Tuesday, August 9, 2022

Point of Order: Why the government should be working on a hydrogen strategy

Point of Order a week ago was serving up some commentary on the news that the Tiwai Point aluminium smelter will not shut down in 2024 — and could have a long-term future.

The question now is whether Meridian Energy, which supplies the bulk of Tiwai Point’s electricity from the big Manapouri station, will be willing to do so without a price hike. The last price negotiation was difficult, with Rio Tinto using the threat of closure to screw the price down.

When Rio Tinto some months ago was signalling it might keep the smelter open beyond the term of the current contract, there was a cool response from Meridian.

Chief executive Neal Barclay has been quoted as saying the company would no longer give the smelter rock-bottom prices, once the current contract expired, even if it wanted to stay open.

Fair enough.

It’s an issue which should be engaging the government, because not only does the government own 51% of Meridian, it should also be developing a hydrogen strategy.

Low-carbon hydrogen can be made from water, using an electrolyser powered by renewable energy. Hydrogen can help decarbonise activities that cannot easily be electrified. These include industrial processes that require high temperatures, and forms of transport, including shipping.

As The Economist has reported, Britain has developed a hydrogen strategy which initially called for 5GW of hydrogen production, a goal since doubled. To do so, plenty of cash is on offer to help production projects get off the ground. Then a “hydrogen business model” will offer price support to low-carbon hydrogen producers.

Much of the money will go to two clusters, one in the north-west of England and the other on the East Coast. The Economist points out these regions not only have a big industrial base but already make use of lots of hydrogen: it is a component in chemical reactions for refining and the production of fertiliser and methanol.

Almost all this hydrogen, The Economist says, is currently the dirty “grey” sort, which is made from natural gas, but does nothing about the carbon dioxide thereby emitted. Producers of cleaner forms of hydrogen in these areas will be close to potential customers.

In the UK, there is talk of encouraging the use of hydrogen as an energy-storage medium to help overcome the peaks and troughs of an all-renewables grid. When renewable energy is plentiful, electrolysers can be turned on, producing hydrogen, which is then stored. When it is scarce, that hydrogen can be burned in a power station or used in fuel cells to generate electricity.

Here in NZ where the government is committed to the goal of 100% renewable electricity, it has not specified how the country may reach that target. Experts suggest that by 2050 electricity demand will have doubled.

So there will be pressure on the electricity production and transmission system from different directions; and there have been some signals Meridian is monitoring the issue of low-carbon hydrogen production.

Almost certainly, though, the government needs to be thinking – like the 12 others that have already done so – of formulating a hydrogen strategy drawn by the vision of a thriving hydrogen economy within a carbon-neutral future.

Point of Order is a blog focused on politics and the economy run by veteran newspaper reporters Bob Edlin and Ian Templeton

1 comment:

DeeM said...

If hydrogen ever takes off as a widespread fuel source I'll install solar panels and a wind turbine in my back garden!

To run your grid on 100% renewables you would need to install over 3 times the nominal amount of generation capacity, compared to conventional generation. Because on average you only get about 30% of the nominal generating capacity from renewables. In other words if a wind or solar farm has the ability to produce 100MW in optimal conditions, it will on average only produce 30MW because of the unreliable and intermittent nature of renewables.
This comes at a massive capital cost which then hugely increases power prices.
And you still get nothing when calm and grey conditions persist over the whole country (large winter high pressure area).

Electrolysing water to make hydrogen only makes sense financially if you have a cheap and plentiful supply of power.
As demonstrated above, renewables are hugely expensive and unreliable.
Economically and practically it makes NO sense. In addition NZ would be covered in wind turbines and solar farms.

Install some nuclear power stations if you want emissions free generation.