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Timera Take A Look At Hydrogen Investment Support (AKA Subsidies)

November 28, 2022
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By Paul Homewood

Timera  take a look at the subsidy mechanisms for hydrogen:

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https://timera-energy.com/uk-hydrogen-investment-support-a-case-study/

I have not bothered to copy the whole thing, as it’s a bit technical. But the intro really sums the whole nonsense up:

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Yes, as I have been inconveniently pointing out for years, hydrogen is very expensive to produce, and nobody wants to buy the stuff at cost prices except for dedicated hydrogen users.

Subsidies drop into two basic categories:

 

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The first is to be funded via general taxation, currently to the tune of £240 million. But it is the second mechanism which will carry significant costs.

Once hydrogen production is up and running, the HBM will be funded in the same way as CfDs are, in other added onto consumers’ energy bills. This subsidy will not only cover the difference between the market price for and hydrogen and the guaranteed contract price, but also to offset potential losses arising if hydrogen producers cannot sell enough hydrogen to cover their fixed costs.

In other words, heads they win, tails you lose!

The long term goal of course is to produce hydrogen by electrolysis using renewable energy. Simply steam reforming gas achieves nothing, as the process still produces lots of CO2, is extremely energy inefficient and costs much more than the natural gas which the hydrogen replaces. Worse still, if gas prices go up, so too does hydrogen.

But here’s the snag! Where will the electricity required for electrolysis come from?

For the foreseeable future, by which I mean the next couple of decades at least, there simply will not be the surpluses of wind and solar power to produce more than a tiny fraction of the hydrogen needed to replace natural gas in our energy mix, both for heating and electricity generation.

Even with the planned 40 GW of offshore wind and extra onshore  and solar power capacity, surplus power will still be infrequent.

In reality if demand for electricity increases for electrolysis, this extra will have to come from a marginal source, one which can be readily switched on and off. In practicable terms this means gas power generation.

If international gas prices remain high, the cost of hydrogen will be higher still. And, of course, those darned emissions will still be sent up into the atmosphere.

Maybe there will come a day when we have so many wind mills around the coast that all of the hydrogen we need can be produced (extremely intermittently) by offshore wind power. But by then, if the climate con-men are to be believed, we will all have fried to a crisp long before anyway!

17 Comments
  1. Mary permalink
    November 28, 2022 7:23 pm

    When I was at University in the 1980 they were trying to develop Hydrogen vehicles….doesn’t look like they’ve made much progress

    • It doesn't add up... permalink
      November 28, 2022 11:14 pm

      Shell recently decided to close their vehicle hydrogen refuelling business in the UK. They also did a major trial in Germany with an electrolysis plant installed at their Wesseling refinery, which produced about 1% of the refinery’s consumption of hydrogen at enormous cost: part of the output was delivered to a handful of service stations. The economics were disastrous. Lots of greenie points for everyone involved of course, including EU subsidies.

      https://www.refhyne.eu/publications/

  2. November 28, 2022 7:23 pm

    One factor about hydrogen that seems to be overlooked is that it is extremely dangerous. Easily ignited. I would not want it being piped into my kitchen. Remember the Hindenburg!

    • November 28, 2022 9:32 pm

      Also difficult to store and transport, requires massive cooling in liquid form…

      ‘Hydrogen can be stored physically as either a gas or a liquid. Storage of hydrogen as a gas typically requires high-pressure tanks (350-700 bar [5,000-10,000 psi] tank pressure). Storage of hydrogen as a liquid requires cryogenic temperatures because the boiling point of hydrogen at one atmosphere pressure is −252.8°C.’

      https://www.energy.gov/eere/fuelcells/hydrogen-storage

      • Sean permalink
        November 29, 2022 5:52 pm

        And hydrogen storage has long-term equipment issues due to hydrogen embrittlement.

      • Stuart Brown permalink
        November 29, 2022 6:33 pm

        Guys, you didn’t read the link I posted below! Storage will be sorted. We’ve (we taxpayers) just given the best part of £8m to develop storing H as uranium hydride. Such a brilliant idea to make use of all those thousands of tons of depleted uranium we have just lying about. Well, I suppose Urenco have quite a bit, but still…

        “We see HyDUS as an exciting energy storage technology that will help to drive decarbonisation of the national grid,” said the UKAEA’s Monica Jong. “What’s even more exciting is that this is a UK technology and a highly exportable showcase example of how to efficiently cross-bridge technology from the nuclear and fusion sectors into the hydrogen economy proving the UK is still a global leader in energy innovation.”

        Fusion sector? Still struggling to get the point of this. Can I have a couple of million to investigate storing H2 as carbon hydrides, and piping it to people’s houses to release the energy in situ?

  3. November 28, 2022 7:53 pm

    I cannot understand a Mindset that can waste time on considering an investment with the assumption that it will produce a NEGATIVE Return and therefore require initial and ongoing subsidies.
    To me a government that does that is committing a fraud against the population.

  4. November 28, 2022 8:08 pm

    The whole idea of Hydrogen being a significant solution to any imaginable problem with the “Climate” is nonsense on stilts.

    But if MPs were as usual bonkers, but additionally seriously interested in making significant quantities of Hydrogen (without converting from methane), the only option is Nuclear. Lots and lots of Nuclear. And not the ridiculous Chinese / French “Hinkley C” Nuclear, at that.

    But out of 650 MPs (forget the Lords), there aren’t enough ‘serious’ ones to stage a five-a-side footie match.

  5. Graeme No.3 permalink
    November 28, 2022 8:11 pm

    The cheapest method of producing hydrogen is from brown coal (lignite) but CO2 is also produced. It is quite reliable.
    The cheapest method of producing electricity for electrolysis of hydrogen is from brown coal but CO2 is also produced.
    The most expensive but least reliable method of producing hydrogen is from intermittent renewables. Supposedly no CO2 is produced.
    Guess which one politicians ‘think’ is best. You need to renew your politicians.

  6. A+man+of+no+rank permalink
    November 28, 2022 8:13 pm

    In the past Paul has shown us this video from Jan Smelik, about Holland using hydrogen to capture windmill power. 6 minutes of pure comedy. And the comments, some from industrial experts, are very sad. Our own MPs should be held down and made to watch this video.

  7. Stuart Brown permalink
    November 28, 2022 8:26 pm

    Apparently we’ll be able to store it though…
    https://www.world-nuclear-news.org/Articles/Funding-for-UK-project-to-store-hydrogen-using-dep
    No, I’m not really seeing the point either…

  8. Aaron Halliwell permalink
    November 28, 2022 8:27 pm

    Even more worrying, at 20.10 on 28.11.22 wind is producing only 1% of our electricity!

    • Mr Robert Christopher permalink
      November 28, 2022 8:43 pm

      Not if you are one of the elite 1% 🙂

  9. Gordon Hughes permalink
    November 28, 2022 9:23 pm

    The problem is far worse than Timera state. Having produced H2 using intermittent renewables (very bad news for a very capital intensive process) you have to (a) store it, and (b) distribute it. There are few volunteers to live on top of hydrogen storage caverns. In any case they are very expensive to build and maintain. Transmission and distribution are equally bad – putting aside the nonsense proposed by gas networks you would need to build completely separate networks because of the conversion difficulties.
    I gave a talk a year ago about the costs of replacing gas by green H2 for the UK. The capital cost would be between £1 and £1.5 *trillion* while the operating costs would be several time the cost of supplying gas.
    Most of the technical problems are soluble if you are willing to pay enough. Still the whole EU program is based on the usual story that if you give us money now the costs in future will magically decline by anything from 50% to 75%.
    The only people really serious about hydrogen are the Japanese (because they have few alternatives except very expensive floating wind turbines). They expect to rely on high-temperature nuclear reactors. That will be a hard sell given the history of nuclear power in Japan.

  10. November 28, 2022 9:50 pm

    Assorted hydrogen issues re. transport…

    https://threadreaderapp.com/thread/1596449504194367488.html

  11. Ben Vorlich permalink
    November 28, 2022 10:33 pm

    BP weighs ending its 70-year-old Statistical Review of World Energy

    LONDON, Nov 28 (Reuters) – BP (BP.L) is considering ending the publication of its Statistical Review of World Energy, over 70 years after it first published the benchmark report, as the energy major focuses on its shift to renewables, the company told Reuters
    https://www.reuters.com/business/energy/bp-weighs-ending-its-70-year-old-statistical-review-world-energy-2022-11-28/

    • It doesn't add up... permalink
      November 28, 2022 11:28 pm

      That would be sad news indeed. It’s not perfect: they rely on government data to a large extent, which they collate. Sometimes they make some strange decisions about how to present some of the data. Sometimes they try to adjust government data and make more sense of it. But as a compendium of data on a global scale it has long been my go-to source. Both Shell and the IEA attempted something similar in the past, but Shell stopped publishing theirs some years ago, and the IEA version is hopelessly biassed to climate issues. The BP one has been beginning to suffer from that too: there was also the weird decision to switch to reporting energy consumption in Exajoules – a unit used by almost nobody – in place of the well understood mtoe – million tonnes of oil equivalent. At the end of the day, it’s just a conversion, but when you have spent many years being familiar with mtoes and have conversion factors to other kinds of energy units used in various parts of the energy biz in your head (e.g. 1 toe=12MWh) it becomes an unnecessary exercise.

      The BP workbook of data really was a massive convenience.

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