23 August 2021. Hydrogen | Transport
The strange case of the UK’s hydrogen cost projections; Scenario planning for transport practitioners
Welcome to Just Two Things, which I try to publish daily, five days a week. Some links may also appear on my blog from time to time. Links to the main articles are in cross-heads as well as the story.
1: The strange case of the UK government’s hydrogen cost projections
Chris Goodall’s Carbon Commentary blog is always excellent on energy and carbon transition issues, and in the last week he’s turned his attention to the future cost of hydrogen production.
This was prompted by the arrival of the British government’s Hydrogen Strategy—and the fact that the strategy seems to be built on numbers for the future cost of hydrogen, and in particular green hydrogen, that are way out of line with everyone else’s.
Green hydrogen is made from electrolysis of renewable energy, while blue hydrogen is made by converting fossil fuels, with some sort of carbon capture involved.
(Image via Wikipedia/ Public domain)
To take an example from his note, the UK government thinks the cost of green hydrogen in 2025 will be £112/MWh (megawatt hour), whereas the EU’s figure for 2020, currency converted, show a range from £64-114/MWh.
As the projections go further out, the discrepancies get worse—this in a market where generally everyone expects economies of scale and scope to push costs down quite quickly.
Again from Chris’ note, by 2050, the UK government thinks the price of green hydrogen will be £71/MWh.
But when you look at the EU projections for 2030 (in a decade’s time, not three decades’ time, in other words), the EU sees the international price range being £28-62/MWh.
And just in case you’re thinking that the EU policy makers have been captured by green industrial rhetoric, the US is targeting a price equivalent to £22/MWh by 2030–so below the bottom end of the EU’s range—and the world’s largest producer, Norway’s Nel, is aiming to produce at £33/MWh by the middle of the decade.
So, there’s an obvious question here:
What is going on? Why is the UK so jaw-droppingly less optimistic about renewable hydrogen than other entities? The suspicion must lie with the country’s devotion to the future of hydrogen from natural gas. It does very much look as though the policy-makers have determined that green hydrogen must remain more expensive than traditional routes of hydrogen manufacture using natural gas.
One of the things that might be lying behind this is that British policy makers are being more sceptical about scale—a critical factor in reducing costs—than anyone else:
it’s notable that the the UK strategy paper talks of ‘small projects expected to be ready to build in the early 2020s’ using renewable electricity but ‘large scale projects expected from mid 2020s’ for those employing natural gas and carbon capture. In other words, renewable electrolysis is still a toy. Even by 2050, the typical project seems to be expected to use a 10 MW electrolyser, when everybody else is talking of schemes today of one hundred times this scale.
And nobody else, anywhere, thinks it’s going to be cheaper to produce hydrogen from natural gas than from renewables by 2050. But you wouldn’t guess that from the UK hydrogen strategy, which is lacking a review of numbers from international sources.
Some quick points from me.
The first is that one of the bits of rhetoric of post-Brexit ‘global Britain’ is that our science and technology base will create opportunities for world leadership in some sectors. Whether or not you believe that’s true (and there are sceptics), it’s a current political factor, and civil servants are encouraged to look for such opportunities. So one of my guesses here is that there’s some wishful thinking going on here about Carbon Capture and Storage, where the UK has some expertise.
My best guess is that CCS is going to be a niche technology, but if blue hydrogen were a big thing in 2050, CCS would be an integral part of that, and therefore a big market.
The second is that BEIS (the UK’s Department for Business, Energy, Innovation and Science) has some form in this area. The reason that the UK is paying France and China to build a nuclear power station at Hinckley Point, with a guranteed electricity price of £92.50/MWh, is because the government had unreasonably pessimistic expectations about the progress of both renewables and storage.
The third is that however you look at them, forecasts are always political. What I mean by that is that they are always based on assumptions, and those assumptions always encode a worldview. And that worldview, invariably, drives investment and spending decisions, for better or worse. But if you plan to be a “science and technology powerhouse,” it’s better to not to waste that investment on policy-driven assumptions.
Chris Goodall’s Commentary is always welcome, so it is good to see that he now plans to put out a newsletter weekly rather than intermittently.
#2: Scenario planning for transport practitioners
I have a co-author credit on a new paper that is designed to help transport practitioners think about how best to use scenarios, in a fairly pragmatic and introductory way, to inform transport planning in conditions of uncertainty. It is published in open access at Science Direct.
My fellow authors are members of the Mott MacDonald team with whom I collaborate on the Department for Transport’s Futures contract.
(Image: ‘future transport 1’ by Wonderlane/Flickr. CC BY 2.0)
I’m indebted to one of my co-authors, the indefatigable Glenn Lyons, for a helpful list of the 10 questions the paper is built around. These are:
1. What is a scenario?
2. Why or when are scenarios worth developing?
3. Who should be involved in developing scenarios, how & why?
4. How is the scope of a set of scenarios clarified?
5. Do scenarios have to be tailored to a particular application?
6. How far should the bounds of future possibility be stretched?
7. How many variables are needed & how many scenarios?
8. How are the scenarios developed?
9. How is a scenario brought to life?
10. How much time & effort are needed for scenario development?
Glenn adds:
The article aims to help transport practitioners by providing insight into what scenarios are, the process of developing them and the purpose they can serve. It offers a basis for those already engaged with scenarios to reflect and for those curious about the possible merits of scenario analysis in transport planning to begin their journey of discovery.
You can access the paper here.
j2t#153
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