Green hydrogen

Advantages

Renewable and can be clean 

• Green hydrogen is made from water, and turns back into water when used, so it won’t run out. 
• Green hydrogen from renewable electricity is a clean energy source both at generation and at consumption. 
• The use of hydrogen in fuel cells emits only water, with no particulates or oxides of sulphur (SOx) or of nitrogen (NOx). 

Energy dense on a mass basis 

• One kilogram of green hydrogen contains the same amount of energy as 2.8 litres of petrol. However, it has a lower energy density on a volumetric basis, and storing hydrogen typically requires specialised – and larger – tanks to hold the gas under high pressure, making it less efficient overall. 

Versatile 

• Green hydrogen can be used in certain areas across various industries, including for chemical feedstock (e.g. fertiliser), mining and process heat. It can also be stored and consumed in other forms – such as methanol which has potential as a marine fuel due to its high energy density (about 10x a lithium-ion battery). 
• In the transport sector, hydrogen fuel cell heavy vehicles have the advantage of being faster to refuel and lighter than electric trucks, allowing for higher payloads and less downtime.

Dispatchable 

• There is an ability to store hydrogen and therefore provide dispatchable energy when required. As dispatchable energy, hydrogen could have different uses for New Zealand’s energy and electricity systems, in particular to help improve the resilience of the electricity system. Hydrogen could be produced during periods of low electricity demand and could be stored and dispatched to help support the security of demand response energy supply on an intra-day or intra-seasonal basis. Uncertainty persists around whether improvements in costs and efficiencies of hydrogen production, storage and power generation will allow it to compete economically with other dispatchable electricity technologies. 

Limitations

High cost of production and related infrastructure

• Green hydrogen is currently expensive to produce, which limits its commercial viability as a replacement for fossil fuels or alternative to direct electrification (which is more efficient). While estimates vary across sources, GNS reports that production costs will need to decrease by around 75% from 2021 costs of around NZD $8/kg to around $2/kg to be commercially viable.¹ While theoretically this is possible, other considerations will need to be taken into account such as transport costs, maintenance and return on capital.

Transportation, storage, and safety issues

• The best method of transporting green hydrogen and storing it on a large scale is not yet clear as there are concerns around the efficiency, safety and cost involved.
• Both leading storage options require a large amount of energy – gaseous form requires compressing the gas to either 350 or 700 bar, whereas liquid form requires the hydrogen to be kept at –253°C. While storing and transporting hydrogen in other forms (such as methanol) can be easier to transport, there are energy losses through the conversion processes that should be considered.
• Hydrogen is a small molecule that can diffuse through metal surfaces, which may cause embrittlement of piping materials used to transport the hydrogen. Therefore, high grade steel pipes need to be used to transport hydrogen.

Energy inefficiencies

• When renewable electricity is converted into hydrogen, between 20-30% of the energy is lost during its production, and it requires a further 10-15% of energy input for compression and storage. This means that the most promising uses for hydrogen are likely to be for applications where direct use of electricity is infeasible or impractical.
• Converting hydrogen to useful energy in a fuel cell or by combusting it leads to further efficiency loss of around 20%-60% depending on the conversion technology.