New tool to assess costs and benefits of switching to green hydrogen

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With green hydrogen building up momentum in Australia and globally, a new, open-source tool will help stakeholders to assess at which point the technology becomes a viable pathway for a community to meet its energy needs. Developed in cooperation between KPMG, CSIRO, ATCO and ARENA, the H2City assessment framework will allow users to compare outcomes from different scenarios, as well as better understand key factors that are potential constraints to conversion and trade-offs required.

“The H2City Tool is the first of its kind to calculate the break-even point when a hydrogen pathway is competitive with an electrification pathway in order to provide energy to a community,” said James Arnott, KPMG Partner and WA Management Consulting Lead commenting on the H2City industry model launch at last month’s All Energy conference. “While it is sophisticated, it contains relevant cost and performance data provided by the CSIRO – as well as publicly sourced data – and it significantly advances the Australian hydrogen debate in a practical way.”

The tool includes over 200 inputs that can be used to determine preparedness for a potential transition to hydrogen-based energy. Both qualitative and quantitative assessments and data inputs can be grouped into eight broad categories for the user to consider in defining the scope of transition in the community, including demand, production, storage and transport, local infrastructure, end use, regulatory policy and legislation, climate policy and social benefits. These inputs are used to contrast a hydrogen versus electrification solution for a community.

As explained in the Hydrogen Communities – Assessment of Suitability of Communities for Conversion to Hydrogen report released alongside the tool, the assessment process then follows four steps: 1: Define demand and match source of production; 2: Quantify the high level incremental cost of conversion; 3: Review qualitative aspects of options; and 4: Review qualitative and quantitative outputs. The report is also looking at global and Australian case studies of hydrogen community initiatives to support the development of the assessment framework.

Major opportunity

“H2City is an open source tool to assess the cost benefit and commercial feasibility of switching to renewable hydrogen at a municipal-scale,” said ARENA CEO Darren Miller. “This will help the hydrogen industry, gas networks and energy developers and local communities to think about hydrogen, and will help us to accelerate Australia’s hydrogen industry, which is one of our investment priorities.”

Touted by as the missing link in the energy transition, green hydrogen offers a major opportunity for greening the grid, while leveraging existing natural gas infrastructure. In Australia, green hydrogen has already joined natural gas in pipelines in a project led by ATCO and backed by the Western Australia Government and ARENA. ATCO’s $3.3 million Clean Energy Hub trials the production, storage and use of renewable hydrogen to energize a commercial-scale microgrid in Jandakot, and assess the practicalities of replacing natural gas with hydrogen at a city-wide scale across a municipality.

The Canadian gas major also acts as a co-collaborator and energy infrastructure provider on the H2City project. “ATCO believes Australia’s gas distribution networks will play a key role in the future energy mix,” said Stevan Green, President of ATCO’s Australian Gas Division. “Beyond natural gas, the gas network has the potential to store and deliver ‘clean’ hydrogen, and to play a central role in reducing energy costs and carbon emissions.”

Declaring 2019 a critical year for hydrogen, the International Energy Agency said hydrogen was enjoying unprecedented momentum around the world and could finally be set on a path to fulfil its longstanding potential as a clean energy solution. The IEA analysis found the cost of producing hydrogen from renewable electricity could fall 30% by 2030 as a result of declining costs of renewables and the scaling up of hydrogen production.

In implementing hydrogen solutions on a community level, stakeholders who could benefit from the H2City Tool include the energy industry participants, government, transport and infrastructure agencies, developers and policy makers. Access to the tool is via ARENA website.