H2Tech - Q2 2021 - 32

SPECIAL FOCUS

PATHWAYS FOR SUSTAINABLE HYDROGEN

The region and the state hold significant advantages to incubate green H2 , which is produced via splitting a water molecule
through electrolysis to create zero-emissions H2. An important
advantage, given the significant power consumption requirements for electrolysis, is that the Texas power market includes
many hours of low-priced power due to a generation mix heavy
in windpower (Texas is the number-one windpower-producing state), as well as a rapidly growing solar fleet. FIG. 7 demonstrates the effects of this extensive renewable power base on
the availability of very low-price power hours. Given the highpower consumption presently required for the production of
H2 via hydrolysis, low power prices create an advantage.
H2 produced during low-cost hours can serve as long-duration H2 storage (i.e., H2 serves as a mechanism to store energy
during periods of high renewable power input such as sunny
days or weeks and provides power during periods of shortage
such as cloudy days or days with no wind).
Moreover, coupling H2 salt cavern storage, uniquely prolific in the Houston Gulf Coast area, with low-priced power
creates the further opportunity to use H2 in (even greater
duration) seasonal storage (i.e., H2 serves as a mechanism to
store energy during periods of low-cost power in the winter, to
be used during peak power prices in the summer). FIG. 8 and
FIG. 9 illustrate the expected growth in Texas renewable power
and additional low-price hours, as well as the synergistic role
of H2 as a storage medium as power intermittency issues rise
with more renewable power on the Texas grid.
Activating blue and green H2 opportunities. Four key initiatives are recommended to activate blue and green H2 opportunities in the Texas region:
* Launch a heavy trucking pilot
* Expand the connection of the existing SMR system
to CCUS to create blue H2
* Pilot seasonal storage leveraging U.S. Gulf Coast
H2 caverns and low-price power
* Advance additional long-duration (> 6 hr, multi-day)
H2 storage opportunities across the Texas electrical grid.

Wind

These activation initiatives will require approximately
$565 MM over 10 yr, appropriate policy changes and public
funding to help defray the costs of new infrastructure buildout, equipment changeout and facilitating permitting. Applying CCUS to produce blue H2 as a fuel could be incentivized
both by CCUS policy (e.g., the federal 45Q tax credit, possibly
with enhancements), as well as by a potential clean fuels incentive. Other incentives and policy changes will be needed
over time to further develop new chains and markets for H2.
Expansion phase for H2 exports. Potential opportunities

exist to expand blue and green H2 production in the region,
as clean H2 demand continues a sharp increase through 2050.
Additional market uses beyond heavy trucking include industrial process heat, electric power production and building
heating-all of which exist in large quantity in the region. As
H2 system costs continue to improve, potentially accelerated
through policy incentives and support, the potential for additional market opportunities grows as the comparative economics of H2 vs. the existing fuel or energy solution improves, and
infrastructure costs are amortized over increasing scale.
Many markets, domestically and globally, will need more
H2 than they can produce over the next decade to meet decarbonization goals. Some markets, domestic and international,
will need to import H2 to meet demand. A strong case exists
for the Houston Gulf Coast to become a global blue H2 exporter with its world-scale, in-place H2 production capacity;
low-cost natural gas feedstock; opportunity to create a lowcost, at-scale CCUS system; and global H2 storage and transport infrastructure.
For example, a promising, early blue H2 opportunity for
Houston could be exporting to California to take advantage of
the latter state's Low Carbon Fuel Standard incentive. A blue
H2 system, anchored in the Texas Gulf Coast area, could expand to become a major H2 exporter, leveraging its low cost,
existing scale, and advantaged pipeline and shipping positions. This could be a mid-term strategy to accelerate at-scale
volumes of clean H2 to domestic and global markets. Initial export markets may include domestic trucking markets beyond
California or international markets, such as the Netherlands,

Solar

Growth
2020-2022
~250%
Growth
2020-2022

Leading
clean storage
technologies

ERCOT ERCOT ERCOT (Operating +
(2020) (2022) planned) (2025F)
Daysmonths

31,266

Seasonal balancing

12-24 hours: Interday balancing

Compressed
air energy

2-12 hours: Intraday balancing

Pumped hydro

14,669

~50%

20 minutes-2 hours: Ramping reserve

4,212

46,604

5-20 minutes: Short-term reserve

37,006
24,789

< 5 Minutes: Spinning and load following
0%

ERCOT installed (2020)

ERCOT projected (2022)

Operating + pipeline

FIG. 8. ERCOT installed and potential wind and solar capacity, MW.
Source: ERCOT.

Q2 2021 | H2-Tech.com

Batteries
(e.g., Li-ion)

23% 34% 38%
Renewable energy penetration

100%

FIG. 9. Energy storage requirements vs. renewable energy penetration
levels. Source: ERCOT.

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H2Tech - Q2 2021

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