hydrogen exports australia’s opportunities from august ......hydrogen is a good option for...

Australia’s Opportunities from Hydrogen Exports

Tom CampeyGeneral Manager, Strategy

August 2018

Australian Renewable Energy Agency

ARENA’s Investment Priorities

‘Creating new, scalable export value chains in renewable energy.’

Hydrogen is a good option for renewable energy export

Hydrogen is not the only means of exporting renewable energy, but it does have many advantages over alternatives.

Compared to HVDC cables:• Can be stored at relatively low cost• Not dependent on a single piece of

infrastructure• More degrees of scalability

Compared to biofuels and synthetic fuels:• Lower life cycle GHG emissions• Greater versatility in end-use application

Compared to embodied energy in minerals/metals:• Greater versatility in end-use application

The hydrogen export supply chain

Hydrogen source Exportable hydrogen or conversion to a carrier

Utilisation at end point

Electrolysis

Thermochemical

Biological

Photocatalysis

Fossil fuels + CCS

Liquid hydrogen

Chemical carriers

Physical carrier materials

Regeneration of hydrogen

Transport

Electricity generation

Direct combustion

Chemical feedstockNot supported

by ARENA

Key markets for Australia are Japan, Korea, China and Singapore

SOURCE: Opportunities for Australia from Hydrogen Exports, ACIL Allen Consulting for ARENA, 2018.

Key potential export markets for Australia are Japan, South Korea, China and Singapore

● Government strategy for new and renewable energy technology development and deployment

● ‘Cap and trade’ emissions trading scheme with a shortfall in credits

● Co-investment from industry and public funds of $2.4 billion

● Increased focus on emissions reductions and air quality improvement

● Forecasted to have a big rise in energy consumption

● Some renewable energy capacity in west, but most of demand is in east

● Almost no capacity to generate renewable electricity

● High carbon tax and vehicular emissions scheme

● Singapore’s future role as an energy hub

● Government strategy to develop hydrogen sector

● Japan H2 Mobility Group formed to support FCEV infrastructure roll-out

● Planned hydrogen import projects

SOURCE: Opportunities for Australia from Hydrogen Exports, ACIL Allen Consulting for ARENA, 2018.

Energy cost dominates cost of hydrogen production

Breakdown of production costs of hydrogen in Australia

Assumes• grid-connected renewables

(85% capacity factor of electrolyser)

• Larger plant size (100 MW)• Renewable electricity price of

A$0.04/kWh.

Water is a minor cost component (<2% even with desalination)

SOURCE: ACIL Allen, based on National Hydrogen Roadmap, CSIRO, 2018

Hydrogen from Australia is likely to be cost competitive

• Also likely to be cost competitive with domestically produced hydrogen in Japan and South Korea

• Those markets would need 7-8c/kWh renewable electricity for domestic hydrogen to compete on price

SOURCE: Opportunities for Australia from Hydrogen Exports, ACIL Allen Consulting for ARENA, 2018.

Forecast global demand for hydrogen for energy

SOURCE: Opportunities for Australia from Hydrogen Exports, ACIL Allen Consulting for ARENA, 2018.

10,000 PJ (10 EJ) of hydrogen is….● ~83 million tonnes● ~1.5x current hydrogen use (all

sectors)● ~7% of global natural gas demand● ~2/3 of the Hydrogen Council’s

forecast of hydrogen for energy in 2040

● ~5x Shell’s Sky Scenario forecast of hydrogen for energy in 2040

Australia’s hydrogen energy exports estimated at ~3.5% of global demand

• Key early market expected to be Japan, followed by Korea

• In the 2040 high scenario, Australia’s total share of the hydrogen export market equates to;

● 382 PJ● over 3 million tonnes● $13 billion CIF value

SOURCE: Opportunities for Australia from Hydrogen Exports, ACIL Allen Consulting for ARENA, 2018.

A hydrogen export industry represents economic benefits to Australia

SOURCE: Opportunities for Australia from Hydrogen Exports, ACIL Allen Consulting for ARENA, 2018.

Electricity requirement and emissions considerations

Hydrogen from PEM electrolysis would require additional electricity generation:

● 200 TWh in 2040 in high scenario● Roughly equal to current generation in the NEM

and high purity water:

● every 1 kg of hydrogen needs 9 kg water● 28 gigalitres in 2040 in high scenario● 0.18% of Australia’s consumptive water use

Hydrogen from fossil fuels would increase Australia’s emissions:

● by 2.26 Mt CO2e in 2040 in high scenario using coal + CCS● ~0.42% of Australia’s current annual emissions

An Australian hydrogen export industry would have a big impact on global emissions:● replacing diesel would save 26 Mt CO2e in 2040 high scenario

SOURCE: Opportunities for Australia from Hydrogen Exports, ACIL Allen Consulting for ARENA, 2018.

ARENA’s activities in hydrogen

● Request for information September 2017● ‘Opportunities for Australia from Hydrogen

Exports’ - ACIL Allen Consulting● $20 million allocated to a funding round for

hydrogen R&D across the export value chain

● ATCO - hydrogen micro-grid● International Engagement Program -

Hydrogen IEA Technology Collaboration Program (TCP)

● Open to proposals through the Advancing Renewables Program

ATCO green innovation hub

www.arena.gov.au

Thank you