ENERGY TRANSITIONS

Gas plant developer bets big on CO2-free hydrogen

A wave of new natural gas-fired power plants is taking shape across Ohio, signaling an energy transition underway in the region as cheap, abundant shale gas undercuts the profitability of coal and nuclear energy.

One of these new plants, though, may not only represent the current state of Ohio's fossil fuel-heavy energy mix but be the vanguard of a green hydrogen future if developers can execute their ambitious vision.

That plant is the 485-megawatt Long Ridge Energy Terminal being built on a 1,600-acre site along the Ohio River that was once home to an aluminum smelter.

Scheduled to go online next fall, the $600 million plant will begin blending 5% hydrogen with natural gas almost immediately with the goal of running on 100% by the end of the decade. Initially, the hydrogen won't be carbon free. It will come from a neighboring industrial plant.

But the endgame for the project is to use wind and solar energy to make green hydrogen through electrolysis, store the gas in large salt domes that underline the property, and at night, or when the wind isn't blowing, removing the hydrogen and burning it for electricity, said Robert "Bo" Wholey, Long Ridge's president.

"We think the cost [of hydrogen] over time will come down to parity with that gas," Wholey, a former investment banker, said in an interview. "So it could be less of a battery storage solution over time and more of a baseload solution provided that these technologies develop like we think they will."

Whether it's green hydrogen or other technologies, finding an economic and reliable source of dispatchable carbon-free energy will be key if the U.S. is to realize President-elect Joe Biden's ambitious goal to achieve 100% carbon-free energy by 2035, analysts and utility executives say.

While many experts agree the U.S. power grid can get to 70% to 90% carbon-free energy using renewables, they point to a need for sources of dispatchable clean energy — seasonal battery storage, carbon capture and sequestration, next-generation nuclear plants, hydrogen, and likely some combination of those technologies — when there's not enough wind and solar energy available.

The Long Ridge project is owned by Fortress Transportation and Infrastructure Investors LLC, a publicly traded aviation leasing and port infrastructure company, and global asset manager GCM Grosvenor. It is among a handful of power projects across the country pursuing a hydrogen future.

In Utah, a coal-fired power plant that supplies electricity to Los Angeles is being equipped with gas turbines that will eventually be able to run on hydrogen produced with renewable energy (Energywire, March 11). Utilities Entergy Corp. and NextEra Energy Inc. are developing green hydrogen projects. And developers of three other eastern U.S. gas projects will use technology from Mitsubishi Power to make gas plants "hydrogen ready."

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None of those projects has as ambitious of a timeline as Long Ridge. The Intermountain Power Plant in Utah, for instance, aspires to increase the amount of hydrogen over a 20-year period, from 2025 to 2045.

Hydrogen wasn't even in the plans for Long Ridge a few years ago when developers purchased the plant site for $30 million. Rather, necessity was the mother of invention.

Original plans called for building a medium-size gas plant to power a data center co-located on the plant site.

But it quickly became apparent that many big technology companies that have 100% clean energy goals didn't want to do a power purchase agreement with a fossil plant, Wholey said.

"So we said, 'OK, we got a half-built combined-cycle gas plant. What do we do?' And that's really what kicked off the focus on hydrogen."

Long Ridge developers selected General Electric Co.'s most advanced gas turbine, which can burn 15% to 20% hydrogen by volume initially, and up to 100% with modifications. A neighboring industrial plant also produces hydrogen as a byproduct that will be used for initial blending with natural gas.

"That's not green hydrogen yet, which is what we were really after," Wholey said. "But it's available, and it's fairly cheap."

'The economics are just challenging'

For carbon-free green hydrogen, the plant needs access to renewable energy, a lot of water, which it has with the Ohio River, and large-scale storage. That, too, is available in the form of large underground salt domes beneath the plant site — one of the features that drew developers to the spot.

To be sure, realizing that vision won't be easy and will depend on a lot of things outside of the company's control falling into place, and quickly.

Key among them is development of hydrogen production technology, which will play a huge role in determining if hydrogen-fueled power can become cost competitive.

While technology already exists to make green hydrogen with electrolysis, it's extremely expensive and only being done on a very small scale. While "blue" and "gray" hydrogen can be produced more cheaply, and likely have a role to play in a hydrogen future, they're not carbon-free fuels.

For the first time this year, investment bank Lazard's recent levelized cost of energy report, an annual analysis that seeks to produce comparative costs for different technologies, included a study of hydrogen as a supplemental fuel for combined-cycle gas generation.

The analysis provides a yardstick for the cost reductions necessary to make hydrogen cost competitive with fossil fuels.

The report put the cost of power for a gas plant that burns 20% hydrogen at $88 per megawatt-hour for "blue" hydrogen made from natural gas to $127 per MWh for "green" hydrogen made from electrolysis. That compares to $44 to $79 for a standard combined-cycle gas plant.

"Trying to compete with natural gas, the economics are just challenging," Paul Browning, the president of Mitsubishi Power, said during a recent talk. "In the future it's going to become an alternative fuel, but we need to achieve some cost reduction."

But Browning, whose company is part of the Intermountain Power Plant and is working with Entergy to explore the potential for hydrogen projects along the Gulf Coast, expects that to change soon.

"If you're looking forward at hydrogen, you can see we're on the cusp of just massive cost reduction and an industry that's going to really take off," he said.

Recent analysis suggests as much. An IHS Markit report earlier this year said the production of green hydrogen could become cost competitive with so-called blue or gray hydrogen by 2030.

Morgan Stanley analysts said in a research note this summer that utilizing cheap wind power in places like Texas or the Midwest could make green hydrogen cost competitive with other hydrogen production technologies even faster — within a couple of years.

A 'Swiss Army knife' fuel

While green hydrogen may ultimately play a role in getting the power sector to a carbon-free future, it's hydrogen's versatility and its application in other sectors of the economy that will be harder to electrify and decarbonize, like long-haul transportation, that is a big reason for the enthusiasm around its future right now, said Doug Vine, a senior energy fellow at the Center for Climate and Energy Solutions.

"Hydrogen is like a Swiss Army knife as an energy carrier because it can be stored for a long period of time," Vine said. "It can be a transportation fuel, it can be a power fuel, and then also that really challenging area of high-temperature heat for industry."

And if hydrogen is going to be a contributor to eliminating carbon emissions from the power sector, it will require more than waiting around for technology to mature, Vine said.

"There are obviously challenges in that natural gas is really cheap," he said. "So we're going to need policy in place to compel these efforts to decarbonize."

One often-discussed way to make low and zero-carbon resources more competitive with fossil fuels across the U.S. economy is putting a price on carbon. But that's politically challenging, Vine said.

For the power sector, the federal government could also regulate carbon and put limits on power plant emissions, as the Obama administration's Clean Power Plan tried to do. States can also enact new and more ambitious clean energy standards.

The federal government could also help cost reductions by putting more money into research and development. While Vine considers hydrogen technology development as having bipartisan support, those research efforts should benefit the incoming Biden administration's focus on climate, he said.

The private sector, too, is pouring money into hydrogen research to help reduce carbon emissions in the power sector and broader economy.

Among those focused on the work is the Low-Carbon Resources Initiative, a new five-year project of the Electric Power Research Institute and Gas Technology Institute. With more than two dozen sponsors including major utilities such as Duke Energy Corp. and Southern Co. and equipment makers like GE and Mitsubishi, the initiative is on its way to raising $100 million to support its work helping to develop low- and zero-carbon energy technologies.

Hydrogen is among them. But EPRI officials involved in the project say that while hydrogen is viewed as one of many decarbonization tools, it is not the only solution when it comes to the power sector.

"A lot of these technologies are emerging. There's a lot of research going on, and we don't know exactly where the costs end up," said Geoffrey Blanford, a senior technical expert at EPRI who was a lead author for the Intergovernmental Panel on Climate Change's Fifth Assessment Report in 2014.

"There's a lot of opportunity for technological improvement," Blanford said. "Electrolysis could get much cheaper, we could get much better [carbon capture and sequestration], there could be a breakthrough in advanced nuclear. That's part of the reason that you want a full portfolio, kind of from the outset, to keep all these options on the table."

In fact, he said other sectors of the economy may have more riding on hydrogen as a low-carbon alternative than the power sector, which will continue to see emissions drop as natural gas and renewables come online and displace aging coal plants.

A 10-year race?

But even if the power sector doesn't spearhead the development of hydrogen technology, it wants to be ready when it's ready.

That includes turbine manufacturers, which are positioning themselves to be ready for a hydrogen future.

Currently, the big gas turbine makers — Mitsubishi, Siemens AG and GE — are doing testing to be able to blend higher levels of hydrogen. But Robert Steele, a technical executive at the Electric Power Research Institute who has spent his career in the gas turbine industry, said none of the manufacturers yet have designs that can burn 100% hydrogen.

"We're probably needing five to 10 years to be ready for that," Steele said. "The gas turbine makers are very keen to get themselves ready for a hydrogen economy. That's really the foot race these guys are in."

The Long Ridge project figures to play a part in GE's efforts to produce a turbine that's capable of burning 100% hydrogen. Plant developers have also hired engineering firm Black & Veatch to help with plans for integrating hydrogen into the fuel stream.

Of course, without a cost-effective source of hydrogen, it's a moot point.

There, too, Long Ridge intends to have to take an active role in technology development.

The company aims to make Long Ridge a sort of "hydrogen incubator" by hosting green hydrogen production pilots, Wholey said.

Long Ridge is working on that with New Fortress Energy, a New York-based affiliate of one of its owners.

Wes Edens, the billionaire CEO of New Fortress Energy, which for now makes money supplying liquefied natural gas to Caribbean power plants, earlier this year laid out its own ambitious vision for transforming the company into a hydrogen supplier within the next decade.

The company has established a new division, Zero, which weeks ago announced an investment in an Israeli green hydrogen company, H2Pro. And it plans to do a U.S. pilot in 2023, most likely at the Long Ridge site.

Wholey said Long Ridge is clearheaded about its hydrogen ambitions and will continue to have the options to produce cheap power for the PJM Interconnection grid using the abundant supply of shale gas.

But, he said, the reality of technology, economic, policy and regulatory hurdles in the company's path don't diminish the urgency in pursuing a hydrogen future.

"We want to be first in the U.S. to begin burning hydrogen in purpose-built gas turbines," Wholey said. "We want to accelerate the transition to hydrogen as quickly as possible."

Twitter: @jefftomichEmail: jtomich@eenews.net

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