Briefing Note | March 2021
The conversion of surplus renewable electricity into green hydrogen is seen as one of the leading pathways to full decarbonisation of some electricity grids. The hydrogen can be stored and then used as a fuel to power gas turbines when there is insufficient wind and solar energy.
Most focus to date has been on reducing the cost of the creation of green hydrogen, down to around a nominal figure of $2 per kilogram, which equates to around $16 per GJ of energy. Wholesale natural gas is typically traded between $7 and $12 per GJ.
Once the hydrogen is created it can follow two basic pathways: it can be immediately injected into gas supply networks (subject to the materials used in pipelines to transport the gas) or it can be stored for later use in electricity generation or for other industrial applications.
The cost and physical limitations of industrial scale hydrogen storage are yet to receive the same scrutiny as hydrogen production. Yet, self-evidently, understanding them is crucial if hydrogen is to provide long term storage and dispatch of renewable generation into the large electricity grids.
The three broad types of hydrogen storage are compression, liquefaction and converting it into other materials (like ammonia). Technologies like liquefaction and materials require large amounts of energy while conventional tanks are modular and can be replicated, but will require space for long term storage. Underground storage may provide the cheapest large-scale storage option but requires very specific geology.
The cost of hydrogen storage is still opaque. There are few estimates of the average cost per kilogram of hydrogen or per kwh because most storage methods are still theoretical or early in the development stage and have not developed commercially transparent costs.
Production of hydrogen and immediate injection and blending into the gas network is one way of avoiding storage costs, although it does not provide a complete electricity system solution.