The costs of hydrogen and fuel cells for energy applications like fuel cell electric vehicles (FCEVs) and fuel cell power plants have been declining due to the progress in both technologies and supply chains. In addition, the need for energy storage is emerging due to the greater uptake of intermittent renewable energy. To this end, hydrogen proves to be a key energy storage option. The greater use of hydrogen will aid the target of achieving more clean energy supply. There are several benefits of hydrogen storage. It is flexible in terms of scale, location and timing, and is especially useful for long durations and seasonal storage. The ASEAN Centre for Energy has published a report titled, “Hydrogen in ASEAN: Economic Prospects, Development and Applications”. The report analyses the need, potential, economics, roadmap and policy implications for the hydrogen sector in ASEAN. REGlobal provides an extract from the report…
ASEAN Member States (AMS) observe that there is a need for hydrogen derived energy for various reasons. One, it will be a green energy supply and will also enhance indigenous energy supplies, thereby improving energy security. In addition, it will assist in reducing imports. According to data, AMS currently consume 4.5 million barrels of oil per day but produce only 2.5 million barrels per day. The remaining supply gap is imported. The demand for oil is driven mainly by the transport sector, especially land transport. Currently, electrifying road vehicle fleets seems to be the most desirable way to address the AMS’ energy security concerns, as well as its financial and fiscal burdens, and emissions and pollution challenges faced by the road transport sector. However, the concept of battery electric vehicles (BEVs) has some limitations. Various studies have shown that if electricity is not generated by energy sources that are sufficiently clean and green, BEVs will cause more emissions and pollution than fossil fuel-powered vehicles.
The concept of hydrogen plus fuel cell electric vehicles offers an option as a complementary solution towards electrifying the transport sector. Hydrogen and fuel cell technologies have intrinsic advantages in the transportation sector. One, the energy intensity of hydrogen is higher than that of gasoline (5 kg of hydrogen on a passenger vehicle can sustain driving up to 500 km). Two, refuelling can be done as quickly as for gasoline and diesel engines. Three, the combination of these two advantages also makes hydrogen and fuel cell vehicles especially suitable for long-distance or heavy-duty trips, such as by intercity buses and cargo delivery by trucks. Four, the countries currently leading in hydrogen technologies are also exploring opportunities to apply hydrogen energy to railways, aviation, shipping, drones, automated guided vehicles (AGVs) and robots. Five, when hydrogen sourced from renewables is used as the fuel, vehicles could be close to or even truly achieve zero emissions. All in all, hydrogen and fuel cell technologies provide a unique opportunity for in-depth coupling of renewables and the transport sector with BEVs as a complementary option.
The AMS are rich in energy resources which can be mobilised to supply both blue and green hydrogen and to power the transport sector by applying fuel cell technologies. According to estimations from various reports, for the production of green hydrogen from renewable energy, ASEAN possesses 229 GW of theoretical resources of wind energy, 158 GW of hydropower (including small hydro), 61 GW of biomass and 200 GW of geothermal. With respect to solar energy, the resource base is strong, with technical potential of more than 8,000 GW gross capacity. With respect to this potential, hydrogen is a feasible option to be used as be as flexible load to take the curtailed electricity from the intermittent renewable energy. Moreover, hydrogen production from renewables offers additional opportunities to further develop energy resources in ASEAN, turning them into a cluster of new industries to drive economic growth and create new jobs.
The AMS are actively looking into demonstration projects for hydrogen and fuel cell technologies. For instance, Chiyoda Corporation, together with Mitsubishi and others, launched the world’s first global hydrogen supply chain demonstration project in 2020 to produce hydrogen from Steam Methane Reforming and convert it into Methylcyclohexane at the Brunei Sungai Liang Industrial Park hydrogenation plant. The product is subsequently exported to Japan. This project aims to supply 210 tons of hydrogen per year after initial completion, equivalent to the demand for 40,000 fuel-cell vehicles.
The following key observations on costs have been made in the report:
- ASEAN has high potential to produce green, blue and grey hydrogen. However, at the current level of capital expenditure (CAPEX) required for hydrogen production, transportation technologies and fuel cells, coupled with relatively high LCOE of renewables, it is not yet economic to use hydrogen energy in either the power sectors or the transport sectors of the AMS.
- As CAPEX decreases for hydrogen production, transportation, along with fall in LCOE of renewables over the next decade, hydrogen production in AMS could become competitive. The formation of hydrogen energy markets in China, Japan and South Korea will certainly help the AMS.
- Grey hydrogen produced from Brunei and Indonesia could already be competitive in the current situation. Going forward, as the costs of hydrogen storage and transportation fall, grey hydrogen production could be upgraded to blue hydrogen production coupled with carbon capture and storage.
The report has also highlighted a roadmap on hydrogen energy development in ASEAN for policy makers and industrial stakeholders:
- Phase I (2020-2025): Countries with advantages in terms of fossil fuel resources and scale of existing infrastructure such as gas pipelines and LNG liquefaction plants could consider developing capacities in producing and exporting grey hydrogen. The new stream of revenue could be subsequently used to expand hydrogen-related infrastructure in these countries and help form a certain level of economies of scale, so as to prepare for the next phase of hydrogen energy development.
- Phase II (2026-2030): Post the setting up of capacity and infrastructure for grey hydrogen production, shift to blue hydrogen production and exports with the help of carbon capture and storage will take place.
- Phase III (Post 2030): After the LCOE of renewables significantly declines and the share of renewable power generation reaches high levels in the AMS, hydrogen from electrolysis could be deployed as energy storage. If competitive electricity markets are established in the AMS by then, the curtailed electricity from renewables could come at even lower prices. Thus, green hydrogen begins to dominate for used in domestic downstream energy applications and for export to overseas markets. This is on the assumption that hydrogen infrastructure is already present in the AMS as a result of the hydrogen export activities in the previous two phases.
According to the report, following are the key policy implications for AMS going forward:
- Dedicated policies such as taxes, subsidies and other incentives or disincentives for both the energy market and for vehicle ownership and usage that favour hydrogen and fuel cells are key in a bid to bridge the cost gaps. This is required in the early adoption stages. In particular, the higher total cost of ownership of FCEVs is due to both high CAPEX of vehicles and the higher cost of hydrogen fuel. Meanwhile, the CAPEX for BEVs has been declining fast, due to supportive policies around the world. Similar policies for FCEVs will improve their economic competitiveness.
- The infrastructure for the transportation and delivery of hydrogen at large scale for energy use has not been established. Therefore, a supportive policy framework with long-term plans and targets is critical to reduce the uncertainties faced by stakeholders in the investment of hydrogen-related infrastructure.
- Carbon pricing could be established in the AMS to accelerate the adoption of hydrogen and fuel cell technologies.
- Market mechanisms such as a competitive electricity markets, pricing of power grid auxiliary services and pricing storage services could also promote the hydrogen sector. These mechanisms can give additional streams of revenue to hydrogen supply chains. Furthermore, innovative financing instruments which help enable investment in hydrogen infrastructure and reduce the financial costs will also help going forward.
- Methane pyrolysis technology should be promoted. The levelized costs of hydrogen for the plasma pyrolysis range between $3/kg and $6/kg of hydrogen under the current economic framework. There is good potential for further reductions in the production costs. At such costs, carbon emissions are drastically lower than the emissions produced from hydrogen produced using steam methane reformation technology. However, the methane pyrolysis technology requires further research development and deployment to be proven commercially viable at large scale.
The full report can be read here