ECONOMIC IMPACT ASSESSMENT OF HYDROGEN ENERGY-3.pptx

Hydrogen energy socio impact is discussed here

1. ECONOMIC IMPACT ASSESSMENT OF HYDROGEN ENERGY LECTURE-VI

2. ECONOMIC IMPACT The analysis of economic impacts tends to concentrate on the necessary investments for hydrogen infrastructure build-up. Other very important impacts of hydrogen as an energy fuel such as those on employment, gross domestic product (GDP), international competitiveness.

3. IMPACT ASSESSMENT OF HYDROGEN ENERGY The success of a green hydrogen economy essentially depends on whether hydrogen can meet the needs of customers in a competitive way under future market conditions. Impact of infrastructure - Building a hydrogen economy will require substantial investment. Production technologies alone will need to attract between £3.5 billion and £11.4 billion by 2035. Minimizing the hydrogen conversion, storage and transport costs by using localized applications could significantly improve hydrogen’s commercial competitiveness.

4. IMPACT ASSESSMENT OF HYDROGEN ENERGY The LCOH (Levelized Cost of Hydrogen) can be one of the metrics to assess the economics and commercial viability of a project or to understand its cost competitiveness compared with other energy sources. Deloittee study (in Uk ) considered three scenario namely Steady Progression , Consumer Transformation and System Transformation 01. Steady Progression – low hydrogen demand case 02. Consumer Transformation – central hydrogen demand case 03. System Transformation – high hydrogen demand case.

5. IMPACT ASSESSMENT OF HYDROGEN ENERGY A combination of blue and green hydrogen will be needed to meet the net zero target, but the volumes will depend on a variety of factors, such as the end-use applications, government policy and the available mechanisms supporting the different types of hydrogen production technologies. Figure 4 shows the projected balance of blue and green hydrogen demand in the three scenarios based on FES 2020 figures. Blue hydrogen demand in the System Transformation scenario is driven by extensive hydrogen use in heat applications.

6. IMPACT ASSESSMENT OF HYDROGEN ENERGY

7. IMPACT OF INFRASTRUCTURE

8. IMPACT OF INFRASTRUCTURE Reducing electrolyzer costs and improving utilization rates can lead to lower green hydrogen production costs The load factor also impacts electrolyser cost Markets with high levels of renewable penetration have favourable conditions for deployment of electrolysers , as the level of renewable output continues to increase and power prices are expected to decline

9. IMPACT OF INFRASTRUCTURE Conversion is potentially the second largest cost component in a hydrogen project. Increasing hydrogen’s volumetric density is one of the main reasons for hydrogen conversion. Compression is the cheapest conversion treatment, adding an average of £0.5/kg to the cost across the three scenarios, However, at 40 kg/m3 (at 700 bar pressure), compressed gas is the least dense by volume of the conversion options LOHC – Liquid organic hydrogen carriers. Conversion to LOHC and ammonia are the second and third most expensive conversion treatments respectively, but both chemicals have higher volumetric density than compressed gas. Perhydro- dibenzyltoluene (PDBT) is one of the most well investigated LOHCs. PDBT has a volumetric hydrogen storage density of 64 kg/m3. Ammonia has the highest volumetric density, at 123 kg/m3 (at 10 bar pressure) of all forms of hydrogen carriers.

10. IMPACT OF INFRASTRUCTURE The cost of storage - Long-term, large-scale storage: salt caverns and compressed gas tanks are the most cost-effective options. salt caverns and compressed gas tanks are the most cost-effective ways to store hydrogen. However, their availability is limited by geography and they will need dedicated transport infrastructure to carry large volumes of hydrogen from the production to the storage facility and then on to end-users. Compressed gas tanks have a number of advantages over salt caverns. They can be set up at a required location, independently from geological constraints.

11. IMPACT OF INFRASTRUCTURE The cost of transporting hydrogen - Large volumes and long distances: gas pipelines are the most cost effective option. The most cost-effective way to transport hydrogen in large quantities over long distances is via gas pipelines Although LOHC pipelines would be cost competitive with gas on a levelised cost level, their advantage is lost due to the high conversion costs. In addition, the ‘spent’ LOHC material would need to re-transported to the production facility to be rehydrogenated Injecting hydrogen into the gas grid or fully replacing natural gas with hydrogen has multiple benefits: The majority of the existing gas distribution networks could continue to be used. The gas distribution network could serve as a storage medium for renewable electricity during times of low demand, thereby linking the electricity and gas grids and increasing the flexibility for both It is cheaper to transport hydrogen in large quantities via pipes than transporting the energy equivalent in electricity .

12. IMPACT OF INFRASTRUCTURE Refueling stations- Refueling station costs can add considerably to the final levelised cost of hydrogen – somewhere between £1.85/kg and £2.26/kg. Hydrogen refueling stations typically require a high pressure storage system and one or more dispensers as a minimum. Refueling station costs are highly dependent on utilization rates.

13. IMPACT ON GDP Country Renewable Energy Targets Hydrogen-specific targets FCEV Targets Hydrogen refuelling station (HRS) Targets Hydrogen flow (MtH2/ yr ) Other United States- Federal 20% (2020) 40,000 (2023) 100 (2023) - - United States - California 100% (2045) 1 million (2030) 1,000 (2030) - 33% green hydrogen Germany 18% (2020) 500 100 (2019) - - France 32% (2020) 50,000 (2023) 100 (2023) - 20-40% green hydrogen Netherlands 14.5% (2020) 2,000 (2020) 5 - - Norway 67.5% (2020) 50,000 200 - - Denmark 30% (2020) 75 10 - - China 770 GW (2020) 1 million (2030) 500 (2030) 0.2 (2030) - South Korea 11% (2030) 630,000 (2030) 520 (2030) - - Japan 22-24% (2030) 800,000 (2030) and 1,200 buses (2030 320 (2030) 0.3 (2030) - India 175 GW (2022) 1 million (2020) - - - Australia 33,000 GWh (2020) - - 0.5 (2030) - New Zealand 100% (2035) - - 0.7 (Taranaki only, 2030) Taranaki proposes exporting around 0.5–1 GW, or 40% of production Table - Country-specific renewable energy and hydrogen targets Source: Deloitte Research and IEA Report Australia

14. SCENARIO CONSIDERATION- AUSTRALIA Four distinct scenarios have been examined: Scenario 1: Energy of the future. This scenario provides information on the impact that hydrogen demand can have for Australia where all aspects of industry development are favourable for hydrogen. Scenario 2: Targeted deployment. Under this scenario, countries adopt a targeted approach which aims to maximise economic value and benefits for effort in the deployment of hydrogen. Scenario 3: Business as usual. Under this scenario, Australia follows a path in which social, economic and technological trends do not shift markedly from historical patterns. However, there are shifts in global markets removing some barriers for hydrogen deployment. Scenario 4: Electric breakthrough. Under this scenario, there is rapid technological development in electrification.

15. IMPACT ON GDP (AUSTRALIA SCENARIO) SCENARIO CONSIDERATION

16. IMPACT ON GDP (AUSTRALIA SCENARIO) Proportion of market captured by scenarios by 2050

17. IMPACT ON GDP (AUSTRALIA SCENARIO) The development of the Hydrogen sector has a positive impact on Australian GDP under all three Policy Scenarios compared to the Business as usual scenario. In the Energy of the future scenario, GDP is projected to be around $26 billion higher by 2050. Under the Targeted deployment scenario, Australian GDP is projected to be around $11 billion higher Projected deviation in Australian GDP from Business as usual scenario, selected policy scenarios GDP of Australia in 2019 is 1392.70 billion US $ Across all modelled regions, the impacts to GDP are larger in the Energy of the future scenario than in the Targeted deployment scenario

18. IMPACT ON EMPLOYMENT (AUSTRALIA) The impact of the Hydrogen sector has a net positive impact on Australian employment, although this impact is relatively modest. Compared to the Business as usual scenario, employment in the Energy of the future scenario is projected to be around 16,700 Full Time Equivalent (FTE) jobs higher (0.09%) in 2050 Projected deviation in employment from Business as usual scenario, Energy of the future and Targeted deployment scenarios Source: DAE-RGEM

19. IMPACT ON EMPLOYMENT (UK) Th UP stream Mid stream Down stream

20. INTERNATIONAL COMPETITIVENESS

21. PATH TO COST COMPETITIVENESS Scaling up hydrogen value chain to unlock further cost reductions For instance, at a manufacturing scale of approximately 0.6 million vehicles per year, the total cost of ownership (TCO) per vehicle will fall by about 45 per cent with respect to present cost. 30 percentage points of this cost drop is attributed to manufacturing scale up. 5 percentage points to the fall in low-carbon and/or renewable hydrogen production costs and 10 percentage points to the scale-up of hydrogen refueling infrastructure deployment. 90 per cent of cost reduction for non-transport applications are from scaling up the supply chain. Up to 70 per cent of cost reductions for transport applications are from manufacturing scale-up of end-use equipment.

22. PATH TO COST COMPETITIVENESS Need for investment: approximately USD 70 billion required to become competitive -the gap between the costs of hydrogen technologies and their lowest cost low-carbon alternative will require funding in order to bring hydrogen to scale and, consequently, cost parity. In production, achieving competitive renewable hydrogen from electrolysis requires the deployment of aggregated 70 GW of electrolyser capacity, with an implied cumulative funding gap with grey production of USD 20 billion. To initiate the implementation of low-carbon hydrogen from natural gas reforming with carbon capture and storage (CCS), it is estimated that USD 6 billion is required to fund the additional production costs versus grey hydrogen until 2030. In transport, with low-carbon alternatives imply an additional required investment of USD 30 billion to cover the economic gap. In heating for buildings and industry, financing the cost difference between hydrogen and natural gas and investments to build or repurpose the first gas pipeline networks for hydrogen will amount to USD 17 billion by 2030.

23. DRIVERS

24. TIME FRAME CVV From 2020 to 2025. In the short term, hydrogen could become competitive in transportation, particularly for large vehicles with long ranges By 2030. With the costs of hydrogen production and distribution falling, many more applications should become competitive against low-carbon alternatives. Long term. By 2050, most of the assessed hydrogen applications considered can become competitive against low-carbon alternatives.

25. TIME FRAME Implications of scale on utilisation and distribution costs Beyond reductions in equipment costs, a scale-up in hydrogen usage will also lead to improved utilisation of capex. The TCO for large passenger vehicles could decline driven by three main factors: lower-cost vehicle capex, lower-cost distribution and retail of hydrogen, and lower-cost hydrogen production. Exhibit 10 shows the cost of hydrogen at which each use case becomes cost competitive with the low-carbon alternative in 2030

26. Conditions for hydrogen production across regions

27. Conditions for hydrogen production across regions Regarding capex, a 60 to 80 per cent reduction from larger-scale manufacturing is expected by 2030.

28. Conditions for hydrogen distribution Analyses suggest that all the pathways for hydrogen distribution should decline significantly in cost over the next decade – by about 60 per cent including production, and by as much as approximately 70 per cent when only considering distribution and retail – bringing the cost of hydrogen at the pump to less than USD 5 per kg by 2030.

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