European power coverage makers apparently are taking a DNV report on offshore hydrogen manufacturing significantly. It doesn’t stand as much as scrutiny, in both its assumptions or its conclusions.

Let’s begin with this concept of offshore manufacturing of hydrogen at wind farms within the North Sea. It doesn’t make a lot sense on the floor (or under the floor), however it’s an concept which has traction. The premise is that as a substitute of transferring electrons to shore and placing them into at present constrained — and that’s an essential issue — transmission to demand facilities or doing electrolysis onshore, construct an enormous electrolysis plant offshore close to the wind farm, transfer the electrons to it, then desalinate seawater and manufacture hydrogen with it, then pipe the hydrogen to shore with a brand new pipeline.

There’s a rule of thumb for development. No matter one thing prices to construct onshore, it prices 10x to construct offshore and 100x to construct on the ocean ground. (I’m unclear on whether or not it’s 1,000x or 10,000x to construct it in orbit, however it’s a type of two, which is why orbital solar energy beamed to earth stays a deeply silly concept.) Oil and fuel rigs have a worth proposition for offshore labor, however in fact that’s coming to an finish. Fish farms have an financial worth proposition for offshore labor. Delivery and fishing have non-stationary business worth propositions. After that, the pickings get skinny for business actions.

Offshore wind farms make sense as a result of they’re untended. They simply sit there and spin. No operations labor offshore. Development and upkeep are it. People contact them for every week or two a 12 months. Sustaining an enormous employees 100 km+ from shore is just not required.

Are there hands-free electrolysis services? No. A big-scale electrolysis facility is an industrial chemical processing plant with round 28 elements. The desalination and pipeline compression models probably double that. That’s a facility with important full-time employees, together with an evening shift with doubtless lowered staffing. However offshore, that’s a full time employees that lives on the ability 24/7/300 and shift modifications requiring a very set of staff come on board. You don’t get cheap labor when you need to ferry or chopper employees to a rig 150 km offshore within the North Sea for 20 days at a time. You get a lot inexpensive labor onshore the place they will drive dwelling on the finish of their shifts.

Is that this factored into the DNV fashions? Nicely, apparently the complete electrolysis facility requires no employees in any respect, as labor is rarely talked about. Is it important? Most likely, however as there may be zero evaluation within the DNV report, it’s unattainable to say. They simply excluded it fully.

This mannequin assumes that a complete large offshore wind farm 100 to 150 km offshore is constructed with out being related to shore with transmission. All the electrical energy, as a substitute of flowing by means of a lot much less complicated electrical energy administration elements and into an HVDC cable throughout the ocean ground, goes to a brand new construct everlasting industrial facility in the course of the North Sea. All of the electrical energy makes hydrogen. A brand new pipeline is constructed to shore as a substitute of simply dropping an HVDC cable off a cable laying ship.

It’s fairly exceptional that anybody takes this significantly, but individuals are certainly taking this very significantly. However why?

Nicely, what the heck is DNV? Its stories get referenced lots and are taken significantly by governments, so what’s the provenance of the group? Is it just like the IEA with its 15 years of hilariously unhealthy wind and photo voltaic stories? Is it credible? Is there maybe a whiff of bias?

“DNV is the world’s largest classification society, offering companies for 13,175 vessels and cellular offshore models (MOUs) amounting to 265.4 million gross tonnes, which represents a worldwide market share of 21%. It is usually the biggest technical consultancy and supervisory to the worldwide renewable power (notably wind, wave, tidal and photo voltaic) and oil and fuel industries — 65% of the world’s offshore pipelines are designed and put in to DNV’s technical requirements.”

Amongst DNV’s 12,000 staff are an terrible lot of people that assume that transferring molecules for power is a requirement versus a section as a consequence of our fossil gasoline economic system. And amongst its executives and number-crunchers are lots of people undoubtedly an enormous portion of their enterprise disappearing as oil and fuel disappear.

Keep in mind, 40% of bulk delivery is of megatons of coal, oil, and fuel. That’s going away. The ~3,500 oil tankers at present in operation are most likely among the many 13,000 vessels that DNV registers. These cellular offshore models are drill rigs. DNV owns the lion’s share of offshore pipeline requirements, and all of these pipelines at present carry oil and fuel. An enormous chunk of its enterprise goes away, except DNV can exchange it with hydrogen. So there are no less than huge parts of the corporate who’re motivated thinkers.

DNV does a number of good work, however like McKinsey, it usually will get issues badly fallacious. It depends upon the folks doing the work and what they’re tasked to do.

So, to the report itself. Did they discover that making hydrogen offshore was deeply costly? Sure. Did they then say that making hydrogen offshore was a foul concept?

“Producing hydrogen offshore needs to be thought-about as a precedence for Europe”

These are actually the primary phrases of semantic content material within the report, the lead sentence within the govt abstract. What’s occurring? An enormous a part of what’s going on is the assumptions within the report. It will get some fundamentals proper. It will get others fallacious.

Let’s begin with what it will get proper. Refineries in Europe are half of complete hydrogen demand at this time. Ammonia is a few third. None is utilized in transportation. They declare nearly 4% is used for power, however I’m unaware of any makes use of of hydrogen for power anyplace, so I take into account that unlikely.

With half of demand from refineries and refineries going away, do they undertaking a decline in hydrogen demand? No, they undertaking a multiplication of demand by seven occasions for his or her report, and DNV considers 14 occasions the demand to be required.

Hydrogen Demand Projection by means of 2100, chart by creator

I’ve been iterating my hydrogen demand curves for a few years. This one is my newest, from my world metal demand and provide curves situation, adjusted for complete inexperienced metal demand at 59 kg of hydrogen per ton of recent metal, with 75% of metal demand finally met by scrapping, together with many of the fossil gasoline infrastructure, pipelines, tankers, and drill rigs.

There’s a little bit of a niche between 7x to 14x will increase vs a roughly 15% decline. Michael Liebreich thinks I’m too optimistic on a few the demand and expertise areas, however his projection is simply 200 million tons globally — 250 million if he’s feeling beneficiant, per a current chat with him.

Liebreich and I share models on this. We use hundreds of thousands of tons. Why is that this important? As a result of hydrogen is an industrial feedstock, not a unit of power. So? Nicely, the DNV report makes use of TWh completely for hydrogen. Baked into its assumption is that hydrogen is dominantly a service of power, though even its report says it isn’t one at this time.

Framing issues, and DNV is properly into the hydrogen for power bubble, or no less than the first authors of the report are. I gained’t identify them, however having reviewed their skilled historical past, they principally have lengthy careers in oil and fuel, and are principally centered on hydrogen for power at this time. Numerous groupthink, not a number of vital considering.

So what’s the conversion between their odd alternative of TWh as a unit for a chemical feedstock? From their North Sea potential web page, “This would offer a manufacturing capability of round 297 TWh/a (LHV), which equals 8.9 Mton of hydrogen.”

What’s LHV? Decrease heating worth. What’s that? That’s the power degree that doesn’t take away water vapor from the hydrogen. Why is that essential? As a result of you may’t go away water vapor within the hydrogen. What ought to they be utilizing? HHV or increased heating worth. It reveals the extra correct and even decrease effectivity of turning electrical energy and water into hydrogen. Why aren’t they utilizing the extra correct quantity displaying much less effectivity? “The EU’s hydrogen technique makes use of a conference of 40 GWH2 of hydrogen (LHV) on the output of the electrolyser.”

Sure, the complete EU hydrogen technique is claiming higher efficiencies for making hydrogen than would be the case in actuality. Expertise which condenses the water out of the hydrogen is a part of the part stack within the steadiness of plant. It takes about 50 kWh of electrical energy to electrolyze a kilogram of water on the decrease heating worth. Eliminating the water vapor takes about one other 10 kWh, one other 20% effectivity hit. The NREL makes this complete arm-waving fairly clear in considered one of its paperwork, however the European reference it cites was from 2002, when the upper and extra correct heating worth was dominant for electrolysis. Apparently Europe has backslid on its attachment to empirical actuality with power, which isn’t stunning, given the hydrogen for power hype that’s been occurring.

However let’s play alongside. 297/8.9 is a ratio of of about 33:1. Their demand assertion for all of present European consumption is 285 TWh. By this ratio, what they’re saying is that about 8.6 million tons of hydrogen is utilized in Europe at this time. The working quantity I take advantage of from different references is about 10 million tons, so that is within the ball park.

Let’s multiply that by seven, which is the demand ratio the DNV report makes use of. That means that Europe goes to require 60 million tons of hydrogen. Utilizing DNV’s most well-liked 4,000 TWh, that’s 120 million tons of hydrogen. Europe goes to devour half of complete world hydrogen consumption at this time simply by itself, and even all of it?

For context, the full wind, water, and photo voltaic renewable capability of the Earth in 2019 was simply ample to fabricate the present hydrogen demand. This exceptional doc is predicated on multiplying that by an element of seven at minimal simply to ship hydrogen with no leftover electrical energy, and only for Europe. There’s no world by which this makes the slightest of sense except you’re deep right into a bubble of groupthink. But European coverage in a number of nations is at present based mostly on this.

So, I discussed that DNV discovered that the resultant hydrogen was costly. How costly?

As much as 100km distance from shore:
Worth chain D: Offshore wind with HVAC transmission to onshore hydrogen manufacturing has the bottom LCOH in 2030 (€4.34 per kg) and 2040 (€3.68 per kg).
Worth chain E: Offshore wind to offshore electrolysis with transport of hydrogen through offshore pipeline has the bottom LCOH in 2050 (€3.21 per kg).

At 150km distance from shore:
Worth chain E: Offshore wind to offshore electrolysis with transport of hydrogen through offshore pipeline has the bottom LCOH in 2030 (€4.59 per kg), 2040 (€3.79 per kg) and 2050 (€3.24 per kg).

Sharp eyes will discover just a few issues in there. The primary is the usage of excessive voltage alternating present (HVAC) wind farm to shore transmission. That’s odd, as excessive voltage direct present (HVDC) has a breakeven level of fifty kilometers underwater. Why? HVAC creates an enormous magnetic area that interacts with water very sturdy, rising resistance lots and therefore lowering effectivity. Choosing HVAC as a transmission vector is suspect. Even their very own numbers make it clear that HVDC is best, with cheaper capital expenditures and better effectivity, so why is the HVAC choice used for comparability?

However let’s have a look at the efficiencies they declare for HVDC. They peg it at 97% for 150 km. That’s odd, as a result of the trade expertise is 3% to three.5% for 1000 km. They look like understating effectivity.

As a word on the place the authors’ heads are at, the report makes use of “pipeline” 330 occasions, “HVDC” 21 occasions, and “HVAC” 23 occasions.

What effectivity do they declare for the pipeline, in contrast? 98.5%, increased than they’ve for HVDC. It’s fairly exceptional when somebody claims transferring molecules over 100 kilometers is extra environment friendly than transferring electrons. And fairly unlikely to be true in actuality.

So, they use HVAC’s decrease effectivity and better capital prices because the worst case situation, understate HVDC efficiencies, and overstate pipeline efficiencies. Not notably credible. In fact, they actually go to city on onshore electrolysis with photo voltaic farms.

What else would possibly sharp eyes discover? Nicely, there’s the precision of their numbers. There exists no offshore electrolysis facility at this time. There are not any undersea hydrogen pipelines, and valuable few kilometers of hydrogen pipelines. These are projected prices from a top-down evaluation for 2030 and 2050. But they’re projecting all the way down to the one hundredth of a euro the associated fee per kilogram with no error bars. Their numbers are based mostly on these large desalination, electrolysis, and pipeline compression crops getting less expensive as a result of one part of maybe 60, the electrolyzer, will get cheaper.

However I promised costly. Be aware that none of their numbers for manufacturing and transmitting hydrogen are under €3.00 per kilogram of hydrogen. The bottom quantity they cite is equal to US$3.50 per kilogram. The present value of producing unabated hydrogen from pure fuel is about US$0.78 per kilogram, and that’s additionally the very best and deeply unrealistic case of Lazard’s levelized value of hydrogen, so that is 4.5 occasions costlier than present hydrogen, which we don’t use for power as a result of it’s too costly. That is their finest case quantity, with unrealistic assumptions littering their report.

How does this evaluate to the costliest type of power used at this time, liquid pure fuel? Nicely, I did the beginning of the maths on that once I checked out delivery hydrogen in liquified tankers a few years in the past. A producing solely value of US$0.78 per kilogram of hydrogen is 1.9 occasions as costly as delivered liquid pure fuel. US$3.50 per kilogram is approaching 10 occasions as costly as the costliest type of imported power used at this time. And that’s earlier than it’s distributed to anyone.

As a reminder, grime low cost grey hydrogen in bulk at this time prices about US$10 per kilogram delivered, and US$15-20 at a pump. Distribution prices aren’t going to magically disappear, so hydrogen sooner or later will nonetheless be far more costly than US$3.50 for any shoppers of it.

In what world is one thing that in the absolute best case with unrealistic assumptions that prices 10 occasions the costliest type of imported power thought-about affordable as the premise for an power coverage? Nicely, contained in the hydrogen bubble within the EU. That’s why it’s going to deflate and pop within the coming years. Nobody will purchase power that’s this costly.

They’ll electrify at vastly decrease prices as a substitute. They’ll use vastly cheaper biofuels that don’t require absurd new infrastructures. Large HVDC electron pipelines can be constructed and pull energy and power all through the EU and from additional afield. The place hydrogen is required, it principally can be electrolyzed at level of demand utilizing grid electrical energy within the volumes and on the occasions the consuming course of wants.

The DNV examine is simply one other thick stack of Powerpoint slides that show to anybody who cares to look that hydrogen for power is a horrible concept. Even a agency as dedicated to hydrogen for power as DNV is, utilizing oil and fuel analysts who gained’t have a job if hydrogen doesn’t change into a dominant power service, can’t make it make sense in its stories, as exhausting as they fight.

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