Renewable energy
The death of hydrogen has been greatly exaggerated
Last week Origin Energy announced it was backing away from its planned joint venture with Orica to build a green hydrogen project in the Hunter Valley. This follows Fortescue Mining’s decision, announced in July, to postpone its plans for a green hydrogen hub in Western Australia. Noting these developments the ABC’s Ian Verrender asks if hydrogen still has a future.
The LNP’s Ted O’Brien was quick to use Origin’s decision as evidence of a failure by the Labor government, and its “inability to secure reliable 24/7 baseload energy”. O’Brien is still thinking about “baseload” electricity, rather than “responsive” electricity: the Coalition’s understanding of engineering seems to be as weak as its understanding of economics.
Origin’s withdrawal from its project comes a few weeks after the government announced its National Hydrogen Strategy, an update on the Coalition’s 2019 hydrogen strategy. The Coalition has announced that if elected it will withdraw support for green hydrogen.
O’Brien failed to acknowledge that power generation from hydrogen, as a substitute for peaking gas and batteries, is only one of four uses for green hydrogen – production of green metals, production of ammonia, and powering long-haul transport being the others.
Grattan Institute’s Alison Reeves points out that Australia’s hydrogen dreams remain alive. She describes how the present government’s scheme differs from the previous government’s scheme. It is more ambitious, and it is directed at different markets.
Origin Energy is still going ahead with its own hydrogen hub to serve the Newcastle region. Fortescue has commenced work on its green hydrogen project in Gladstone. Both companies are committed to involvement in the Port Bonython hydrogen hub in South Australia, which is intended to use excess renewable energy to power the electrolysis process to produce hydrogen.
The outlook for green hydrogen has changed because of competing technologies (which are also green), and a re-assessment of its costs, particularly the cost of transporting it. This means that the most viable projects are likely to be those which use hydrogen close to where it is produced.
Renew Economy’s Marion Rae points out that renewable energy is crucial for producing green steel, particularly the use of hydrogen as a replacement for coking coal to reduce iron ore. (The CSIRO has an information website describing how hydrogen can help de-carbonise iron-making.)
Closely related to pure hydrogen (H2) is ammonia (NH3), which is a basic input into fertilizer and explosives. Ammonia can also be used as a means to transport hydrogen. As explained in the Open Forum article The quest for “green ammonia”, ammonia produced by present processes contributes about two percent of global emissions. Green ammonia is emissions free.
The answer to Verrender’s question, which he provides himself, is that green hydrogen has a promising future, but it’s a little different from the future once envisaged.
Public support for renewables remains strong
Some publicity has been given to SEC-Newgate’s September 2024 Mood of the nation poll, which shows that the public’s enthusiasm towards Australia transitioning electricity generation to renewables has been weakening. At its height, in August 2022, 70 percent of respondents were positive ( “positive” or “very positive”) about the transition, while only 12 percent were negative (“negative” or “very negative”). By September this year respondents’ positive assessments have fallen to 47 percent, while their negative assessments have risen to 26 percent.
That’s still almost a 2:1 ratio, and about half of respondents believe that the transition is happening too slowly.
The same survey finds about equal support for and opposition to nuclear energy. It seems that reliable information about its cost and the time to get it up and running still hasn’t gotten through to the public.
It also finds very strong support for rooftop solar – 84 percent.
At first sight it is hard to reconcile that waning enthusiasm with our obvious love of rooftop solar. As is widely reported, about 35 to 40 percent of households have solar panels, the world’s highest penetration.
This apparent contradiction possibly relates to discontent with feed-in tariffs. Some panel owners may be able to shift their consumption to times when the sun is shining (e.g. heating water during the day, timing dishwashers and washing machines to come on at peak solar time), but not everyone has that ability, and the standard meters installed in Australia, although called “smart”, are primitive technology – they cannot display current consumption and they cannot be connected to the internet. Also, as people install larger systems, their marginal benefits reduce, because there is only so much electricity people can use during daytime. The balance is sent back to the grid at miserable feed-in tariffs.
That establishes a strong case for investment in household batteries (as covered in last week’s roundup). In an opinion piece in the Sydney Morning Herald – If you give voters free solar batteries, they might keep you in power, Mr Albanese – Rebecca Huntley puts a strong political case for free batteries, as the title implies.
The article is paywalled, but its main message is about the political dividend from the government being seen to be doing something about the cost-of-living. She touches on the economics of such a move, linking to the Climate Council’s Seize the Sun report (also covered last week), showing that households could save nearly $3 billion a year on their power bills.
In fact the political case could be even stronger than Huntley suggests, because when you have your own battery you have control: you become less reliant on the munificence of the government to give you a rebate, which could disappear after the election. And the trouble with those rebates and subsidies is that they carry the implicit (but entirely wrong) message that they are compensation for the government’s policy of pushing high-cost renewables into the grid. That interpretation reinforces the Coalition’s lies about the cost of renewable energy.
The economic case for subsidising batteries is even stronger than that $3 million saving mentioned by the Climate Council. If batteries or other means can shift electricity consumption away from peak periods, power prices could fall significantly, given the influence of peak demand on the cost of generating and distributing electricity. That may allow subsidies to be reduced or eliminated. Huntley’s proposal is one that economic quants should test and model.