Utilities Look to Green Hydrogen to Cut Carbon Emissions
September 05 2020 - 5:59AM
Dow Jones News
By Katherine Blunt | Photographs by Dan Krauss for The Wall Street Journal
U.S. utilities are increasingly exploring the use of what is
called green hydrogen made from wind and solar energy to reduce
emissions from power plants and pipelines.
The early investments by companies including NextEra Energy Inc.
and Dominion Energy Inc. are expected to help commercialize a
costly technology that has been slow to develop despite its ability
to provide a steady source of carbon-free power. Utilities and
policy makers are beginning to view the technology as necessary to
support ambitious renewable-energy goals.
The Los Angeles Department of Water and Power, the nation's
largest municipal utility, is spearheading a $1.9 billion effort to
convert a coal-fired power plant in Utah to run on natural gas and
hydrogen produced with excess wind and solar power. The plant,
which serves numerous small utilities and electric cooperatives,
has long been one of Southern California's most significant power
sources.
The gas turbines, slated for completion in 2025, will initially
burn a 30% hydrogen fuel mix. Within two decades, they are expected
to run entirely on hydrogen to comply with a California law that
requires the state's electricity supplies to be carbon-free by
2045.
"From a cost perspective, it doesn't compete with natural gas at
this point," said Paul Schultz, director of external energy
resources for LADWP. But he said the utility considers the
conversion a long-term investment in changes that lawmakers and
regulators are requiring.
And the price of green hydrogen is expected to become more
competitive in coming years.
"The costs are going to go one direction, and that's down," said
Craig Wagstaff, Dominion Energy's senior vice president for Western
gas distribution. "It's just a question of how far down they're
going to go."
Hydrogen, which is used in a range of industries, is most often
produced from coal or natural gas through carbon-emitting
processes. The production of green hydrogen, on the other hand,
eliminates those emissions by using renewable energy to strip
hydrogen atoms from water molecules through a process called
electrolysis. Currently, only 1% of the hydrogen produced is green
hydrogen.
A relatively small number of electrolyzers were deployed
globally through 2019. Many more are expected to be in use by 2025
as companies look for ways to cut emissions from power and gas
supplies, transportation and other sectors, according to a report
by research firm Wood Mackenzie.
In June, German engineering firm Apex Energy Teterow GmbH
completed a green-hydrogen plant with a two-megawatt electrolysis
system located near the Baltic Sea.
Growth in green-hydrogen production has been slow in part
because it typically costs three to six times as much as hydrogen
derived from fossil fuels, said Dan Hahn, who leads the global
energy-providers practice for research firm Guidehouse. He expects
costs could fall significantly within the next decade as production
technology develops and policies are implemented that favor green
hydrogen over that derived from fossil fuels.
"We think that even in the next two to three years, costs will
decrease because of the investments that are being made in the
market," Mr. Hahn said.
Juno Beach, Fla.-based NextEra, the nation's largest owner of
wind and solar farms, earlier this year announced plans to invest
$65 million in a project that will use excess solar energy to
produce hydrogen for use in a Florida natural-gas plant. The
20-megawatt electrolysis system, expected to be online in 2023,
will be used to replace a portion of the natural gas in one of the
plant's three gas turbines.
"What makes us really excited about hydrogen...is that it has
the potential to supplement significant deployment of renewables,"
Chief Financial Officer Rebecca Kujawa said in a recent earnings
call. NextEra declined to elaborate on its plans.
Dominion Energy, a Richmond, Va.-based company that provides
electricity or natural gas to about seven million customers in 20
states, is planning to blend hydrogen into its gas-distribution
system to reduce methane and carbon emissions. It is aiming to test
a 5% blend at one of its training sites early next year, with the
intent to incorporate it more widely and eventually increase the
percentage of hydrogen in the system.
Eventually, the company sees potential in using excess wind and
solar power to produce its own hydrogen for power plants and
pipelines as it pushes for net-zero emissions by 2050.
Write to Katherine Blunt at Katherine.Blunt@wsj.com
(END) Dow Jones Newswires
September 05, 2020 05:44 ET (09:44 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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