Essay by Eric Worrall
“… The “hourly matching” rule will force hydrogen producers to either cease production when renewables are not available … or sign up for excess renewable power …”
Fortescue slams Biden administration’s green hydrogen tax rules
Peter Ker Resources reporter
Updated Apr 21, 2024 – 2.09pm, first published at 2.00pmFortescue says the proposed design of the Biden administration’s green incentives scheme could triple the cost of low-carbon hydrogen projects …
The iron ore group has an ambitious strategy to become a major force in hydrogen and renewable energy …
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But Fortescue’s enthusiasm has waned since the US Treasury issued draft regulations known as “45V” which provide the detail on eligibility for the tax credits. Fortescue’s biggest problem is the requirement that companies must match each hour of production to an hour of renewable power generation and consumption to be eligible.
The rule is designed to ensure that subsidies are not given to hydrogen made from fossil fuel power during times when solar and wind power are not available.
The “hourly matching” rule will force hydrogen producers to either cease production when renewables are not available – an option that would undermine productivity and viability – or sign up for excess renewable power from diverse sources to improve the chances of having clean energy available from at least one source at all times.
…
“If I am building a gigawatt of electrolysers in Texas I may only need a gigawatt of energy at any time, but I have to buy seven times that to ensure that I have all the probabilities working, so I know I can match in that hour, which means the bulk of what I buy I don’t need,” he told a Bloomberg podcast.
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Read more (paywalled): https://www.afr.com/companies/energy/fortescue-slams-biden-administration-s-green-hydrogen-tax-rules-20240419-p5fl78
You can understand Fortescue’s distress. Who could have imagined Biden would insist green projects actually be powered by renewables?
As Fortescue helpfully explained, renewables are so unreliable they would have to build or buy 7x overcapacity to ensure continuity of supply, which would be prohibitively expensive. A bit like how attempting to power the entire economy using renewables would be prohibitively expensive.
Oh, this is perfect. What an obvious way to find out about the high cost of wind and solar that use “free” energy!
Typical ‘green’ ambitions.
They never think anything through thoroughly.
And then get all rambunctious when the sh1t inevitably hits the fan.
Apparently, the Taliban is the newest moderate voice on climate change.
Nor do those on the left of politics. Sad there isn’t another Reagan
This is predictably what you get when ideology rules the roost.
Who wants to bet that the Leftist media will ignore this?
IIRC, electrolysers need to be working at a steady rate to work properly. Can’t just stop and start them as will. Also the major part of the generator is the water purification. That also has issues on variable output.
Could this be another example of legislation overruling the rules of economics, if not rules of physics?
Yes.
electrolysers need to be working at a steady rate to work properly. Can’t just stop and start them as will.
Does it really apply to hydrogen production?
Yes it does. Electrolyser efficiency is maximised in a calibrated steady state operation with minimal shutdowns for maintenance/refurbishment.
Actually, the legislation is supporting the basic economics of a renewables/hydrogen grid. It is never going to make sense to run hydrogen generation to make hydrogen until you invent a perpetual motion 100+% efficient generator/electrolyser combination. You will simply chew through your hydrogen store faster otherwise.
Even with this level of overbuild on generation, it would still require a massive outlay in batteries for continuous operation of the electrolysers. Definitely no sun at night and often no wind. The guaranteed output of all WDGs is ZERO.
If Hydrogen was economic they would just use hydrogen to power the electrolyses when there was no sun or wind. But it is lower cost just to shut down the electrolyses than overbuild the electrolyses to supply its own power because the losses are so. They rely on soaking up power at zero cost or even being paid to take the power. Lunchtime demand in Australia is now a desirable commodity that generators are prepared to pay for by eroding some of the take from their mandated theft..
With a 7X overbuild and no storage you could count on around 50% utilisation of the electrolyses. So the capacity would need to be doubled to sustain the target average output.
Alternatively, just set the electrolyses up in China running on coal and export the green hydrogen to USA.
If Hydrogen was economic they would just use hydrogen to power the electrolyses when there was no sun or wind
Only if electorlysers were at least 100% efficient. Otherwise you are burning more hydrogen than you make.
Hydrogen is very explosive when oxygen is available, it also burns with an invisible flame, and IR goggles are needed to see the flame. Very Dangerous.
Using dynamite for energy storage would probably be cheaper.
Hmmm…. Kicking that can down the road might come up with something.
I know they introduce nitro into race cars for the thrust boost.
Hmmmm…..
And the minimum ignition energy for hydrogen is .019 MJ versus .28 MJ for methane….so a wee bit of static electricity becomes an ignition problem.
More good news, I think for hydrogen production to be considered green it should only use wind and solar. None of this would be an issue if the government got out of the energy business. Fire up all fossil fuel and nuclear generators and build new fossil fuel and nuclear generators.
We need to reclaim the terms “renewable” and “green” in the same way that minorities have successfully reclaimed terms that were derogatory in the past.
Wind and solar are not renewable, they are unreliable.
Green is not the same as environmentally responsible, it is extreme leftism.
Don’t you just love it when the Green dreamers come up against the hard reality of physics and science.
Problem is they never seem to realise that they have come up against that hard reality
But even so, they ignore it (reality).
They have OPM to spend.
Fortescue is one of the worst hypocrites in this industry. Andrew Forrest takes subsidies for his green hydrogen production – which doesn’t seem to work – even though he has promised it will give us a cleaner, cheaper fuel and then b*tches because he has to pay the actual cost of reliable fuel thereby reducing his profit from these subsidies. He is fraudulent in my view.
That sounds about right to me. Another alternative would be to just call it hydrogen and not green hydrogen. Oooops no, can’t squeeze it that way either.
EDIT: Upon reading my comment back after posting, it occurred to me that I might actually be saying that Biden is right on this one. Do I need some kind of therapy?
“…Biden is right on this one. Do I need some kind of therapy?” Yes. Me too. The Biden administration has made a good point here, no doubt unintentionally exposing the lunacy of their own core claims about “climate action.” So the therapy is to be reminded they are just clueless. The sensible outcome was accidental. 🙂
Hydrogen is only green with the addition of dye.
You could try chlorine gas. But it tends to form gaseous HCl which is no longer green (don’t ask me how I know…)
In the beginning- the cosmos was mostly hydrogen. Then it struggled for billions of years to build more complex stuff. Now we’re struggling to go back to hydrogen. Makes no sense.
There is a need for hydrogen, but not as a substitute for fossil fuels. And stop calling it green hydrogen.
Hydrogen is needed here in Alberta to turn our heavy oil into light oil. We have succeeded in convincing the taxpayers that they need to pay for the hydrogen plants by paying carbon tax on the fuel consumption….so far nobody is catchin’ on….
/s(?)
The 45V regulation is just a consequence of the rules for power generation that require “low GHG hydrogen” to reduce CO2 without defining exactly what it is. So now they have done that and no one in the real world likes it. I don’t blame them. One could imagine that letting a new industry get established using whatever power source they can contract for would be the best way to proceed. After all, electricity is completely fungible.
Companies like Fbook and Google sign power purchase agreements for wind and solar all the time so they can proclaim that all their power is “renewable.” But that is total BS. They are attached to the grid like everyone else and their purchases amount to the total MWhrs they use, but there are times when none of their power is from those sources. They cannot afford to interrupt the power to their server farms in the same way electrolyzers cannot sustain such interruptions.
So why not let them follow the same practices as Big Tech? Because they will be called out for the flimflam it truly is by the greenies.
This is no way to run a power grid for reliability. It is just a way to virtue signal at a great cost for a non-existent problem.
I didn’t know enough about hydrogen as an energy source to ask an intelligent question
so I googled “different types of hydrogen colors”, here is one result======>
https://aeclinic.org/aec-blog/2021/6/24/the-colors-of-hydrogen
I previously had serious reservations about our elected officials having enough mental
capacity to have a clue about energy. That’s now been confirmed.
Reminds me that there are now over 80 gender identities (as opposed to 2 sexes).
Seems more of a psychological issue vs a biological deal.
A friend of mine recently visited his son and was telling me
about his high school aged granddaughter who won’t eat
any meat due to the climate change brainwashing she got/is receiving
at school…very sad. My wife worked with a gal 20 some yrs ago
that went vegan for the same reason. A friend told me about
his sister who is homeschooling her kids for the same issues.
I asked about social issues from being homeschooled and he
said there are several others that pool together for those thing,,,
crazy times..
Crazy time. Yea.
India is vegetarian for moral reasons, not for fictitious ones.
Hydrogen, green or otherwise, is not a useful dispatchable energy resource since it requires more energy to produce it than it then contains. The more hydrogen you produce the more energy you lose.
Is it any different from a battery, or a pumped hydro?
Cheap and reliable. B.S. alarm is sounding at high decibel level.
If you consider a grid powered by renewables and by hydrogen powered generation when the renewables supply is inadquate the rule is perhaps not quite as crazy as it sounds. The interesting bit is working out the economic corollaries.
State 1: surplus generation, in excess of demand in theory allows diversion to electrolysis plant to make and store hydrogen in order to cover
State 2: where stored hydrogen fuels CCGT to provide power to make good the deficit when renewables generation falls below demand.
Occasionally you might reach State 3, where renewables generation and demand match, but this is unlikely to last more than a minute or two at a time unless you are curtailing output to prevent surpluses.
In State 1 the level of surplus generation is a function of the installed capacity relative to average demand. It will be potentially higher overnight in low demand hours – a lot higher if you build enough capacity to cover all the need to produce hydrogen to balance the grid. In shoulder hours the surplus will reduce, and reduce still further in peak demand hours. This creates an intermittent surplus supply, even if the wind is blowing consistently. Now add in variations in wind output as weather systems make their way through, and you have a very intermittent and highly variable supply.
This chart shows typical surplus duration curves (i.e. what % of the time the surplus would be at least y MW) for the UK at various levels of wind capacity.
https://datawrapper.dwcdn.net/nZM72/1/
Lowest demand and maximum wind output is a rare event. Indeed, at lower levels of wind capacity surpluses are not all that common and it will not make any sense to have electrolysers to use it. By the same token, it is never going to make sense to invest in electrolyser capacity and grid delivery capacity to utilise all the surplus at any particular capacity level, because the utilisation of those extra assets to take advantage of it will be very low, and thus uneconomic. You are going to curtail/waste the surplus above the level of electrolyser and grid capacity that makes economic sense i.e. the minimum acceptable utilisation. Mouseover the chart curves to see the effect. The curtailed power increases the average cost of power supplied to meet demand overall, and even the power supplied to electrolysers is likely to require subsidy. Perhaps it is simplest to cost all wind generation (including curtailed volumes) at a simple LCOE, and cost the rest of the system required to make a functional grid on top. You can account for your chosen subsidy regime on top, but it is just robbing Peter to pay Paul.
The maximum utilisation of the first electrolyser is defined by the percentage of the time that there is surplus generation. To see why this is so, consider what happens any time there is a generation deficit against demand: you start up the hydrogen fuelled generators to meet the deficit. If you now want to run the electrolysers to improve their utilisation, you will be pinching power that could have been used to meet normal demand. In order to supply that extra power, you will have to dip further into the hydrogen store and run more hydrogen generation. In effect, you are burning hydrogen to make hydrogen, and simply wasting your stored hydrogen to do so because you will incur the full round trip losses on the extra generation. This is why the order was made.
Obviously there is a second limit to the economic wind capacity level. If you have sufficient capacity to generate a very large surplus you will have fewer hours when hydrogen generation is needed. You will end up with expensive surplus hydrogen, and lower utilisation of the hydrogen based generation, pushing up the cost of its output. The result is that it is unlikely to be economic to have a maximum electrolyser utilisation much above 50% so that the produced hydrogen gets used. The cost of production will be on a rising scale until the cuttoff minimum marginal economic utilisation is reached. Note that increasingly marginal electrolysers will get progressively more intermittent operation, denting their economics still further by reducing efficiency.
This analysis ought to be fundamental to any researcher considering the use of hydrogen as a store of wind energy. AFAIK, I am the only one to have produced it and considered it, although I do post about it when suitable topics come up.