Power point: hydrogen enters the electoral race

It’s touted as a world-first hydrogen project that will put South Australia at the forefront of a global energy revolution that sidelines dirty coal and methane power stations in pursuit of net-zero greenhouse gas emissions by 2050.

SA’s Labor opposition is proposing a $600-million hydrogen hub that would include one of the world’s biggest electrolysers, largest hydrogen storage facilities, and a 200MW power station, all run by a new government body called Hydrogen Power SA.

With an election on 19 March, voters are about to decide whether they believe the plan can add stability to the state’s electricity grid, which is dominated by large but capricious wind and solar resources, kickstart a hydrogen export industry, cut power prices and create hundreds or possibly thousands of jobs.

Labor reckons the power plant’s ability to act as a baseload generator means it will also be able to counter one of renewable energy’s biggest problems: the notorious dunkelflaute, roughly translated from German as the dark doldrums when the sun doesn’t shine and the wind won’t blow.

But will voters reward the Liberal government’s view that there’s more dummkopf than dunkelflaute to Labor’s plans? It says the project is so badly designed it will fail, with unrealistic costings that will blow a billion-dollar hole in the state’s budget.

South Australians are used to their power network attracting outside interest. The statewide blackout of 2016 gave plenty of ammunition to opponents of the state’s enthusiastic embrace of wind and solar.

South Australians are used to their power network attracting outside interest. The statewide blackout of 2016 gave plenty of ammunition to opponents of the state’s enthusiastic embrace of wind and solar.

Yet SA’s response – commissioning what was then the world’s biggest battery, built in 2017 by Tesla’s Elon Musk and now managed by French company Neoen – has proved extraordinarily effective in helping keep the electricity grid stable.

Labor has yet to reveal the location for the energy “gamechanger” it says will use wind and solar power to convert water into enough clean-burning hydrogen to drive Australia’s first major H2 power station,which will be operating by 2025.

The plan is to buy cheap surplus renewable energy that currently makes the electricity grid unstable in the middle of many sunny days and use it to power up a giant 250MWe electrolyser, which separates water into hydrogen and oxygen, slated to cost $220 million.

Up to 3600 tonnes of the resultant H2 would be held in storage, enough for two months’ supply and claimed to cost $31 million. That appears to be the biggest store of liquid hydrogen anywhere in the world.

Then, on those dunkelflaute days, the hydrogen would be burned by the $342-million power plant using combined cycle gas turbines (CCGT) to provide the continuous or baseload power needed to prevent blackouts. Its designers say it might operate only 5% to 10% of the time and could also kick power to the grid when prices are higher, such as in the evening.

Liberal deputy premier Dan van Holst Pellekaan says Labor’s plan is fatally flawed and would cost at least $1 billion. He says the CCGT turbines are “dinosaur technology”, switching on too slowly to compete against giant batteries and open cycle gas turbines, which ramp up much quicker.

He says the Australian Energy Market Operator (AEMO) advised the government (although not in reference to the ALP policy) that no CCGT are needed in SA because they have “limited flexibility and can’t effectively operate in a system where wind and solar are producing energy at very low cost at times”.

Another big problem, according to van Holst Pellekaan, is that Labor has vastly underestimated the cost of storing liquified hydrogen, which requires a giant double-skinned steel “thermos flask” to keep it at minus 253°C. That, he claims, would add least $300 million to the bill.

Labor’s energy spokesman, Tom Koutsantonis, rejects the government claims, saying the plan is fully costed by leading consultancy Frontier Economics using CSIRO estimates.

Koutsantonis claims the power station would be able to cut wholesale power prices by 8% by pushing extra power into the market to support renewables without seeking the high profits private generators demand.

Why hydrogen? “It’s the only way to completely replace fossil fuels as baseload power,” says Koutsantonis, adding that the costs associated with green hydrogen at this stage – multiple times the cost of natural gas – means government must take the lead role.

“It’s got to be government to step in and do this, otherwise it won’t happen,” he says.

“I like the idea of the baseload generator operating in SA, operated by the government. The idea we would turn on to meet demand misses the point. Our generation will be offering baseload stability to the grid that we’ll be using to stabilise renewable resources.”

But, with increasing focus on big batteries – Origin is planning a 700MW battery as it closes its 2880MW coal-fired Eraring plant in the NSW Hunter Valley, and AGL a 250MW battery in Adelaide – why choose H2?

“Hydrogen manufacture is a form of storage while simultaneously proving up a new technology that has wider applications than a battery,” says Koutsantonis. Labor hopes the move can put the state in the box seat for what the federal government forecasts could be a $130-billion hydrogen export industry by 2050, meeting 10% of global demand.

Koutsantonis claims the power station would be able to cut wholesale power prices by 8% by pushing extra power into the market to support renewables without seeking the high profits private generators demand.

The energy problem for SA is also its strength – the state has some of the best locations for wind and solar generation in the world, resulting in one of the highest take-ups of rooftop solar, with more than 1.2GW installed (about what a large nuclear power reactor produces). Late last year, wind and solar met all the state’s power needs for almost a full week.

But SA’s power demand swings wildly with the weather, ranging from 100MW on mild spring days to 3300MW on summer scorchers. So, when demand is low and solar production is high the grid can become unstable. Equally, when demand is high, there may be too little renewable energy available.

The SA government has responded to the first problem by authorising some rooftop solar to be switched off when low demand threatens grid stability. It is also backing a big electricity interconnector linking NSW, Victoria and SA as a way of diversifying power sources, and also unloading excess from SA.

Koutsantonis claims the Liberals have put all their eggs in the interconnector basket at a time when the closure of big baseload coal generators has raised fears about NSW’s own ability to stabilise the grid.

Labor’s alternative plan is to “soak up” that excess daily cheap power to make hydrogen, keep it, and feed it back when the renewables need backup.

So who’s right? There is no consensus among experts, many of whom were only prepared to comment as backgrounding.

Professor Gus Nathan, director of the Centre for Energy Technology at the University of Adelaide, backs Labor’s general idea. “Conceptually it’s good and well-aligned with the kind of things that are occurring overseas, and within the general thinking of what is likely to be viable,” he says. “The question is whether this is the right scale.”

Labor’s proposal is similar to what Australia’s former chief scientist, Professor Alan Finkel, one of the nation’s strongest backers of hydrogen and the federal government’s special adviser on low-emissions technologies, has pushed.

But Climate Council councillor Andrew Stock, a former chief executive at Origin with 40 years’ experience in oil, gas, renewable energy and power-station production, says Labor’s idea is flawed in concept, costings and also in its direction.

He believes the construction of the electricity interconnector with NSW will alleviate the problem of excess solar during the day by allowing increased interstate exports.

Labor’s hydrogen plant would also be able to run for weeks while the big batteries now being built can exhaust themselves in a few hours.

He also says turning electricity into hydrogen, then turning it back into electricity, is hugely inefficient. By the time 100 electrons of renewable energy have gone through the electrolyser and then liquified the hydrogen, only 30 electrons will be left – 70% is wasted in the process.

Hydrogen, he says, is more suited to use in making green steel, other chemicals such as ammonia, and for fuel cells for heavy transport and long-haul trains.

A better and likely cheaper strategy to protect the grid and use renewable energy is to focus on greater electrification of Australia by subsidising more home batteries, more electric vehicles – including buses and suburban trains – and replacing gas with electricity in the home.

Stock says Labor’s 8% power price cut is “highly unlikely” and calls its costings a long stretch – the project would be “very, very expensive”. The hydrogen storage would need about 90 kilometres of 112-centimetre-diameter pipe, he estimates, adding that NASA’s liquid hydrogen storage was the biggest he knew of, at 350 tonnes – less than a 10th of Labor’s proposal.

Some other analysts don’t agree. “The reason hydrogen looks like such a promising technology is simply that electricity is expensive to store, and expensive to move,” one economist says.

“Some people say – why are we stuffing around with hydrogen? We can make electric cars, we’ve got induction cookers, technically probably all of our energies can be electrified.

“The problem is that to shift all of the energy that we use from natural gas and from liquid fuel under the electricity system is likely to be enormously costly. And probably more than people realise just because it’s so difficult or so expensive to transport and store. And that’s where hydrogen may be a cheaper alternative.”

Labor’s hydrogen plant would also be able to run for weeks while the big batteries now being built can exhaust themselves in a few hours.

Another analyst argues that while Stock is correct about hydrogen’s inefficiency, that doesn’t mean it isn’t economic to use.

Frontier Economics, which drew up Labor’s plan, stands by its numbers. “If there is a large-enough difference between the costs of buying green electricity to make hydrogen and the price at which hydrogen-produced power is sold, then it can be done economically,” it says.

“If there is a large-enough difference between the costs of buying green electricity to make hydrogen and the price at which hydrogen-produced power is sold, then it can be done economically”

Frontier Economics

Yet with no real examples of the project, Labor’s costings must be uncertain. SA currently has the nation’s biggest electrolyser at Hydrogen Park SA, which is 1.25MW and provides green hydrogen to be fed at a 5% mix into the existing natural-gas network for more than 1500 customers in the Adelaide suburb of Mitchell Park.

The demonstration is run by Australian Gas Infrastructure Group (AGIG), which is aiming for 100% hydrogen to its two million national customers over coming decades.

Senior adviser Owen Sharpe says AGIG would welcome more state government involvement in establishing targets for use of hydrogen, and a hydrogen industry that included power generation, blending in the gas network, and transport.

He says AGIG’s plans to increase hydrogen to a 10% mix in the gas network by 2030 could use about one-fifth of the output of Labor’s electrolyser, leaving the rest for power generation and other sectors.

If Labor’s project does produce power for the costs it claims, some believe it would make money. Ben Cerini, managing consultant at energy adviser Cornwall Insights, says the company’s modelling suggests the plant would have made $47 million in the summer of 2020–21. But he says the generator type depended on its purpose.

“If it wanted to jump in to fill shortages in the market to make money, then an open cycle turbine which can ramp up more quickly – but is much less efficient – would make sense,” he says. “But if you’re talking weeks, you want CCGT.”

Richard Day, a senior renewable energy specialist at SA’s Department for Energy and Mining, says the state already has seen strong international interest in hydrogen exports from Japan, South Korea and Europe’s biggest port, Rotterdam. Several projects are under investigation, but none have yet produced hydrogen (other than the AGIG electrolyser).

The main projects are focused on the top of Spencer Gulf, where Day says a government study of likely hydrogen export ports nominated Port Bonython near Whyalla as a strong contender, given proximity to major power lines, a government-owned jetty, gas and liquid-fuel pipelines from Moomba, and 2000 hectares of government-owned land.