway today with these efforts is encouraging in terms of trying to get to that next stage.

Research and development remain critical to the long-term pathway — Southern Company is currently engaged in R&D efforts focused on driving down the cost of hydrogen, understanding end uses, and understanding the potential for blending with natural gas — especially within existing infrastructure.

While we are following the global research efforts around hydrogen blending and supporting some consortia work, we really see potential in pure hydrogen pipelines as an earlier market application.  

Paul Kjellander: There are some first mover projects in North America, and one is based in Utah. Developers are near Delta, Utah with Advanced Clean Energy Storage, which is the name of the project.

They're targeting 2025 to be starting up a project to use renewable resources to create hydrogen that will be stored in a salt cavern and then distributed to a converted coal-fired generator. Natural gas will be used for the hydrogen blend, and it's around eight hundred forty megawatts of capacity for this new generation resource.

They're initially targeting a thirty percent blend with hydrogen, hoping to move up to a hundred percent. They have an offtaker, Los Angeles Department of Water and Power.

Federal support is a huge piece for all these first movers. For this project, there's over five hundred million set up as a clean energy loan guarantee by DOE. To let you know how important that is, that's been secured, and is the first time since 2011 that a federal loan guarantee like this has been put together for a renewable project.

Utilities and regulators are going to be watching this project, because they're trying to deal with the risk factors. We're going to learn a lot. That'll go a long way toward trying to ease some of the concern the regulators and utilities are going to have as they start to look at hydrogen as a resource.

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PUF: Kristine, GTI Energy has many scientists and engineers. What are they looking at to try to get costs down?

Kristine Wiley: In the broader context of decarbonization solutions, hydrogen is a long-term strategy. Other industry partners are engaging in their own pilot studies around how to integrate hydrogen into their systems, but all this is to help drive down the cost to advance technology, to scale up these technologies, and to gain experience.

All of that is going to happen within the next decade, but it won't be until the 2030s that you start seeing broader use of hydrogen and that market develop, because so many components have to be in place.

Not just from the technological perspective, but we need the right policies and incentives in place. You need collaboration and partnerships, domestically and globally. The hope is similar to natural gas, that we can have an international market around hydrogen.

Traditional oil and gas producers, which now have decarbonization goals, can start looking at hydrogen as another opportunity to sell a clean product.

PUF: It sounds like more renewables are needed than planned to make green hydrogen. Will those renewables be devoted not to electricity, but to making green hydrogen?

Joanne Mello: There are different opportunities for production of hydrogen, but green hydrogen is exciting because it gets to that storage issue in terms of potentially having ability to store excess renewable energy from sources like solar and wind for electricity.

Sometimes when the sun is shining or the wind is blowing, you're not going to be in a position to use all of that energy for direct use of electricity. It needs to be stored somehow.

It's a challenge to do that cost-effectively with the technology of today, although we continue to see exciting progress with innovation with batteries and other forms of storage. If there's a way to store it in the form of hydrogen and then use hydrogen as another energy carrier, that introduces more flexibility into using those resources as efficiently and effectively as possible.

What makes hydrogen really exciting is that it can be created from electricity, but its use is not limited to just electricity generation. This makes it unique among energy storage approaches, that it can be leveraged into so many different markets at all different scales.

PUF: Will the cost come down enough? Is that what's happening on the research and development and pilot front, or maybe it just has to get to scale?

Kristine Wiley: It's all of that. An important part of addressing that question is to look at the energy system in a holistic manner, recognizing that it is already integrated. Investigating options to decarbonize in different parts of the economy, there are going to be trade-offs.

Are you going to utilize natural gas powered generation with carbon capture, versus other types of low-carbon fuels like hydrogen, and maybe have an opportunity to use renewable natural gas let's say, in the residential sector with renewable natural gas versus using hydrogen. It's understanding what those trade-offs are in terms of reliability, system resiliency, and affordability.

Conducting that type of analysis for the industry is critical. We are engaging in that type of analysis through a research collaborative, our Low-Carbon Resources Initiative.

It's in partnership with the Electric Power Research Institute. That initiative is focused on advancing low-carbon technologies in the post-2030 timeframe. Southern is one of our foundational sponsors.

One of our core work streams is integrated energy systems analysis. It analyzes different scenarios. We will be releasing results publicly in the fall.

Paul Kjellander: Look at existing infrastructure and the innovative technologies coming on board. How can you look at those in terms of hybrid energy production that involves production of hydrogen?

National lab system folks are looking at how advanced nuclear can be used to help develop and create more hydrogen that can be utilized into the system. Also, in the west, we've all seen the duck curve.

There's an overproduction of renewable resources during certain times of the day. That's what the project in Delta, Utah is looking at. How to take advantage of some existing energy resources to help create green hydrogen.

As you look at the new, innovative technologies, how do you build that into those projects? If they locate a nuclear reactor, can hydrogen be produced there?

How close is a project to a pipeline? What other industrial uses might there be for hydrogen? Can hydrogen storage be used to provide energy when it's needed for peaking?

PUF: What are the opportunities in hydrogen for companies and regional economies?

Joanne Mello: There are a lot. That's why it's important to be engaged in R&D and other collaborative efforts in this space. There's the opportunity around production, transportation, and storage utilization of hydrogen as part of a long-term growth for utilities.

Hydrogen has a role to play in the path toward the net-zero greenhouse gas emissions economy. There are decarbonization solutions within the energy value chain and in cross-sector opportunities, economic development, and growth opportunities for local distribution companies, customers, and communities.

Natural gas users in industrial processes like steel and food processing are key industries that could be interested in utilizing hydrogen for the longer-term. We're seeing it as a potential way to partner with stakeholders in finding solutions that are going to work for our customers and communities.

PUF: How are regulators on planning for hydrogen?

Paul Kjellander: Regulators are already being confronted with the hydrogen question in terms of where that fits in the near-term and long-term planning. There are some utilities, coal states that have coal-fired generators. As they look to transition away from coal, their first next step is natural gas.

They're going to make a conversion at coal sites to natural gas facilities. They get a fifty percent reduction in theory, over where the carbon level is with a coal-fired generator.

Regulators are asking, what does that transition look like past that point? You want to be out of coal by 2028. You're going to natural gas, but that's still got carbon. The answer is it gives a utility an opportunity to see how hydrogen may fit into the mix.

Questions asked by regulators include, are the pipeline issues going to be resolved? What does the blending piece of the puzzle look like? Depending on how the technology advances, can you move to a hundred percent?

Hydrogen is part of the planning horizon. But utilities don't know enough yet to be able to say yes, it's going to be hydrogen.

PUF: What are some of the challenges?

Kristine Wiley: I don't think that we will have issues with the innovation that's needed or being able to have technology breakthroughs. We will be able to do that.

Blending hydrogen into pipelines or using hydrogen and existing natural gas pipelines, there's a lot of research being done there. GTI Energy is doing research in that area.

DOE through their HyBlend program is doing research in that area. Southern is supporting similar research. The general consensus is you could potentially blend up to twenty percent hydrogen into existing pipelines, which would only require minimal modifications.

This, in part, is based on experience and information gathered internationally. There are pilots in the UK and Germany where they're blending up to twenty percent and even up to a hundred percent usage of hydrogen in different applications.

Driving down the cost is necessary, but investments are happening. You see that with different pathways to produce hydrogen, like using the traditional SMR with carbon capture. That's more cost-competitive now versus using an electrolytic pathway, but advances are being made around the electrolyzer technologies to drive down costs.

The other challenges deal with de-risking these technologies, financing, and making sure we have the right manufacturing capabilities and facilities to drive down the cost and get scale.

PUF: At the Southern Company level, are there other challenges?

Joanne Mello: First, start with the operational questions to be answered. Safety is our number one value. We're thinking about what the implications are for bringing a new fuel into our system, for our infrastructure and customers.

With blending, it's thinking about materials compatibility, which look different depending on what your system is made of and what materials are on your system, what kind of pipes you have.

How can we work together through some of the policy questions we have discussed? Several key policy challenges exist for hydrogen, such as costs, lack of hydrogen-ready infrastructure, policy and regulatory uncertainty, and safety considerations.  A big part is collaboration among market actors and other stakeholders. Constructive and consistent standards, regulation, and support will be critical.

For example, the Inflation Reduction Act has a clean hydrogen production tax credit. That will enable more private sector investments in clean hydrogen projects and continue to build on seeing what works and driving down cost over time.

We have infrastructure that delivers reliably, resiliently across all seasons and geographies. How do we think about leveraging that infrastructure to transport other types of fuels?

It can be the opportunity potentially around hydrogen, but also for renewable natural gas. We want to continue to provide quality service to our customers while also decreasing the carbon intensity of the fuel.

PUF: Paul, talk about challenges from the regulator's standpoint.

Paul Kjellander: It's rare to find a regulator who wants to take the risk of being a first mover. That's where these pilot projects and the fact the federal government has kicked in a lot of support with hubs and loan guarantees is going to be helpful. But the key's going to be cost and risk. How do you de-risk that?

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In the Utah project, one of the offtakers is the Los Angeles Department of Water and Power. What's de-risk for them is they're going to use the hydrogen to create electricity and send it down the transmission line. At the end of the day, all LADWP has to do is tell everybody they're using energy produced by hydrogen.

It's basically electrons coming down a transmission line and they put it into their system the same way they always have. It's not a big risk for them and the key's going to be cost. But California is a high-cost market.

Closer to 2025, we start to see where the costs are. It could be in the money for California. It's always more expensive for the first mover.

The key for regulators is to see the success of those first movers.