Green Hydrogen - The “Hulk” of the Hydrogen Future
Is Green Hydrogen an applicable alternative to existing market dynamics in Trinidad?
Trinidad and Tobago’s main industrial contribution to economic growth is facilitated by the energy industry consisting of both oil and natural gas production. The sector has been responsible for the country’s increased GDP since the inception of the industry and based on the commercial initiatives of both current and successive governments, will provide the baseline for economic growth for the foreseeable future. Sector development has been extremely successful, but current challenges, such as the availability of Natural Gas, has severely impacted the viability of several multinationals (ammonia and methanol producers) whilst also eroding the State’s collection of revenue and taxes. With forecasted gas production figures expected to increase marginally over the next couple years with Matapal and Cassia C Compression projects coming onstream, the outlook for enhanced development and utilization of gas reserves needs to be thoroughly examined to allow for optimized extraction of value from this limited resource.
The downstream sector comprises of mostly ammonia and methanol production plants with front-end systems designed to convert Natural Gas to hydrogen as a main component for the commodity production. With limited availability of Natural Gas, the question must be asked - Is current planned usage optimal for revenue generation? As an alternative to the industrial use of Natural Gas for hydrogen generation, renewable energy (RE) sources can be used to supply electricity for electrolytic methods of hydrogen generation for ammonia/methanol synthesis. RE sources have traditionally been discussed in the forum of replacement of carbon sources for power generation. The IPCC (Intergovernmental Panel on Climate Change) has established the importance of renewable hydrogen energy as a major contributor to the energy mix in the transition from gas to RE for power generation (Bruckner T. 2014). Hydrogen usage can offset the need for natural gas in the downstream sector and create an opportune scenario for the use or creation of alternate commodities such as LNG, power or baseline stabilization of natural gas usage in the country. Green Hydrogen is the creation of hydrogen by utilizing RE sources to power electrolytic processes converting water to hydrogen and oxygen. This method, while traditionally energy intensive, allows for a sustainable pathway to create hydrogen feedstock, free from carbon emitting sources.
(Mohsin 2018) examined the LCOE (Levelized Cost of Electricity) for wind generated RE for hydrogen creation at an average capacity factor of 0.40 which resulted in the cost of generation for utility scale systems at approximately 0.08 USD/KWH. While this cost is currently more than the local electrical generation cost using traditional natural gas systems (USD 0.06USD/KWH), the existing cost represents a subsidized cost which affects environmental, fiscal and social dynamics negatively as subsidies have been noted to encourage wastage and inefficiencies. Allowing for a realistic cost structure for electrical pricing, RE power generation can be used to offset natural gas and facilitate competitive pricing for hydrogen gas as well as the domestic electricity supply. The favorable economic conditions outlined by (Mohsin 2018) for the production, CAPEX, OPEX and storage of hydrogen allows for commercial viability of such systems as feedstock to the existing downstream sector in Trinidad. Plans for Green Hydrogen usage have been explored and ratified in countries such as Northern Ireland and Australia. Specifically, initiatives for integration into existing ammonia plants are being undertaken by YARA and ENGIE to offset natural gas usage with Green Hydrogen (Engie 2019). Supply chain and business models for hydrogen production are also currently being explored and built by ThyssenKrupp Industrial Solutions which is constructing a Hydrogen power plant integrated with an ammonia plant.
Commercial application of Green Hydrogen can allow for a sustainable, alternate energy stream for the local energy sector. With the focus on RE implementation and Energy Efficiency currently at the forefront of discussion to achieve the SDGs (Sustainable Development Goals) and fulfill the Paris Agreement, the move to integrate RE to facilitate industrial and manufacturing sectors can enhance more sustainable revenue streams for traditionally hydrocarbon producing countries. As Trinidad transitions to an era where sustainable Natural Gas production becomes increasingly difficult, the scenarios that must be examined would focus on the existing model of natural gas use and how can renewables enhance the value chain and revenue stream for the country going forward. I personally believe that the risk/reward scenario of the industry based on the establishment of the downstream sector and associated experiences can lead us to a more sustainable future where energy supply is readily available for utilization. The final question resonates to the similar risk that was taken to establish the Point Lisas Industrial Estate - Can we usher in a new era and lead the industrial transformation away from oil and natural gas?
Andrew Castor is an Environmental Advisor and has significant expertise in Natural Gas. To learn more about Andrew follow him on LinkedIn.
Bruckner T., I.A. Bashmakov, Y. Mulugetta, H. Chum, A. de la Vega Navarro, J. Edmonds, A. Faaij, B. Fungtammasan, A. Garg. 2014. Energy Systems. In: Climate Change 2014: Mitigation of Climate Change. Intergovernmental Panel on Climate Change.
Engie. 2019. ENGIE and YARA take green hydrogen into the factory. February 12. Accessed 2019. https://www.engie.com/en/news/yara-green-hydrogen-factory/.
Mohsin, M., A. K. Rasheed, and R. Saidur. 2018. "Economic viability and production capacity of wind generated renewable hydrogen." International Journal of Hydrogen Energy 43, no. 5 2621-2630.