These days, there is lots and lots of news about how the supposed “energy transition” is not happening. There’s so much news on this subject that I could devote this entire blog to that subject alone and have plenty to occupy my time. Expect multiple posts about this topic over the next several weeks.
To whet your appetite, I will take you today to Australia, where we find the latest news on the inevitable collapse of impossible dream of “green” hydrogen as the means to make electricity from wind and sun work.
But before getting to the latest news, kindly let me remind you of my post of February 14, 2024 titled “When You Crunch The Numbers, Green Hydrogen Is A Non-Starter.” “Green” hydrogen is the type of hydrogen produced by electrolysis of water using electricity generated only by wind and sun. The idea is that you run your electrolyzer to make the “green” hydrogen on sunny and windy days when the wind turbines and solar panels produce a surplus; and then you burn the hydrogen to cover the gaps in wind/solar production on overcast days and calm nights. If it all works out, you end up with electricity that matches demand 24/7/365, and there is no carbon in the process from beginning to end. In other words, energy utopia.
But has anybody crunched the numbers to see if this can be done economically? By “economically,” I mean: producing electricity costing at or about the same as our current cost of electricity.
My February 14 post discussed a Biden Administration initiative to allocate $7 billion in government funding to “catalyze” $40 billion in private investment to jump-start production of “low-cost, clean hydrogen.” How “low-cost”? The government of course didn’t quantify it, but my post cited a guy named Jonathan Lesser who had done a work-up that concluded that they could get to “green” hydrogen in a price range of $2.74 – $5.35 per kg of hydrogen provided they could buy the wind/solar-generated electricity for $40 per MWh. Anyway, that’s the goal.
Does $2.74 – $5.35 per kg of hydrogen sound cheap? I love the way they quote prices for hydrogen in different units from the normal units used for natural gas, in order to make it so no one can easily make the comparison. Natural gas prices are generally quoted in $ per MMBtu. What you need to know is that it takes 8 kg of hydrogen to produce 1 MMBtu of energy. So $2.74 – $5.35 per kg of green hydrogen translates to $21.92 to $42.80 per MMBtu. In the past 5 years, U.S. natural gas prices have been under $4/MMBtu for most of the time, and have never reached as high as $10/MMBtu. And to achieve the green hydrogen prices of $20 – 40/MMBtu requires a cost of wind/solar electricity of $40/MWh. Recent contracts for wind and solar generators have been requiring guaranteed prices of $150/MWh and up. So adjust the $20 – 40/MMBtu accordingly. The green hydrogen is going to cost you at least 10 times the cost of natural gas, and perhaps as much as 20 times.
On to the latest news from Australia. Australian energy blogger Joanne Nova reports yesterday (July 19) that a large green hydrogen project in that country has just “collapsed” with the loss of 700 jobs. I assume that by “collapse” Ms. Nova is referring to some sort of bankruptcy or equivalent. Ms. Nova’s headline is “The Hydrogen Titanic just collapsed in Australia because renewable electricity costs too much.”
The project in question is the baby of Australian industrialist Andrew “Twiggy” Forrest and his company Fortescue. According to Ms. Nova, Mr. Forrest has “burned off $2 billion dollars (AU) on setting up his Green Dream Hydrogen energy plan.” Forrest’s project had been the “centerpiece of [the Australian Labor government’s] $2 billion Hydrogen Headstart program.”
Ms. Nova quotes liberally from the big Australian newspaper called The Australian, which unfortunately is behind a pay wall. I will just use Ms. Nova’s excerpts. Here is the key one:
For more than two years, Fortescue has been full throttle trying to turn Forrest’s promise of converting green hydrogen into a commercial reality within years. Instead, as the economics around surging electricity costs needed to produce green hydrogen sunk in, deadlines were pushed back and back. The mission changed, then there was a revolving door of executives.
The problem is very simply the cost of producing the “green” hydrogen, which is not remotely competitive with natural gas. Nor can anything be done to make the cost anything close to competitive. This quote is from another Australian source called Financial Review, also behind pay wall:
Matthew Rennie, a former EY partner who is now an independent adviser, said his firm’s analysis indicated that prices for power and electrolysers – which use renewable power to split water into hydrogen and oxygen – would need to be much cheaper to produce green hydrogen in Australia even at under $[AU]3 a kilogram. He said power prices would need to be less than $[AU]40 a megawatt-hour and electrolyser costs would need to more than halve to produce hydrogen at that level – still 50 per cent more expensive than the government’s ${AU]2 target for the gas to be competitive.
The $[AU]3/kg target is the equivalent of $[AU]24/MMBtu [thus about $US16] — 5 [or so] times the typical natural gas price in the U.S. of $3-4/MMBtu. And they’re saying that to achieve even that, they would need wind/solar-generated electricity prices of $[AU]40/MWh [thus about $US27/MWh] and electrolyzer prices to halve. Ms. Nova reports that the two Australian states that produce the most electricity from wind and solar are South Australia and Tasmania, and they have wholesale electricity prices of $[AU]199/MWh and $214[AU]/MWh respectively [thus about $US133 and $US138 respectively]. So in the real world the cost of this green hydrogen is going to be more like [ten to] 20 or more times the cost of natural gas, instead of the paltry 5 [or so] times higher that they were hoping for.
Meanwhile, I keep reading many things saying that green hydrogen is the wave of the future. But I can’t find anything about major production facilities for the stuff coming online. Maybe none ever will.
UPDATE, July 21: Commenter littleoil (who I believe is Australian) asks for clarification as to which monetary figures in this post are in $AU versus $US. An Australian dollar is worth about 2/3 of a US dollar. I have added some clarification in the post.
Besides cost of production, hydrogen leaks and leaking are problems. Otherwise it’s the best thing since sliced bread.
not to mention hydrogen embrittlement of steel pipelines and storage
Just as long as there are no sparks around, of course.
Only peons care about costs! When One Is Saving The World, costs do not matter!!
And as it is not their money, the Green Blob especially does not care.
Even that renowned climate scientist and economist AOC told us this .
What’s really fascinating about the Green Blob is how a select group of billionaires seem to be benefiting so substantially from “saving” Mankind from the ravages of climate change!
One wonders what will happen the kiddies awaken to being needlessly frightened by the climate ghost stories, and find that their wallets have also been mysteriously emptied!
Updated 17 June 2024, 03:45 The average price of hydrogen fuel at publicly accessible filling stations in California — the only US state that has them — is currently $32.94 per kilogram, according to analyst Platts.
This is more than four times higher than the average price of H2 fuel in both South Korea and Japan, which stand at $7.18/kg (according to Korea’s main H2 fuel website) and $7.71/kg (according to Platts), respectively.
https://www.hydrogeninsight.com/transport/average-hydrogen-fuel-price-at-pump-in-us-more-than-four-times-higher-than-in-japan-and-south-korea/2-1-1656000
And whose $2 billion would that be I’m pretty sure it’s not Twiggy’s he’s not a billionaire for nothing:
“Mining magnate Andrew [Twiggy] Forrest believes a $2 billion federal funding injection to help accelerate Australia’s green hydrogen industry will be just the start, as his company positions to tap into the likely subsidy” (AustralianBC News 10 May 2023).
This is cherry picking accountancy. It mixes low US nat gas prices with offshore wind prices (not Australian, we don’t have it). And I don’t think Menton clrifies anything by switching from kg H to MMbtu, then to MWh.
In fact, hydrogen gives 150 Mj/kg, or 42 kWH/kg, so their price of $3/kg amounts to about $.07/kWh, or $70/MWh. Not so bad. I’m using USD uniformly. The $4/MMbtu for US natgas amounts to $13/MWh, but that is a minimum, and of course not available in Australia, where the price is about $20.MWh. And we export, so prices in much of the world will be higher.
But this is all based on a purchase price of electricity of $40/MWh. Coming back to Australia, the last 12 month average price in Victoria was $28/MWh. And the attraction of hydrogen is that electrolysis can be varied to use cheaper periods – the wholesale price is often negative here.
Less biased accounting, please.
“…In fact, hydrogen gives 150 Mj/kg, or 42 kWH/kg, so their price of $3/kg amounts to about $.07/kWh, or $70/MWh. Not so bad…”
So long as you don’t have to trouble yourself with details like water purification, compression, storage, transportation, maintenance, ROI…
Hydrogen is a thermodynamic fantasy. If you are going to dream, dream big and go for a perpetual motion machine.
They would be included in the $3/kg price estimate.
Steorn tried that already…didn’t work
…and the cost of the special metal alloy that resists embrittlement.
I guess that’s why hundreds of companies are successfully producing massive quantities of green hydrogen at scale and making healthy profits. Oh wait…
Yes, wait.
LOL, it has been a looong wait since this pipe dream hasn’t left rainbow land as it remains extremely expensive to make.
I believe it is only 20 years away and will come online alongside the nuclear fusion generation plants that have been 20 years away for nearly 40 years.
Your mind will be long gone before green hydrogen become even remotely viable.
Oh wait….
Most of us are smart enough not to wait for fairy tales to come true.
And where will all the necessary “Surplus Generation” to produce Green Hydrogen come from if not new offshore wind? There certainly won’t be sufficient On Shore Wind to produce a surplus source capable of driving green hydrogen…especially not with electrification of current fossil energy sources
“And where will all the necessary “Surplus Generation” to produce Green Hydrogen come from”
Nuclear, coal or gas, of course.. They are the only source that can reliably provide surplus generation.
“There certainly won’t be sufficient On Shore Wind”
There is plenty n Australia
LIAR !
Never has there been remotely enough wind and solar on the NEM for there to be a “surplus”.
The three big states RELY on COAL and GAS.
And as seen recently SA regularly relies on GAS and DIESEL.
On rare occasions, SA gets enough wind to export a very tiny amount to Victoria.
Quite wrong Nick. Records over more than six years show that the average wind CF across the entire National Grid is only 30%, less than the U.S. average. And the entire grid also regularly experiences wind dunkelflautes, on average a bit less than one every three days, with durations up to 48 hours. You cannot rely in wind in Australia. And you certainly wouldn’t want to rely on grid solar, with its even lower CF of 16%.
For electrolysis, you just need plenty of electricity whenever you can get it. Australia is a big place.
That is an incredibly EMPTY and MEANINGLESS comment.
I thought that I explained that the dunkelflautes occurred across the ENTIRE national grid. Up to 48 hours duration. Possibly the WA SWIS grid was still ok, but that’s about 3000 kms away. And BTW, the WA SWIS grid wind power vanished for 7 hours recently, right through the evening peak time.
So you’ll need numerous hydrogen production facilities? That’ll get expensive. Many won’t be doing anything most of the time. And numerous storage facilities- and a vast new pipeline system?
How does big equate to useful?
Hydro electric power on some scale would be much cheaper than wind or solar to run electrolysers that require power 24 hours a day, 365 days a year to operate successfully.
I know Australia has a number of such schemes but are they up to the job?
The best source would be Floating Nuclear. The Navy uses it all the time to power some of their ships and submarines
For hydrogen electrolysis you need both abundant power supply and abundant water supply.
The water supply should be the ocean so as to NOT use the fresh water people and animals require.
If the Abundant Power is to come from renewables, Australia had little if any current overcapacity to supply it.
With the electrification of heating, cooking and transportation AND to do so from renewables will require greater than a doubling of current available renewable generation.
Given proximity to demand, the only logical source for the process would be Offshore Wind and will be costly
Is there any WEF initiative you don’t go along with? The lies are getting old Nick.
I don’t know how successful hydrogen will be. But I object to biased and faulty arithmetic.
I object to biased and faulty arithmetic.”
roflmao….. From you, that is the height of ironing !!
Did you intend that comment as slap-stick comedy ?
Gotta love autocorrect… Not
I ran the numbers through my Vic-20 and the probability of wide scale green-hydrogen in my lifetime, to the nearest whole number, is Zero. 🙂
The absolute horror that must be the fever swamp of your mind.
“not Australian, we don’t have it”
NO… we rely mostly on COAL and GAS.
Is that the point you were trying to make ?!
—–
“12 month average price in Victoria was $28/MWh”
Good thing they run on really cheap BROWN COAL, hey Nick !!
Anero shows wind at 2800MW for Victoria, Not a lot of surplus there.
“For the fourth consecutive month, lower than usual renewable energy generation plagued the National Energy Market, contributing to higher spot prices.”
https://www.leadingedgeenergy.com.au/news/electricity-market-review-latest/
Nor there
From your link. 2024 prices are way down on 2023, and SA and Vic are lower than NSW, Qld:
That’s because SA has so little demand, and Victoria has cheap brown coal.
Recently SA have regularly been calling on large proportions of GAS and DIESEL
Gas price has been low apart in 2024 from April
And why not post the wholesale prices, which are all up from last year.
Disingenuous as always.
Not to mention…..
They don’t fit the narrative so are False Information
Using a heat engine……? Is that another halving to be considered?
Come on Nick, if you know nothing about the topic, just admit it and move on.
We would never hear from him again !
The average 12 month price is not the correct parameter. You need to go on the price of wind generated electricity. And that price needs to adjust for subsidies and backup.
As an example, The UK government has recently increased the price paid for offshore wind electricity to up to £73/MWh to attract more investment, following an auction that failed to attract bids at the previous price of £44/MWh. On shore wind recent bids were over £40.
And that leaves out all the costs of making this intermittent supply into dispatchable supply, suitable for running an electrolysis project at scale. So the real cost of the power in use is going to be significantly greater than those numbers.
The idea that you will just use the surplus wind is a fantasy. Industrial scale chemical processes need dispatchable power, not power that goes up and down like a yo-yo.
Electrolysis is an inefficient process. What you get out in the form of the hydrogen is far less than what you put in, in the form of your wind generated power.
You then have the hydrogen, which from all of the above is going to be many times the cost of natural gas, so what do you do with it? You can’t run it through the existing grid pipework, you have to re-lay that to make it hydrogen proof. You then have to upgrade all the in-house pipework, same reason. You have to replace lots of appliances, boilers and cookers. You have to convert whole areas of cities at once, because you’re going to cut off the gas and then replace it with hydrogen. So every house in a local distribution area has to be ready for it.
If you want to store it, the Royal Society proposed excavating salt caverns and sealing them. Has anyone ever done this at the required scale, and anyway, its in addition to all the above issues.
This is hopeless. Its one of those things that seems like an interesting idea until you get into the specifics, and these specifics, there is no way around them. Which is why people are dropping out of doing it.
It must be ideology, true believing. Even if there is a climate crisis, even if reducing natural gas consumption is an important part of the solution, making hydrogen from wind and substituting it for natural gas is not the answer. Spend the energy and the money on finding something that works.
And that cost is largely due to the low cost of brown coal generation, isn’t it?
Nick, you would be a great business leader. You would buy expensive electrolyzers and only use them for the few hours on sunny days when the wholesale price of energy is low. When you have an asset that needs to run a continuous process, the average price of electricity is the one you should be concerned with. And since you are now raising demand, don’t you think that just maybe the price would rise a bit? Playing computer games with climate models is BS, business is real.
When everyone has switched their electrical demand to “off peak” to take advantage of lower pricing, there will no longer be an “off peak” period, and the reduced pricing that goes along with it.
But, what did the feasibility study say? Twiggy is a mining man, isn’t he?It is against the law to promote a mining project you want to list on the stock exchange without a preliminary economic study, this needs to then go to prefeasibility to get some of the permits for work needed to do a bankable feasibility study (+/-15% on costs)
This project was in pre-feasibility and tanked. I do not know how much Australian tax payers have contributed but I think it is mostly FMG’s money.
There are hydrogen pilot plants in operation in Australia. The one in South Australia has demonstrated that the electrolyses can be operated over a wide range of input power and not be damaged. But they are expensive and any plant that is operating below capacity is a waste. Hence the electrolyses are not economic when mated to weather dependent generators.
“mostly FMG’s money.”
Reflected recently in my FMG shares 🙁
“electrolyses are not economic when mated to weather dependent generators”
I don’t know of any manufacturing process can be.
The project was simply canned because it was completely uneconomic.
The proponents worked out they could only make hydrogen by using low cost coal power. That is not available in Australia any more.
Weather dependent generators operate at about 30% average capacity – at best. So they would have needed a 3-fold scale up in the electrolyses capacity to get target output of 30% of the capacity. Obviously the capital costs roughly triple. The project could not bear the capital cost.
Twiggy is bully and did not like the answer so sacked the whole hydrogen team. Before he struck the iron ore pay day he had some notable failures.
There are a couple of electrolyses working in Australia producing Hydrogen but the hydrogen is horrendously expensive.
The proposals for lowest cost production using WDGs uses batteries to increase the utilisation of the electrolyses. This should make it obvious that the hydrogen produced from these plants is more expensive for storing energy than using batteries.
All exiting WDGs working in fossil fuelled firmed, on-demand grids do not save coal. They just cause China to burn more coal. Hydrogen as a store of energy is another step up in insanity.
In a rational world, Hydrogen will only ever be used for niche, Hydrogen-specific processes.
Ditto for solar and wind and tidal and geothermal, etc. Only niche applications are they relevant.
The safest, cheapest and best way for stocking and transporting hydrogen: everyone knows it, it’s in the form of hydrocarbons, natural gas and oil. These people will sooner or later have to face the truth. You can’t fix stupid and you can’t beat chemistry or physics. How much heat does one get from burning a dollar bill directly ? It makes around the same amount of sense.
That is why the world is moving to electronic currency. The fuel value of dollar notes is approaching their face value. It is called inflation.
Australia stopped ,making silver coins a long time ago. The coins had more value melted than their face value.
Now the nickel based coins are close to more value in metal than their face value.
In Australia. it takes 32 cents to produce a note. A significant portion is contained energy. But the lowest face value for an Australian note is $5. I expect US $1 notes are heading toward history.
Australian hydrogen was Hindenburgered.
These days, there is lots and lots of news about how the supposed “energy transition” is not happening.
Well fickle energy is cheapest as all the experts keep telling us which is why taxpayers have to bankroll it all of course-
Deal for ‘clean, reliable power’ despite gas shortfall (msn.com)
Federal Labor needs to get those RETAs hunkered down before the next election naturally as there’s no time to lose with the dooming. Not that you need much agreement doling out a bucket of money to State Premiers and their sustainable subsidy miners. Just put the bucket on the floor and stand back well clear.
The subsidy farmers in Australia need more climate ambition. The RET is set to end in 2030. That will end grid scale wind and solar projects.
The current price of LGCs is increasing because rooftops are eating into the demand. In 2023 LGCs averaged $46/MWh and wholesale price for wind was $43/MWh; meaning more than half of their income was subsidies. Take the subsidies away and they all crash.
The closest we will get to a hydrogen economy will be synthetic diesel made with hydrogen produced by electrolysis using power from nuclear reactors. Nothing else will work in a post-fossil fuel world.
If splitting hydrogen out of water via electrolysis was even remotely economic, it would have been done in the late 1890s. It would have been presented as an alternative option to oil and coal for sea going transport.
It didn’t happen.
We have had over a hundred years to evolve technologies using ever greater sophistication with computer controlled processing, to help us achieve economic hydrogen via electrolysis. It hasn’t happened. We are nowhere near achieving such, nor can we ever, manufacture ‘green’ hydrogen, able to compete economically with natural gas or oil.. That reality is also ignoring the handling difficulties hydrogen presents. That is just another issue that can never be ignored or casually dismissed.
How many more centuries need to pass by, before we learn the obvious lessons of thermodynamics? Newton managed to understand the fundamental rules 350 years back.
How dim are we?
Great post, Francis, but Joanne Nova’s headline is quite misleading. Surely it should read: “The Hydrogen HINDENBURG just collapsed in Australia…” Crashing and burning is more likely!
“Crashing and burning is more likely!”
Except they hardly produce enough hydrogen to burn !!.. 🙂
That was the problem !
Isn’t the latest fantasy natural hydrogen deposits buried underground? Just need to find them and develop the technology to extract it – won’t be a tick, right after we’ve sorted nuclear fusion.
But… H2 + O2 = H2O which is the biggest contributor to the so-called greenhouse effect, so isn’t that defeating the object of the exercise?