New Green Hydrogen Project Warns Natural Gas Stakeholders: Get Out!

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Natural gas stakeholders have been sniffing around the hydrogen market for a chance to stay afloat in the sparkling green economy of the future, but that door is already slamming shut. In what could be a trendsetting development, the US utility Puget Sound Energy has just pulled a double whammy by closing a deal on a new green hydrogen project that provides for energy storage and fuel production, while pushing natural gas out of the power generation market, too. To make matters even more interesting, PSE is the gas supplier to 900,000 customers along with its 1.1 million electricity ratepayers.

Green Hydrogen For A Gas & Electric Utility

For those of you new to the topic, hydrogen is the unspoken glue of the modern industrial economy, at least as far as agriculture, food processing, refining, metallurgy, glassmaking, electronics, textiles, toiletries, pharmaceuticals, and of course, rocket fuel are concerned. Nobody really thinks about hydrogen, but you can’t walk into a room without bumping into it, especially now that hydrogen-enhanced water is a thing. No, really. It’s a thing.

The skyrocketing interest in fuel cells — both stationary and mobile — is providing a fresh jolt of juice to the hydrogen market. All of this should be great news for natural gas stakeholders, because natural gas is the source for almost all of the global supply of hydrogen.

Unfortunately for natural gas stakeholders, the march of technology has upset the apple cart. Hydrogen can be squeezed out of water by applying an electrical current, and the cost of this so-named green hydrogen has been sinking like a stone in recent years.

According to one analysis, green hydrogen will compete on cost with fossil-sourced hydrogen by 2030, but apparently Puget Sound Energy is not waiting for the grass to grow under its feet. Last week the utility inked a deal with Mitsubishi Power America to bring green hydrogen to its customers sooner rather than later.

PSE Hearts Green Hydrogen & Energy Storage, Too

Despite its interests in the natural gas area, PSE is on a deep decarbonization mission. Last year the utility signed on to a renewable biogas arrangement with the nearby Klickitat Public Utility. The deal provides PSE gas customers with a biogas option, and PSE is also eyeballing biogas as a replacement for fossil gas at its power plants.

Last March our friends over at Utility Dive noted that critics of the company would like to see PSE move more quickly to replace fossil fuels at power plants, and it sure has a long way to go. As of last year, PSE’s stake in the notorious Colstrip coal power plant in Montana still accounted for 35% of the utility’s power generation, with natural gas coming in second at 31%. Hydropower and wind accounted for almost all of the rest, at 32%.

PSE tried to sell at least part of its stake in Colstrip last year, only to see the deal fall through. State law requires PSE to remove coal from its power generation portfolio by 2025, so the heat is on. Whatever happens to Colstrip, PSE will have to replace at least some of that capacity, and it looks like green hydrogen is in the running.

The Mitsubishi deal revolves around the firm’s Hydaptive™ power and energy storage package, which leans on new gas turbines that can switch to green hydrogen as supplies become available. Mitsubishi gave the new turbines a test run at a power plant in Utah back in 2019, and evidently it is pleased with the results. The company already has similar projects in the pipeline in New York, Virginia, and Ohio, and it is part of a new regional hydrogen consortium oriented to green hydrogen and renewables.

Mitsubishi Gas-To-Hydrogen Scheme Hearts Renewable Energy

Mitsubishi bills the Hydaptive package as a system that “optimizes integration across renewables, energy storage, and hydrogen-enabled gas turbine power plants, which all work together to create and incorporate green hydrogen — a key to reaching carbonless emissions.”

If you’re wondering why not lithium-ion batteries for energy storage, PSE does plan on doing that, but in the service of short-term energy needs. For long duration energy storage aimed at wind and solar, PSE prefers the green hydrogen solution.

To put the long duration energy storage angle in perspective, when Mitsubishi Power introduced the Hydaptive package last September, it noted cited an assessment of future energy needs that anticipates wind and solar capacity quadrupling by 2050. That makes bulk, long duration energy storage a must-have.

“Recent power shortages in California and elsewhere have elevated industry concerns that power balancing and energy storage are essential components to successfully operate a low-carbon power grid,” the company explained, adding that “The green hydrogen energy storage system includes three key elements. First, electrolysis plants convert excess renewable energy into hydrogen. Next, storage mediums such as salt caverns, pipelines or above ground vessels store this “green hydrogen” for hours to seasons, depending on the grid’s needs. Finally, hydrogen-enabled simple cycle or combined cycle gas turbine power plants convert the green hydrogen into centralized dispatchable electricity.”

Green Hydrogen: Fuel Cells Are Just The Beginning

There has been quite a bit of back-and-forth about whether or not hydrogen fuel cell electric cars will ever compete with their battery-powered cousins, but as the PSE project underscores, the market for green hydrogen sprawls far and wide. In addition to other enabling other forms of zero emission mobility such as locomotives, heavy duty trucks, aircraft, and small watercraft, and cargo ships, green hydrogen is beginning to nudge fossils aside in the steelmaking business and other industries.

In an ominous sign for both natural gas and coal stakeholders, PSE is already eyeballing the industrial end of the green hydrogen market.

Earlier this year, PSE articulated a “Beyond Net Zero Carbon” that leans on biogas to replace fossil gas. The plan also indicate that a significant amount of green hydrogen in the portfolio is somewhere off in the sparkling green future.

PSE is a co-founder of the Renewable Hydrogen Alliance, “with the goal of exploring hydrogen replacement of fossil gas on pipelines and a path to green hydrogen,” the company explained.

That was back in January. The new Mitsubishi deal indicates that the green hydrogen transition could come about sooner rather than later.

Aside from Mitsubishi’s electrolysis-based system, PSE’s biogas experience could provide it with a leg up on the emerging field of extracting hydrogen from biomass and/or various forms of waste.

Activity in that area seemed to be drifting last year, but lately the pace has picked up.

Here in the US, the Wyoming firm Raven SR has hooked up on a waste-to-hydrogen plan with the New York State fuel cell company Hyzon that involves 100 hydrogen hubs scattered about the globe.

Another US waste-to-hydrogen firm with something in the works is Ways2H. Last March the company and Japan Blue Energy Co., its shareholder and technical partner, announced that work is finished on a sewage sludge-to-hydrogen facility in Tokyo, aimed both at the fuel call and the power generation markets.

Japan is a hotspot for hydrogen development, and the new facility is an all-hands-on-deck effort involving the Tokyo Metropolitan Government, TODA Corporation, TOKYU Construction, and CHIYODA Kenko with an assist from the Tokyo University of Science.

Municipal sewage sludge is already a well-known source of biogas to sub in for natural gas, and researchers have been hammering away at the hydrogen angle as well. If the Ways2H project pans out on a commercial basis that should keep fossil gas stakeholders up at night, considering how many sewage treatment plants are pumping out massive amounts of source material for sustainable hydrogen all over the world, non-stop, 24/7.

Follow me on Twitter @TinaMCasey.

Image: Courtesy of Mitsubishi Power America.

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Tina Casey

Tina specializes in advanced energy technology, military sustainability, emerging materials, biofuels, ESG and related policy and political matters. Views expressed are her own. Follow her on LinkedIn, Threads, or Bluesky.

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