Investing in clean hydrogen – why solar and wind cannot do it alone
Market watch
Investing in clean hydrogen – why solar and wind cannot do it alone
-
25 January 2024
-
Real Assets
-
Infrastructure
Reading time: 3 minutes
Amir Sharifi
Energy Transition Lead & Infrastructure, Senior Managing Director at Ardian and CIO at Hy24
For years hydrogen has played a secondary role to wind and solar power as a clean energy source. But that is going to have to change soon.
Hydrogen has been used to refine petroleum, treat metals, and produce fertilizers for years, but as a clean energy source it has played a secondary role to wind and solar power. However, if governments are to have any realistic chance of meeting net-zero emissions targets by 2050, that is going to have to change soon.
Decarbonizing electricity by flipping generation to solar and wind has been the lead horse in the race to zero carbon emissions, but relying exclusively on green electricity to replace all energy sourced from hydrocarbons poses significant challenges and risk to the continuity of supply.
Electricity powered by renewables faces three main limitations: supply intermittency, storage complexity and grid constraints.
Hydrogen: clean energy that can be stored
Electricity powered by renewables faces three main challenges: supply intermittency, storage complexity and grid constraints.
The challenge of supply intermittency is obvious. Wind and solar farms do not generate the same amount of power all the time. This then presents the challenge of storing excess wind and solar output. At present the main solution for storing excess electricity from renewables is battery technology. Battery storage models, however, are impacted by material degradation costs.
One of the main reasons why fossil fuels have accounted for around 80% of the energy mix historically is that they can be stored and transported in a way that electricity can’t.
“What makes green hydrogen so appealing is that it has the same versatility as oil and gas. In many respects clean hydrogen can serve as a like-for-like replacement for oil and gas and can be transported using existing infrastructure. It is an energy source with particular characteristics that make it a crucial part of green energy transition alongside renewable sources such as solar or wind.”
Acknowledging hydrogen’s essential role in the energy transition opens a wide range of options.
How hydrogen can unlock renewables bottlenecks
The fact that green hydrogen can be moved through existing pipeline infrastructure and transport networks is a huge advantage. Even if supply intermittency and storage was not an issue for renewable power generation, upgrading existing electricity grids to not only reach wind and solar farms (often located in remote locations with hostile climates), but also meet the additional demand for electricity from electric vehicles, would prove to be challenging. We can’t rely on this unique solution. Hydrogen is the complementary option.
We have already seen grid connection bottlenecks delay new wind and solar farms from feeding output into our energy networks by between six and ten years, according to consultancy Roadnight Taylor. Bringing clean hydrogen production into frame as a source of energy off-take can provide a simple and cost-effective solution to these challenges.
Grid constraint is a big challenge for renewables.
“Electricity grids are designed to provide roughly 20% of the energy mix, not 50%. So, instead of trying to connect all the output from new wind and solar projects to the electricity grid, that power can be used to produce clean hydrogen that can be stored and transported from the solar or wind farm to where it is needed,” Sharifi says.
-
20 %
of the energy mix is supplied by electricity grids
Acknowledging the complementary role clean hydrogen has to play in energy transition opens up wide range of options for addressing the cost and implementation hurdles that face global energy systems as they decouple from hydrocarbons.
Discover our latest conference dedicated to Data Intelligence for Clean Energy here