Banking on hydrogen

Hydrogenics delivered a two megawatt power-tp-gas storage system to German utility E.ON in Falkhagen that was commissioned in 2013 and is producing hydrogen that’s stored in the country’s existing natural gas storage network. Photo: Hydrogenics.

It’s a good time to be Daryl Wilson. He’s the CEO of Mississauga, Ont.-based Hydrogenics Corp., which has developed a technology that converts surplus energy from renewable sources such as wind and solar into hydrogen that’s stored in the existing natural gas storage infrastructure in mass quantity.

“This is revolutionary because it allows the introduction of energy banking into the energy industry,” says Wilson, who adds that the company invested more than $300-million in R&D since it was founded in 1995. “The technology introduces surplus energy into several pathways in terms of realizing value, which is similar to the ethanol in gasoline story.”

Ontario’s energy grid is in much need of a game-changer; a technology that would help Energy Minister Bob Chiarelli and his department justify a consumer power cost increase over the next three years (at least), as outlined in December’s Long Term Energy Plan (LTEP).

Although the LTEP raises energy costs, it also focuses on innovation in an effort to modernize the grid so it’s more efficient and reliable, and eventually lower costs. That’s Hydrogenics’ sweet spot. Its power-to-gas technology uses a proton exchange membrane (PEM) electrolyzer to convert surplus power generated from solar and wind farms into hydrogen that’s injected into an existing natural gas pipeline network, where it can be stored in vast volumes.

That hydrogen can be used as a clean fuel for transport such as public transit buses and fleet vehicles, and to power manufacturing plants.

This capability presents the province with an opportunity to mitigate the cost of its energy. Power-to-gas would allow the grid to stockpile surpluses in existing natural gas infrastructure during periods of low-cost generation, and use it when demand and prices are highest.

“Ontario has recognized the need for energy storage, but there’s uncertainty around how to deploy it.”

“There’s a bunch of options that all do different jobs – like data storage in the computer world – but we’re at an advantage because power-to-gas solves issues related to capacity: it stores large quantities of energy for long periods of time,” says Wilson.

Hydrogenics says electrolyzer technology outperforms other energy storage options such as compressed air, pumped hydro, batteries and fly wheels, by providing a rapid response to a grid operator’s signal and adjusting to variations in renewable output. This performs two important functions: rapid response grid stabilization and the ability to store large amounts of energy for consecutive weeks without “running full” and needing to discharge it.

The company, which also has European operations in Germany and Belgium, employs 145 people who develop and manufacture industrial and commercial hydrogen systems for industrial processes and fuelling stations, fuel cells for electric vehicles such as transit buses and commercial fleets, fuel cell installations for freestanding power plants, and uninterruptible power supply (UPS) systems.

It has more than 145 patents and patent applications on the go, and more than 2,000 products deployed in 100 countries.

Hydrogen is proving to be a big business for Hydrogenics. Its 2013 revenues of $31.4 million represent a 44% jump over 2012 and as of September, it had an order backlog of $53 million.

Growth is driven by a rapid global push for the development of hydrogen technologies. In 2013, the EU launched a $2.1 billion joint technology initiative for hydrogen and in Germany, the NOW organization has released a strategy paper calling for 1,500 megawatts of hydrogen storage, 2,000 hydrogen fuel cell buses and 500,000 cars to be deployed between 2016 and 2023.

The California Energy Commission has also announced a mandate for 1.3 gigawatts of energy storage and has committed $44 million to develop hydrogen fuelling infrastructure and alternative vehicles.

Auto makers that include GM, Honda, Hyundai, Toyota and Volkswagen, have re-engaged fuel cell development programs, and they will encourage a push to develop fuelling infrastructure at a more rapid pace.

Procuring hydrogen

Hydrogenics CEO Daryl Wilson expects the company to participate in Ontario’s 50 megawatt energy storage procurement. PHOTO: Stephen Urahney

Ontario is also getting the hydrogen message.

The province’s LTEP committed to procuring 50 megawatts of energy storage capacity by the end of 2014; a sort of try-out for the various technologies it has available, according to Wilson. Hydrogenics will participate in the program.

“We want to demonstrate that power-to-gas can not only be successfully deployed, but also simulate the business of doing energy storage in Ontario’s electrical markets to make sure we’re covering all of our bases,” says Wilson.

George Pessione, director of resource integration at the Ontario Power Authority (OPA), says there are issues related to the different technologies available.

“Fifty megawatts doesn’t seem like a whole lot in the context of a 30,000 megawatt system, but there are challenges to overcome and we need to identify which [ones] work in specific situations,” he says.

To produce hydrogen, PEM electrolysis uses a solid polymer that conducts ions when they’re hydrated with water. A potential difference (voltage) is applied between the two electrodes and the water molecules, which have a polarity, are forced to dissociate into hydrogen and hydroxide. The hydrogen ion is attracted to the cathode where it receives an electron and becomes a neutral hydrogen atom.

When the hydrogen atom encounters another like it, they form a molecule of hydrogen gas. Attracted to the anode, the negatively charged hydroxide ion gives up its extra electron and combines with three like-molecules to form two water molecules and one oxygen molecule.
The company has developed a one megawatt cell stack that’s the size of a bar fridge, a component of the electrolyzer, where both hydrogen and oxygen are produced.

The system purifies water and splits it into hydrogen and oxygen. The resulting hydrogen contains 85% of the input energy to process.
Power-to-gas is already being used commercially in Europe. In 2012, Hydrogenics signed an agreement with a consortium of European utilities and technology companies to develop the 39-megawatt INGRID project, a grid-connected, renewable energy storage effort in Puglia, Italy with 3,500 megawatts of solar, wind and biomass energy in place.

In December 2012, the company was contracted to deliver a two-megawatt power-to-gas system in Falkhagen, Germany that would be operated by E.ON, the country’s largest utility. The facility produces hydrogen that’s stored in the natural gas network.
In April 2013, Hydrogenics and E.ON teamed up again to commission a one megawatt energy storage system in Hamburg, Germany to produce hydrogen from surplus wind power. Hydrogenics’ PEM electrolyzer stack will serve as a building block for future multi-megawatt applications.

It’s also working with E.ON alongside a consortium of 100 local utilities to develop a two megawatt power-to-gas facility that will produce up to 360 cubic metres of hydrogen per hour.

In the UK, Hydrogenics will deliver two fuelling stations deploying three electrolyzers to produce up to 400 kilograms of hydrogen daily to power a fleet of 10 fuel-cell buses. It will also install a HySTAT30 electrolyzer to produce 65 kilograms of hydrogen per day to power material handling vehicles and light vans at a Honda manufacturing plant in Swindon, England.

The development of those projects has attracted major attention at home. In April 2012, energy-giant Enbridge Inc. invested $5 million to acquire a 13% stake in Hydrogenics. The companies are now working to establish a power-to-gas project in Ontario as part of the recently announced call for 50 megawatts of energy storage under the LTEP.

David Teichroeb, business development for Enbridge’s alternative and emerging technologies division, says the energy storage capability piqued the Calgary-based energy company’s interest in Hydrogenics.

“This is a major opportunity to deliver renewable energy for less money,” he says, adding that Enbridge’s investment portfolio in alternative and renewable energy has grown to nearly $3 billion through its Innovation Pathfinder program.

Teichroeb identifies up and comers in alternative energy technology and makes investments with an eye on commercializing and operating them as they become full service offerings in the energy sector.

“We need to maximize the value out of the generation and energy assets we already have, and power-to-gas presents us with a major cost advantage and added flexibility because we don’t have to spill excess energy over a dam or ship it to New York.”

Solving challenges
The technology is coming at a good time, as Ontario readies to deploy an additional 10,700 megawatts of renewable power from bioenergy, solar and wind by 2021. The LTEP expects almost half of Ontario’s installed capacity (46%) to come from renewable sources by 2025, which includes hydro generation.

Power generation from renewables only accounted for 9% (8.4 kilowatt-hours) in 2012. Wind power generation will jump 300%, and account for 9% of total installed generation by 2032, from just 3% today.

The challenges related to deploying energy storage capacity don’t lie solely in the technology, says Pessione.

“Why don’t we have more of these technologies online if they’re so great? It comes down to the economics, and in Ontario they haven’t been there.”

Current regulations limit the ability of storage technologies’ to compete in Ontario’s energy market cost-effectively. Some are required to pay various retail, uplift and Global Adjustment charges twice – once when the energy is captured and again when it’s used.
“Implementing technologies like power-to-gas will depend on solving these challenges on the regulatory side to make sure [they] are cost-effective and providers are paid accordingly,” says Pessione.

But the LTEP also addresses issues related to managing this new generation. It provides opportunities for storage to be included in large renewable energy procurements by lifting regulatory barriers for projects that are larger than 500 kilowatts.

Those are the projects Hydrogenics is going after with Enbridge because of capacity factor. Flywheels, batteries and compressed air are limited by capacity, and the time in which captured energy can be stored.

“New technologies always have some issues to work through, but because hydrogen technology has had a good pedigree in other capacities, we’re confident it will work,” says Teichroeb. “We have to walk before we run, but everyone wants to see this run.”

Comments? E-mail mpowell@plant.ca.

From the March 2014 issue of Plant.