Hydrogen Creation

Creating a robust, high volume electricity generation plex in the South Australian Outback has intrinsic efficiencies.

--it offers the ability for renewables to have a role in energy generation
--It closes the nuclear cycle
--It jump starts a hybrid car industry by allowing nighttime nuclear power to recharge vehicles
--It gives Australia a headstart in adapting to the Hydrogen Age because nighttime Outback-generated power over and above that needed for off-peak and vehicle recharging needs can be used to generate hydrogen.

Making hydrogen is a relatively well-known process. The question now is cost. Making hydrogen with renewables is the Holy Grail. Making hydrogen with nuclear could be a step along the way.

The United States is already engaged in researching hydrogen-producing nuclear plants. As a result, there's a terrific opportunity for Australia, with the world's most abundant uranium supplies, to team up with America, the world's research powerhouse. Together they can work toward an era of clean energy production based upon nuclear hydrogen. The Americans are taking the potential so seriously they may spend US$1.25 billion on it. That's as much as the US had planned to spend on the ill-fated Futuregen "clean coal" effort.

America is considering spending big on research to develop hydrogen from nuclear power
Source: A Means To The Hydrogen Age: The U.S. Power Industry, Senate Hydrogen &
Fuel Cell Caucus Briefing, February 22, 2006

In the US state of Nevada, researchers believe they can create solar hydrogen cost effectively in as little as three years from now, all in a climate very similar to Outback Australia. Meanwhile, researchers at the Australian National University are busily working on ways to store solar energy by splitting ammonia into hydrogen and nitrogen.

In Australia's "National Hydrogen Study," researchers concluded hydrogen production in Australia is most cost efficient if initially it's produced on a distributed basis. The is because of difficulties in transporting hydrogen compared to transporting electricity. The chart below compares the rate of losses of electrons and hydrogen between the power plant and the consumer. While advances in technology will reduce this over time, for now transporting power as electricity rather than hydrogen makes alot more sense. But that may change as time goes on. So why not get a bet either way? Australia can.

Much of the energy stored in hydrogen can be dissipated in transit, presenting a hurdle to overcome
Source: Home Power

As the Hydrogen Economy becomes a reality, South Australia’s massive energy generation resources centered around Olympic Dam and Moomba can serve over time as both a means of distributed and centralised means of hydrogen production -- first one, then the other. In the early days, a huge nuclear/renewable electricity generation complex centered at Roxby Downs could send electricity down high-capacity direct current wires to urban markets to enable recharging of plug-in hybrid vehicles and small-scale off peak production of hydrogen during nighttime hours in order to soak up all the excess nighttime power generated by the nuclear power industry.

Michael Strizki's home near New York City uses hydrogen made
from solar power to run his home
Source: CNET

By creating downstream infrastructure for hydrogen progressively followed by an upstream infrastructure, Australia ensures it gets the lowest cost hydrogen creation over time. As technological advances make centralised production of hydrogen more cost efficient, Australia's flexible distribution system will be able to accommodate a shift of hydrogen production upstream to Roxby Downs.

During the intermediate period between distributed and centralised hydrogen production, Australia's flexible power line system between Roxby Downs, New South Wales and Queensland can be used to carry both electricity and hydrogen (dubbed “hydricity”) with only minor tweaks to the system. Natural gas could also be used as a hydrogen feedstock. As it happens, Australia’s natural gas pipeline network converges at Moomba, just to the northeast of Roxby Downs.

This raises the possibility large scale, centralised hydrogen production could be undertaken in the Outback using, variously, renewable energy, nuclear power and/or natural gas as inputs. The resulting hydrogen supplies could then be delivered to urban consumers through existing natural gas pipelines or through parallel pipelines laid along existing rights of way.

Australia's natural gas pipeline infrastructure
converges at Moomba

With such a secure supply of domestic hydrogen, Australia could then move on to generating an exportable surplus. This would put Australia in the happy position of exporting higher-value, safe hydrogen instead of low-value uranium and coal. By moving up the value chain to hydrogen, Australia would benefit many times over by gaining more of the value added at in each link in the energy value chain. Australia needs to think about its global energy responsibilities. Does Australia want to be a sultan of clean energy, or a salesman of uranium raw materials for dirty bombs?

The Hydrogen Economy

The Hydrogen Economy doesn't lie in some far off, theoretical future. The Hydrogen Economy is rapidly approaching. To get an idea of how fast it’s getting here, the National Hydrogen Study outlines American objectives in the hydrogen area. The US anticipates introducing hydrogen vehicles around 2010 -- with rapid expansion to follow. Japan is just as aggressive.

The United States foresees a rapid shift toward a
hydrogen economy, and already the timeline above
is proving overly conservative

What's more, rapid falls are expected in the prices of both hydrogen engines and hydrogen as a fuel. Incredibly, US Department of Energy researchers believe hydrogen could fall in price to as little as US$2-3/kg by 2015. Used in transport, that would equate to roughly A73cents per litre for petrol.

By 2015, hydrogen could cost the same as regular fuels
By 2015, hydrogen engines could be competitive
Source: “Roadmap on Manufacturing R&D for the Hydrogen Economy,” US Department of Energy, 2005

If large scale, reliable, cost-effective hydrogen supplies are reliably introduced into the transport fuel mix, particularly from renewables and nuclear power, it would reduce Australia’s largest single source of greenhouse gas emissions: transport. The only problem is adjusting the vehicle-refueling infrastructure (ie petrol stations) to handle and sell it. If Australia grasps the opportunities presented by hydrogen economy, it can help create global intellectual property of incalculable value.

Already, the United States is moving down this path. California has its 'Hydrogen Highway,' a network of hydrogen-equipped filling stations along the major north-south freeway, thus enabling hydrogen cars to traverse the state. The city of Las Vegas has gone one better. It's opened a filling station that sells hydrogen generated exclusively from solar power.

The hydrogen economy will have hugely positive macroeconomic effects as well. One of the most volatile inputs to the Australian economy is energy. Once the nation's energy supply is produced from highly-predictable, flat price, stable domestic sources, fuel price volatility will disappear. This will create more stable prices across the economy. Constant wasteful hedging of energy costs will become a thing of the past. With a wild card taken out of the inflation equation, monetary policy will be easier to conduct, in turn allowing the economy to operate at a higher 'speed limit' without worries about spurring inflation.

In blazing a path toward the hydrogen economy, Australia need only exploit her natural factor endowments. In the "National Hydrogen Study," Australian researchers estimated hydrogen could emerge as both a major vehicle fleet transportation and industrial power fuel in Australia by 2010, followed by passenger cars in the following years. Given that Perth is already running a hydrogen-powered bus, these forecasts are already looking conservative.

By using Outback-generated nuclear power and renewables to create both electricity and hydrogen, Australia gains flexibility and profit at every link in the energy value chain. In the "National Hydrogen Study," Australian researchers envisaged a combination of nuclear, fossil fuels and renewable energy sources for creating hydrogen during a transitional retooling of the global economy away from dirty fuels and toward cleaner energy supplies. The most aggressive Hydrogen Economy strategy would entail the need for 54,000 gwhs of electricity by 2030, or the equivalent of about 7,000 megawatts of generating capacity. As it happens, that’s nearly exactly the amount of nuclear power plant capacity ANSTO says is necessary to ensure a viable domestic nuclear industry.

Outback generated power could create the energy needed for Australia's hydrogen economy
Source: "National Hydrogen Study," ACIL Tasman

By using its own enriched uranium to generate power for urban consumption during the day and hydrogen creation at night, and in large volume, Australia can set itself up as a low-cost global producer of hydrogen. This will be due both to its unique factor endowments but due to its creativity in linking them altogether to create the highest-value output for sale on international markets. The possibilities are huge.

Consider this: supertankers routinely arrive in Australia's east coast ports laden with oil and oil derivatives from Singapore. Instead of buying refined oil products from other nations, why not sell them hydrogen? Reliable low-cost hydrogen from Australia could, by itself, spur de carbonization of the Chinese and Indian economies. Hydrogen could replace coal as Australia's greatest value energy exports -- putting it at the pinnacle of the global energy chain.

Here, once again, is the value chain:

--If Australia engages in uranium enrichment, Australia pockets the profits.
--If that enriched uranium stays in Australia and provides a secure, low-cost, proliferation-proof fuel for a domestic nuclear electricity generation, Australia gains lower, more stable electricity costs.
-- If Australia uses surplus overnight Outback-generated electricity to recharge electric vehicles and generate hydrogen, Australia will operate its energy infrastructure more efficiently and gain by replacing refined fuel imports with domestically-produced energy sources, improving her trade balance.
-- If Australia pioneers hydrogen exports, possibly in single-hulled oil tankers now being retired from the global oil trade, Australia gains a higher value export than just raw uranium oxide. This will eliminate "denial of shipping" issues with uranium. There are already templates for Australia to follow. For instance, Iceland is already shifting its maritime fleet over to hydrogen. Canada has experimented with hydrogen barges.
--By using its natural factor endowments to blaze a path toward the Hydrogen Economy, Australia can match its resources and skills with the United State, while also nudging the world's largest economy away from nuclear power and toward cleaner renewables.

The extra value captured in these steps is potentially immense. For instance, below is an estimate of the ultimate value of hydrogen exported from Australia versus low-grade uranium ore. There's a 700-fold increase in value from ore to hydrogen. Isn't that value worth reaping at home?

Prices quoted are values derived from a single
kilogram of uranium ore throughout the value-adding chain to hydrogen
Source: ASFEE

 

There's not just money involved, but geopolitical stability as well. Consider this: the United States is the world's largest importer of uranium. As an 'energy superpower' Australia could -- by channeling it's own efforts into closed-cycle nuclear power and hydrogen creation -- limit the globally aggressive tendencies of its big brother by selling it only value-added hydrogen, not uranium. This would greatly improve geopolitical stability by providing the US one less reason to start regional wars.

Over time, solar could replace nuclear as the prime hydrogen creation energy input. In fact, solar could prove cheaper than nuclear before 2017, the year of Australia's nuclear referendum. But whether it does or doesn't won't really matter if the infrastructure is in place to exploit whichever energy source is most efficient, cleanest and safest. The key is flexibility.

Researchers at the German Aerospace Center estimate that concentrating solar
power now creates energy at a price equivalent to US$ per barrel of oil.
By 2020 CSP costs could fall as low as $20 per barrel equivalent.
Graph source: The Wall Street Journal