ali tabibian, managing partner, GTK Partners
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An unedited transcript is below.
Programs like the ACES Delta hub, which uses hydrogen storage to make renewably-sourced electricity available around the clock, may improve the economics of hydrogen transportation.
Welcome, welcome, welcome, everyone to this episode of Tech. Cars. Machines, and Happy New Year 2024. I hope it’s the best year of our lives so far. If you’ve been living a life worth living, you’ve been listening to our recent episodes, where you’ve heard executives from some great companies talk about their plans for climate-friendly offerings. You heard from Volvo, Daimler, Traton, and Cummins Engine talk about their plans in trucking, and Universal Hydrogen in aviation.
What you heard in those episodes was a fair bit of discussion about hydrogen as an energy source, as compared to diesel, jet fuel, or electricity stored in batteries. In this episode, I’d like to pull on the hydrogen transportation thread a bit more. What are the benefits, what are the issues, and how can a very cool unrelated use of hydrogen benefit its use in transportation?
Why Is This Subject Relevant?
Transportation driven by the energy stored in batteries, battery electric vehicles, BEVs, or even just EVs, has become commonplace in personal transportation in recent years. However, too many people assume that battery-based solutions are a suitable near-term solution for nearly all applications. Insiders in the transportation and industrial worlds don’t make this assumption at all. For vehicles and equipment such as freight trucks, mining equipment, agriculture equipment, and ships, plenty of insiders believe that tanks of hydrogen as a source of energy will be required, especially for heavy-duty or long-haul work.
In some cases, these hydrogen-fueled vehicles will convert hydrogen energy to electricity in a device called a fuel cell, and then use this electricity to run the same powertrain you’d have in an electric vehicle. In other concepts, the hydrogen is ignited and burned in a combustion engine, much like today’s combustion vehicles. Whichever method is used, a key driver of success for hydrogen in transportation is how and at what cost you produce, transport, and deliver the hydrogen.
Neither the Chicken Nor the Egg
For hydrogen-fueled transportation, you, of course, first need to produce the hydrogen, often by breaking down H20, better known under its trade name “water.” Electricity is often used to break down this water, so the sustainability of hydrogen production and part of its cost depends on how that electricity is produced. Second, hydrogen is a very light gas (the lightest in the universe), so to be stored or transported, it needs to be kept under very high pressure, adding a lot of complexity and cost. Third and finally, you need to have a distribution network so that a truck fleet or other users can refuel where needed. The problem with all of this is that we have neither the chicken nor the egg. There’s no prevalence of green hydrogen production, no delivery infrastructure, and few vehicles running on hydrogen. I have yet to hear anyone confident that a soup-to-nuts build-it-and-they-will-come approach for hydrogen is economically viable. It all depends on heavy government subsidies. That’s why plenty of people view the economic case for hydrogen in transportation as quite challenging.
history to the rescue
However, IMHO this pessimism ignores that plenty of the things we use today wouldn’t have come about if, back in the day, the offering and its ecosystem had to be justified simultaneously. It’s often solutions developed for an old, pressing issue that are repurposed, with marginal cost, to solve a very different problem.
Here’s a fun bit of history to demonstrate the point. The smartphones we’re all addicted to aren’t much use without their data plans. Today, cell phone data networks almost incidentally also carry simple voice calls. But that simple voice call was the only justification needed, it was the foundational application, for a multi-decade consolidation of towers, equipment, and frequencies to enable voice-only cell phone service around 1980. It took another decade for very rudimentary data plans to be offered; even another 10 years later, Blackberry built its own network to support text-only email service on its devices. To extend the example, the success of even those simple voice networks depended in meaningful part on another foundational application for nationwide connectivity — railroads. The railroad networks had the rights of way that allowed lines and towers for telegraph, telephone, and eventually wireless networks and fiberoptic cables to span the continent. For example, Sprint, now merged with T-Mobile, stands for Southern Pacific Railroad Internal Network Telecommunications. Sprint also had a fiberoptic network, and other fiberoptic offshoots of railroads include Level3 Communications, MCI and Qwest, each worth tens of billions. You’ll find these old businesses inside the modern entities Verizon and Lumen Technologies.
Aces on Deck
So, is there an “old app” that can help pay for the “new” app hydrogen transportation? So, is there an application for hydrogen, unrelated to transportation, that can help pay for the transport application?
I have a candidate for this “old application,” and it comes from the electric utility industry. In particular, I’m going to give you a podcast tour of the ACES Delta Hub. ACES, or Advanced Clean Energy Storage, based in Delta, Utah, is an extremely large scale project that uses hydrogen to time-shift electric energy for months at a time. Hundreds of millions have been committed to this project, including a $500MM loan from the US Department of Energy. Rapid progress for the project resulted in Chevron acquiring a majority stake in the program after first turning down the opportunity for involvement.
More History
Why would a utility need to time-shift electric energy, and why bother with using hydrogen? A bit of history. In 1909, an electric power authority in Switzerland began operating the first “pumped-storage facility” for storing electric energy. Based in Schaffhausen, north of Zurich and close to the German border, the point of this facility was to use electricity during periods of low demand to pump water into a reservoir at altitude. When electricity was in higher demand, the water would tumble down from the storage reservoir and spin turbines to generate power. Hence, the name “pumped storage”, and this approach has been copied hundreds of times subsequently, allowing utilities to avoid having to build enough generating capacity to meet peak demand. Sometimes the utility needs to time-shift electricity for a few hours and sometimes across seasons. Doing this is much easier said than done and has bedeviled power companies for over a hundred years. The elegance of the solutions depends quite a bit on the availability of mechanisms for storing electricity, none of which are very satisfactory. Pumped storage takes a lot of land and doesn’t work well in flat areas, and lithium battery solutions are small-scale and best used for storing electricity for days rather than between seasons.
Let’s see how the ACES Delta Hub treats the issue. Excess renewable power, for example, from solar panels in Southern California, will be transmitted to Delta, Utah, about 130 miles southwest of Salt Lake City. There, the electricity is used to break down water to produce hydrogen. Weeks or months later, the hydrogen is burned in a carbon-free process to boil water, turn a turbine, and create electricity, just like fossil-fueled power stations. The byproduct of this burning is water, with no CO2 and very little pollutants released. And the scale is massive.
For example, the world’s largest battery storage facilities are pushing 3GW of capacity (in Moss Landing, California, and similar for a Florida utility). The ACES program is targeting 300GW of storage, or 100x larger. Its initial capacity could be enough to supply seasonal storage that would allow utilities across the Western U.S. to decarbonize by 2035. The facility is designed to convert over 220MW of renewable energy to produce up to 100 metric tonnes of green hydrogen daily (worth a few hundred million dollars annually at typical prices). 220MW of energy, in rough numbers, is about the capacity of a 1.5 square mile solar farm, and could, by my calculation, fuel about 150 of the largest semi trucks every day with hydrogen.
But what enables this scale? A key ACES's innovation is to use the natural geology of central Utah to provide the otherwise complex and expensive containment structures for compressed hydrogen. It turns out that the area close to Delta, Utah sits on top of a giant underground slab of salt. Three features of salt are helpful in the cause of hydrogen storage. First, salt is an excellent sealant, as anyone who has cooked fish in a salt crust knows. Salt lets very little moisture through, a talent that extends to small hydrogen molecules and this last bit of geologic talent is hard to find. Second, salt structures are stable, allowing for large caverns to be shaped on the order of 1200 feet in height for ACES Delta. Third, these caverns can be shaped by dissolving the salt with water, a reasonably environmentally benign process. The water for making the caverns, as well as the water from which hydrogen will be produced, comes from the agricultural allocation for the area. By the way, as another example of the scale of this project, the machines that use electricity to separate hydrogen from water, called electrolyzers, are the world’s largest. They’re manufactured by the Norwegian company HydrogenPro. Mitsubishi Power America, based in Florida, is providing most of major equipment for the Hub, and is a joint venture partner in the program.
The program’s full benefits will take until about 2045 to secure, by which time the program may have expanded. However, the confidence in the program is such that in September of 2023, only about four years after conception and 1.5 years after the Department of Energy involvement, oil & gas company Chevron, which deservedly has a reputation of leadership in transitioning to sustainable energy sources, acquired a majority stake in the venture.
I find this massive hydrogen project fascinating because it has nothing to do with transportation or industrial applications. Yes, there are subsidies involved, it will take time, and key pieces of equipment have to be retrofitted. However, notice how a handful of entities working together at a single location can achieve a large-scale, working solution. Renewable electricity is being generated at existing facilities, transmitted over existing lines to an existing power-generation location, and even the cavern-storage solution has been around for decades, just not for hydrogen. These kinds of hydrogen applications seem much easier and more justifiable to implement than the vast ecosystem of changes that need to take place for hydrogen-based transport. For example, Delta, Utah, sits about 40 minutes from Interstate 15, a major feeder highway for Las Vegas and Los Angeles. Take I15 north, and in about 90 minutes, you’ll reach Interstate 80, which will take you to Silicon Valley through Reno, NV, a major logistics hub for Northern California. It’s not too much of a stretch to imagine expanding the ACES Delta hub, at incremental cost and effort, to serve as a “refinery” that can serve hydrogen fueling stations along two critical interstate highways. Just like the railroads eventually helped bring your cell phone a wireless data connection, programs like ACES Delta may enable hydrogen-based transportation far more naturally than current attempts to lay down production, distribution, and vehicle technologies simultaneously.
Well, I hope you enjoyed the description of the fascinating ACES project and the couple of historical detours we took. I originally thought this episode would be a short quick-drop, but there are so many fascinating things that I came across about this project that I hope to get some of the program principals to have a conversation with us in the coming months. I’m off to CES next week and look forward to sharing a few resulting episodes on autonomy and general observations with you. Stay well.