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Msg  1526 of 1587  at  8/31/2020 2:19:36 PM  by

jerrykrause


Why gas utilities could get left behind in the hydrogen economy

 from SNL Energy Finance Daily
 
 

Why gas utilities could get left behind in the hydrogen economy

 
Byline: Tom DiChristopher
 

Natural gas utilities could find themselves largely observing the rise of the U.S. hydrogen economy from the sidelines, according to a consultant who closely follows the emerging renewable hydrogen market.

The gas industry envisions a future in which local distribution companies, or LDCs, decarbonize heating by delivering a blend of renewable hydrogen and natural gas to utility customers, energy consultant Tom Russo said during an Aug. 25 webinar hosted by the U.S. Association for Energy Economics.

But a lack of government and regulatory support at the state and federal level as well as technical challenges unique to LDCs could leave gas utilities with a marginal role in the hydrogen economy, Russo warned.

Renewable hydrogen could help LDCs cut their planet-warming emissions by displacing natural gas, which is composed primarily of the potent greenhouse gas methane. But few gas utilities are actively pursuing this option, in part because without guidance from state utility commissions on piloting hydrogen blending, many companies are hesitant to move forward, Russo said. Another complicating factor is that hydrogen can react with metals in ways that could compromise pipeline integrity, Russo added.

NextEra Energy Inc. intends to use electrolysis to produce green hydrogen from solar energy that would have been curtailed, with an eye toward blending the fuel with natural gas at a gas-fired power plant.Source: Salt River Project

Meanwhile, U.S. utilities with power generation segments are advancing plans to produce so-called green hydrogen from excess renewable electricity generation to power turbines at gas-fired power plants.

"Power generators, in my opinion, are a wild card here. They might not wait for the gas grid to get good and ready to blend hydrogen," said Russo, who consults with energy companies on decarbonization strategies at Russo on Energy LLC. "Power generators could actually bypass the gas industry altogether by buying electrolyzers and blending green hydrogen directly to run their gas plants."

This means power generators start using up the cleanly generated hydrogen they produce before gas utilities are prepared to blend the zero-carbon fuel into their own systems.

Little clear support from government and regulators

Lack of action in Congress on clean energy policy impacts all potential renewable hydrogen end users, Russo said. However, introducing renewable hydrogen into transmission and distribution lines will require input from state utility commissions, the Federal Energy Regulatory Commission, and the U.S. Pipeline and Hazardous Materials Safety Administration, and those bodies have made little progress on the matter, in Russo's view.

Russo said federal 45Q tax credits for companies that use carbon capture and storage technology could drive conversion of so-called grey hydrogen production to blue hydrogen output. Both processes can use steam methane reforming to convert natural gas to hydrogen, but plants capture carbon emissions to produce blue hydrogen. Grey hydrogen production does release greenhouse gases.

However, some climate activists only support green hydrogen produced only from renewable energy because blue and grey hydrogen production is not carbon-free. They argue that limited renewable gas supplies should be dedicated to hard-to-decarbonize industrial processes, rather than the building sector, which can be converted to electric and geothermal heating.

The U.S. Department of Energy has invested in a range of hydrogen research, including production, delivery and storage. As part of his energy and infrastructure plan, Democratic presidential nominee and former U.S. Vice President Joe Biden has pledged to ramp up research in order to ensure renewable hydrogen is cost-competitive with conventional hydrogen by 2030.

Gas utilities running out of time

Russo noted that Biden's plan, which calls for a massive investment in renewable energy and the U.S. electric grid, reflects efforts in California and other states to prevent new natural gas infrastructure, including through building electrification mandates. Russo does not argue with the industry's message that gas-fired generation is clean because it emits less carbon dioxide than burning coal, but he warned that by hewing too closely to that position, gas utilities risk getting left behind in a world whose priorities are changing.

"I don't think the industry has years to think about this," Russo said. "Because I think, especially if we have a change of administration and we have a change of parties in [Congress], everything could be focused on electricity and not so much natural gas anymore, with the exception of hydrogen."

CenterPoint Energy Inc. is planning a demonstration project in Minnesota's Twin Cities area that would inject green hydrogen into its gas distribution system. The project is in the engineering design phase, and the company intends to place it into service in 2021.

"This project will help CenterPoint Energy gain familiarity with making and using renewable hydrogen, and it reflects the company's continuing commitment to emissions reductions and a cleaner energy future, including renewable natural gas," CenterPoint spokesperson Ross Corson said in an email.

Sempra Energy recently told analysts to expect renewable hydrogen announcements from its Southern California Gas Co. and San Diego Gas & Electric Co. subsidiaries. Meanwhile, Dominion Energy Inc. said a pilot project to ensure its gas distribution systems can accept up to 5% hydrogen by 2030 has entered advanced planning stages in Utah.

 


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