In episode 8 of Energy Renewed, Claire Dodinval and Heidi Larson are joined by two guests from GTI Energy: Vice President of the Hydrogen Technology Center, Kirstine Wiley, and Senior Director of Business Development, Brian Weeks. Together, they discuss perspectives on hydrogen’s role in current and future energy markets and solutions. Topics covered include:
- Looking to 2030: Move the hydrogen economy forward
- Addressing the future of hydrogen infrastructure and transportation
- Hydrogen as an energy storage solution
- Hydrogen and energy systems: Challenges and opportunities
- Leveraging soft and physical infrastructure for a hydrogen-integrated future
Read the full transcript below:
Welcome to Energy Renewed, a meeting of the minds in renewable energy where people come together to discuss ideas and synergies to propel the industry forward. ICF provides technical advisory services to lenders, investors, developers, and asset owners of renewable energy technologies and processes. In this podcast series, we will consider varying viewpoints ranging from policy topics to equipment components.
Claire: Thanks for joining us on this episode of our Energy Renewed podcast on hydrogen. This time around, we've got Brian and Kristine here from GTI and myself and Heidi here from ICF to share our perspectives on hydrogen and really imagine what hydrogen is going to look like out into the future. My name is Claire Dodinval. I am an energy markets consultant at ICF. I focus on new energy solutions, and what that really means is looking at things like low-carbon fuels, understanding how they might impact a decarbonized future in our energy system. I'm going to hand it off to Brian to share his perspective and his background from GTI.
Brian: Thank you, Claire, and you as well, Heidi, and thank you to all the listeners for joining us today. My name is Brian Weeks. I'm senior director of business development for GTI Energy, and I'm located in Houston, Texas. GTI Energy, just to keep the introduction very, very brief—we're a nonprofit research and development organization with a broad portfolio of energy technologies, and hydrogen is very much one of them that is growing importance in our portfolio. And with that, turn it over, I guess, to my colleague and good friend, Kristine Wiley.
Kristine: Thanks, Brian, and thank you, Claire and Heidi. Very excited to be on this podcast here and to be talking about one of my favorite subjects, hydrogen. So I've been with GTI energy for almost two decades now, always focused on environmental issues as it relates to the energy industry. But in my current role, I lead our hydrogen technology center, and that really broadly covers our hydrogen research and technology portfolio across the full value chain. So we're very interested in how we integrate it into our energy system, how we produce it in a low-cost manner, how we transport and deliver it, and then how can we use it optimally in a number of end-used applications really across different sectors of our economy. So excited to get the discussion started here.
Heidi: Claire, Brian, Kristine, great to be speaking with you all. And my name's Heidi Larson. I lead the technical advisory practice at ICF. And increasingly we're working with clients and industry stakeholders that are focused on energy and infrastructure efforts that support decarbonization. And I think we certainly view hydrogen as a key piece to that and appreciate the collaboration and discussion today with the GTI team.
Looking to 2030: Moving a hydrogen market forward
Claire: Thank you all for joining us today. I really am looking forward to having the opportunity to dive in into hydrogen and really unpack some of the pieces from a technical perspective and sort of a strategy perspective—how it's going to play out for us. So I'm going to kick us off with a question. Imagine we're in 2030. So hydrogen is integrated perhaps in the energy mix in a way that we are not seeing today. What has happened to make hydrogen an important part of said energy mix? Brian, Kristine, maybe kick us off.
Brian: Sure. Well, why don't I talk a little bit about maybe some of the things that would happen? Again, we're looking back, right? We're 2030. We're looking back 10 years or so and some things that'll happen in the market to help to pull the hydrogen solution forward: one is market pull. Things such as incentives—such as the low-carbon fuel standard credit in California, for example—other incentives for the use of hydrogen, because end-use of hydrogen is a very, very important and sometimes overlooked part of this overall market development.
The second thing that I think likely will have happened now that we're in a successful hydrogen market is production tax credits to really help incentivize the production of hydrogen. The third thing would be possible pricing on carbon because hydrogen from hydrocarbons, which we call sometimes blue hydrogen, will continue to be —and certainly early on will be—a big part of the overall mix. So having incentives to capture and sequester that carbon will be part of it.
And finally, the fourth thing I think will happen in the market: we'll need regulatory changes and regulatory rules that will help to facilitate the build-out of hydrogen infrastructure—things such as permitting, maybe even things such as allowing utilities to rate base some costs related to hydrogen infrastructure. So those are the four pieces I think that the market will need to really move a hydrogen solution forward.
Kristine: So I couldn't agree more with Brian. I think he's really highlighted some of the core elements that we need to build out and create a broader hydrogen market, especially when we look at it from the financial perspective, creating transparency around pricing for hydrogen and some of the regulatory frameworks that we need to enable the broader use of hydrogen.
A couple points that I'll touch on will primarily focus around the breakthroughs that we need around technology. So we know today that it's very costly. It's expensive to produce hydrogen. We have to generate it. And so whether we're talking about hydrogen from electrolysis or hydrogen that's produced from natural gas, we need to be able to bring down that cost. And so when we look at the electrolytic pathway, part of that cost is coming from the electrolyzer itself. So I think we're going to have some of that innovation and technological breakthroughs needed to drive down the capital costs associated with that.
And then I also think another core element that kind of rides along with the technology innovation is collaboration. So a lot of the breakthroughs that we see in science and technology happen because of collaborative programs, collaborative research that we see, partnerships that are established—both public and private partnerships. And so I really see that as a key element to why we were able to make hydrogen happen. And you're seeing that right now when we think about some of the collaborative programs that are being executed by research organizations like GTI Energy or even other organizations at the federal level—so through the Department of Energy, right? A lot of collaboration there to incentivize R&D around hydrogen and really promote its use in our energy system.
Addressing the future of hydrogen infrastructure and transportation
Heidi: Kristine, I think that's a great point. And if I put us in 2030 and we're seeing the global demand for hydrogen increasing and may be on track to hit the estimates of a 4X increase by 2050, we've seen hydrogen playing an important part of that energy mix not only because of that collaboration—which I think you've touched on is great—but we found opportunities from both a market/regulatory standpoint and a technical standpoint, such that we didn't have to start at square one. We saw the stakeholders across the industry coming together on structures, incentives, solutions that are not only a collaboration but opportunities for us to leverage the existing infrastructure that we have in place to support hydrogen.
I know we've talked about this in the past, and one of the things that we talk about commonly amongst our practice and with our clients is, for example, the transportation of hydrogen, which most likely, if we're in 2030 and hydrogen is taking off, we're seeing it ultimately transported through pipelines. And we are seeing success because we've asked ourselves the questions of how do we work together to repurpose and retrofit existing infrastructure, creating those win-win situations, and doing that through collaboration that leverages existing with the new? So I think if that's done, that'll really be something we see as a big driver.
Kristine: And maybe I'll just build on that point. I appreciate you bringing up infrastructure because we know that it's going to be very expensive to achieve net-zero in the U.S. and globally. And so we should be looking at all opportunities to reduce the cost, especially to the consumer. And one way to do that is to be able to leverage our existing infrastructure. Maybe if we just take pipelines for an example. Not only can we look at how do we retrofit or repurpose those pipelines to transport low-carbon molecules—like maybe that's hydrogen, maybe that's renewable natural gas—but we should be looking at that opportunity. But it also offers an opportunity for utilities and pipeline operators to evolve their business because in this energy transition, we are moving towards a more low-carbon energy system. And that is one avenue that they can now start taking their assets, decarbonizing them, and then delivering that low-carbon, low-cost energy to their customers.
Heidi: And just to keep going one more time, what about combined cycle turbines? We've been in discussions with all of the major manufacturers that have roadmaps for, again, in that spirit of leveraging existing infrastructure, to retrofit turbines to burn a blend, as well as roadmaps for combined cycles that can run on purely hydrogen in the future, which just puts us in a position to leverage that into success.
Hydrogen as an energy storage solution
Claire: Maybe going off of that, I feel like this was a really good segue. Coming back to 2022 for a second (we got maybe ahead of ourselves – we’re talking about 2030). If we're looking at the present, why are we considering hydrogen? What makes this different than previous attempts to use hydrogen in the energy sector or as an energy source, and why is the interest in 2022 stronger or different than any other previous attempts to use it?
Brian: I think I'll jump in on this one. I mentioned earlier that we've seen the roller coaster of hydrogen interest has waxed and waned over the last two or three decades, really. What is different about this time? What's different, in the past, we have talked about hydrogen in the context of vehicle fuel. The business case was really based on the comparison of cost to diesel or gasoline. And we've talked about hydrogen in the context of a niche power generation fuel, power generation from using fuel cells.
Today, what's new and different is we're talking about hydrogen in the context of it being an energy storage solution—a grid-scale, long-duration, energy-storage solution. We all know that renewables—wind and solar—are an increasingly important part of the grid electric production portfolio. But what comes with that is the instability that that can have on the grid—instability that is only solved by introducing a grid-scale energy storage solution, where you can store that excess wind and solar at times where the grid can't take it, and then you can have it available at those times when you don't have the wind and solar capacity to meet the grid peak demand.
So hydrogen as energy storage solution has brought in a number of additional stakeholders—that being utilities, both gas and electric utilities, who quite honestly, 10 years ago, were not really that interested in hydrogen. Today they're very interested in hydrogen because it solves two problems for them. One, it provides the energy storage solution that helps to stabilize the grid. Secondly, particularly for gas utilities, it provides a method for them to decarbonize their existing infrastructure by introducing hydrogen into the overall pipeline mix.
So it's very exciting because the other thing that utilities bring with them is a unique capital structure that other companies don't have. Utilities can make investments that they can recover over the next 20 years that other companies just can't do. And so you have a new application. You have a new source of financing, potentially, that utilities bring with them, and all the engineering expertise that comes with having a new stakeholder in the mix. So it's a very exciting time.
Claire: Thank you.
Brian: Kristine, what's your thoughts on this?
Kristine: Yeah, so I appreciate you, Brian, bringing up the energy storage piece of this, because I think oftentimes in discussions—we see this on webinars and in conferences—people are very infatuated with using hydrogen as a fuel, essentially, kind of as a replacement for natural gas for certain applications. But as Brian has pointed out, we're going to integrate more and more renewables, and you're going to need that energy storage. I think another interesting element is because of that, you see a lot more collaboration and integration between the electric and the gas sector, because you're seeing that generation from renewables. You're seeing the opportunity, as Brian said, to leverage infrastructure such as the subsurface storage of hydrogen and really bringing those utility sectors together. And I think that's very exciting.
Understanding pricing: Driving production costs through commercial-scale projects
Kristine: One point that I wanted to touch on is that, in looking at pathways and strategies to decarbonize, hydrogen is going to be one of those solutions. I think we can all acknowledge that. We're seeing that in a lot of the net-zero analysis that's being done. So I don't think it's a question of whether hydrogen is going to have a role. I think the question is how big of an impact, how big of a role, is hydrogen going to contribute to reducing emissions? But we definitely see that interest in those hard-to-abate sectors as everyone talks about in looking at the transportation and the mobility sector or the industrial sector, which are responsible for a lot of the emissions that we see even at a global scale. So I think as we figure out how to drive down the cost of producing hydrogen and best leveraging our infrastructure to deliver that broadly to these different end-use sectors, we're going to see that hydrogen market grow.
Heidi: Brian, Kristine, I think you've made really great points. And the one that I would just add is part of the why now question. I think it has to be tied to the acknowledgement of the precipitous decline in both the cost of natural gas with wide-scale deployment of fracking, but also in the cost of renewable energy—specifically wind and solar—some of the lowest cost of energy sources on the globe right now. And so I think that's another key element that's certainly changed from 20 or 30 years ago, but even from 10 years ago, that we just can't deny in this equation.
And if I was just going to throw a few numbers out there…we had developed some cost modeling specifically related to hydrogen, and we think—or we know rather—that the hydrogen through an SMR process is running about 70 cents a kilogram. And just for those keeping track at home, I think the Earthshot Initiative that was announced by the DoE is $1 a kilogram for green hydrogen. But if we produce hydrogen with some of our cross-modeling with SMR technology and carbon capture, we're looking at achieving something in the target of $1.35. And when we start looking at hydrogen produced with zero-cost or negatively priced hydrogen—we're talking about stored—we're seeing increasing curtailment as an issue with the deployment of renewable energy. And within a decade we could be at a $1.20, $1.25 for hydrogen that is produced through electrolysis with negatively priced or zero-cost electricity. And so it's some pretty promising things, that's not even taking fully into account some of the collaborations and leapfrog innovation that we might see as stakeholders begin to work on this, just to your point earlier, Kristine.
Kristine: So I think it's really important to highlight some of those productions that you just put out there. They're in line with what we're seeing with other organizations and being able to drive down the cost associated with hydrogen production. But the one thing that I would say is that in order to do that, we need projects on the ground at a commercial scale. And while we see a lot of announcements about pilots and demonstrations and you see DoE putting funding to advance the technology really more at the research and kind of demonstration scale, we need the investments to come in really at that commercial scale to gain experience with producing hydrogen at this volume and really to build out that market. So I would just emphasize that all of this is great that we can see a pathway towards that, but now we need to start seeing companies take action and to deploy those projects and facilities.
Heidi: You're spot on. I'll just give one analogy. I spent a lot of time in the last decade in the solar industry. And if we rewind to 2008, 2009 time frame, solar—some people will say—is in a similar spot of hydrogen now, and we were $5 or $6 a lot to install solar. And within a decade, by the time we got to 2018, we were sub-$1 a lot for a large-scale installation. So I think the trajectory and the modeling says we can get there, but you're just spot on Kristine that until we start putting the steel in the ground, those benefits just can't be realized.
Claire: There's hopefully some policy and some deployment opportunities to get us there, right? You know, it's an Energy Earthshot. It's named that probably for a reason, right? But $1 per kilogram of clean hydrogen by 2030 is ambitious, but there are definitely avenues for us to work towards that as a goal.
Hydrogen and energy systems: Challenges and opportunities
Claire: And maybe I'll have this as an opportunity to pivot to another question now. In terms of opportunities and challenges for hydrogen, we've talked about some of the incentives and mechanisms that are going to facilitate hydrogen being successful, but there are still some hesitancies out there with respect to hydrogen being able to really be one-for-one for what we're used to doing, or really compatible with the infrastructure that we're talking about. So we often hear that energy density, energy capacity, especially as hydrogen compares to other energy resources, is a very real challenge related to hydrogen deployment, especially at a large scale. So can you help us put that into perspective? Maybe Heidi, would you be down to kick us off?
Heidi: Yeah, great. A starting point here is that we can be provocative. And if we pick up on the thread Brian was making about storage, we can say hydrogen—it's molecules versus electrons in lithium ion batteries. It's a battle royale. But I think the important thing is that it's not...and hydrogen as a discussion topic and as a solution is really about electrons and molecules, and how do we develop that intersection for the advancement of the energy industry more broadly.
Kristine, you were making a great point that's critical for decarbonization, is that electrification alone can't do it. I think less than 50%. Depending on sources you use, it's even lower than that. But I think we can safely agree that less than 50% of U.S. energy consumption is via electricity. And there are many energy-intensive industries—long-haul transportation, manufacturing, agriculture—where electrification is not a feasible solution to decarbonization. But as we have declining costs around renewable electricity and natural gas, electrolyzers, other gasification technologies, I think we can see coming together solutions that include hydrogen to facilitate an environment where hydrogen serves really as a solution that links different sectors of the energy industry.
Brian: This might be a good point to bring in a specific example—the ERCOT, which is the Electric Reliability Council of Texas. I'm in Houston, by the way, so this is near and dear to my heart. The electric grid stability here locally is always important, particularly as we go into the hot summer season here in Houston. But ERCOT did a study looking at the export capacity for expected or anticipated wind development in west Texas. And then what it found was that by 2030, they're expecting an almost 30% curtailment rate. In other words, there'd be way more supply for renewables than there would be grid capacity to take that power generation out of the west Texas into the eastern part of the state, which is where most of the load takes place. So the numbers worked out to about eight gigawatts of the extent, of that 30% turns, translates to about eight gigawatts of curtail capacity.
We took a look at how much of that energy could be converted to hydrogen and what it would take to...and what we found was one pipeline, one hydrogen pipeline—approximately 30-inch diameter pipeline—could handle half of that capacity or half of that excess energy. If we converted it to hydrogen in west Texas, then transported the hydrogen via pipeline to markets to east Texas, we could take about half of it with one pipeline, half of that curtailment.
The alternative would be to build 7 to 10 electric transmission lines. Think about that. Think about the permitting, the not-in-my-backyard issues that would be encountered by building that much transmission capacity versus building one pipeline. So this is where hydrogen could really play a very important role in facilitating that continued buildout of renewable wind and solar.
Kristine: So Brian's example here really highlights why I think we need to be looking at decarbonization from an energy systems perspective, because you can't look at one sector, one solution in isolation. Maybe I'll elaborate a little bit on the pipeline aspect here. I think we have great opportunities to be able to leverage our existing pipeline infrastructure to transport and deliver hydrogen, but we also appreciate that that doesn't come without some challenges and some barriers that we need to overcome.
What I will say, though, is that we do have history in transporting hydrogen within our pipeline system. So even dating back to when we used to use town gas, that had significant amounts of hydrogen in it, sometimes up to 50%, and we were using the same pipeline infrastructure that we use today to be able to transport that. So we do have experience there in Hawaii. Hawaii Gas transports their synthetic gas, which can contain up to, I think, Brian, correct me if I'm wrong, up to 15% hydrogen potentially. So there's experience there, but we do recognize that there's some technical challenges that we need to overcome. But that's why you see the investments coming from industry. You see investments coming through DoE, through their high blend program to understand some of those impacts on pipeline materials, on gas operations. GTI's working directly with some of the pipeline operators and utilities on their own blending pilots.
This is all just to say that we're evolving and adapting and that it can be done. I mean, if we look to what's happening in the U.K., where they're already blending up to 20% in distribution lines, you see companies—transmission operators like Sam—who are already delivering up to 10% within their transmission lines, and they've put together their European hydrogen backbone to identify specific parts of their transmission system that can deliver hydrogen. You see a lot of action happening. We know that it can be feasible and practical, but we just need to do some of that validation and testing here in the US, because we do have different infrastructure, different materials that we're using in our pipeline system.
Leveraging soft and physical infrastructure for hydrogen-integrated future
Claire: If we're looking at the energy system and hydrogen as a big player, particularly with respect to decarbonization, what's your takeaway that you want the audience listening to have? Is there something key with infrastructure we should be looking for? Are there specific opportunities? How should we be thinking about hydrogen as an opportunity itself?
Brian: Sure. Thanks, Claire. I think that if we were to walk away with one concept from this discussion, I'd like that to be that we can... We have an existing, robust infrastructure that we can leverage, and there's a lot of room where we can better integrate that infrastructure. I'm talking about gas pipelines, liquids pipelines, the electric power grid, as well as both end use and production facilities. This is all part of an infrastructure that can be much better integrated to achieve the deep decarbonization goals that our policy makers have set for us. So leveraging this infrastructure, modifying it, expanding it, and in some cases, repurposing has to be part of the solution. And hydrogen runs through... is a common thread through all of those. So that's the one takeaway. Let's use this infrastructure that we have much better than we are currently using it.
Kristine: So I'm going to build off of Brian's comments here. He talked about the importance of infrastructure, and really we're talking about physical assets here. I think it's also important to highlight that there's soft infrastructure that we can leverage as well if we think about our resources in terms of talent and people and the expertise that we can leverage from our traditional oil and gas industry. They're going to be key as we move towards this energy transition and how we integrate hydrogen.
And to that effect, I would say that looking at opportunities and initiatives such as DoE's regional hydrogen hubs opportunity is going to be very critical to spurring the progress of how we use and produce hydrogen. So we all know about the $8 billion that's been allocated for these regional hydrogen hubs. I think that's a great first step coming from the Department of Energy and really at the federal level start thinking about how we can match locally and regionally the supply and demand of hydrogen. That's going to get things started, but that's only one component. And so we're going to have to see more investments coming from the private industry to really build off of that and then create that broader, more transparent hydrogen market.
Heidi: Brian, Kristine, I think those are both great points. And maybe my one thing that I would leave with is building on a phrase you used earlier, Kristine, is energy systems. And I think in order for us to achieve the deep level of decarbonization that many stakeholders are moving towards, is we're going to need system-level thinking. And that is one thing for me that we need to look beyond just the fence of a single asset, beyond just the network of certain set of pipelines, and encompass a whole system thinking to make this successful. And I think the hubs are going to be a great way to play that out, and I think the collaboration and integration that Brian described is right on point there.
Claire: Thank you so much. This was a really thoughtful way to explore how something so technical as hydrogen, in some ways, but also so highbrow and hard to put your head around in other ways hydrogen can be, is really something that we can rely on as an opportunity. And there might be hiccups along the way, but something that we can really trust is going to be a part of our energy system going forward. Thank you to Kristine and Brian for bringing your technical GTI background to Heidi and I today and for unpacking that with us. This has been a really interesting conversation,
Heidi: Thank you, Claire. Thank you, Brian.