Fueling the Future – Which direction?

Practical Energy Management

Fueling the Future – Which direction?

Its apparent to all of us that as green energy solutions begin to represent more of the nation’s portfolio of electric generation, the solutions are not simple and are not necessarily cheaper. While Biofuels, Geothermal, Solar, Hydro, Wind, and other resources are significant considerations and will continue to play a significant role in meeting our energy requirements in the future, this month we will examine some current trends focusing on 3 primary energy fuels to see what’s coming, what’s here, and what’s leaving.

What’s Leaving:

Coal: It will be with us a while longer. However, there are projections that worldwide demand for coal will be minimal beyond 2050 relative to other fuels and yes today coal plants are being scuttled left and right. In Montana as an example, the Colstrip generation plant, once the largest of its kind west of the Mississippi River, has shut down units 1 and 2 and units 3 and 4 will in all likelihood be retired in the early 2030’s. Even if the US were to eliminate all coal fire generating stations in the near future, there is still a very large demand for coal in other regions of the world particularly in China and India. How much longer demand for coal will exist is a function of technology, economics, and end-use conversion to other green sources such as wind, solar, battery, and hydrogen which is now evolving. Energy solutions tied to hydrogen, ammonia, renewable natural gas (RNG), and Biomass are being planned for and to the extent existing hydro facilities can expand online generation without building new dams. Some hydro enhancements can provide additional renewable resource base in future years, that is provided there is enough water to spin the turbines. Has anyone heard of Lake Powell or Lake Mead?

A report from Morgan Stanley said renewable energy such as solar and wind power will provide about 39 percent of U.S. electricity by 2030 and as much as 55 percent in 2035. According to the U.S. Energy Information Administration, coal currently makes up roughly 20 percent of U.S. electric generation today compared to 46% of the US electric supply 10 years ago. Meanwhile, the share of electricity supplied by natural gas-fired power plants increased from 23 percent in 2010 to an estimated 39 percent last year. President Biden has taken a series of executive actions to shift the nation’s priorities to focus on climate and his administration has set a goal of making the U.S. carbon neutral by 2050, which will require steep reductions in greenhouse gas emissions and investments in renewables like solar and wind. The forecast is for coal phasing out as a component of US power generation by 2033-2035 timeframe.

What’s Coming:

Hydrogen: The buzz word of today. Clean hydrogen, which is produced with zero or next-to-zero emissions from renewables, nuclear energy, or natural gas with carbon sequestration, is set to play a vital future role in reducing emissions from some of the hardest-to-decarbonize sectors of our economy, including industrial and chemical processes and heavy-duty transportation. Clean hydrogen can also support the expansion of renewable power by providing a means for long-duration energy storage and offers flexibility and multiple revenue streams to all types of clean power generation—including today’s nuclear fleet, advanced nuclear, and other innovative technologies. The U.S. Department of Energy (DOE) has announced its intent to issue $750 million in funding from President Biden’s Bipartisan Infrastructure Law to dramatically reduce the cost of clean-hydrogen technologies. While hydrogen technologies have come a long way over the last several years, costs and other challenges including the expense associated with transporting hydrogen which is required for at-scale adoption of hydrogen fuel is needed to be addressed before clean hydrogen can realize its full potential.

Currently, we can successfully convert around 80-85% of the energy of the hydrocarbon into hydrogen fuel, and then use two innovative technologies to utilize the captured CO2. The first involves injecting it into oil reservoirs for Enhanced Oil Recovery, while the other takes the waste CO2 and converts it into chemicals like methanol for industrial use. Any additional CO2 can also be safely sequestered deep underground.

When methane burns it creates hydrogen and CO2, but what makes this ‘Blue Hydrogen’ different is that we capture these CO2 emissions and either recycle, remove, or reuse them. This all forms part of a circular carbon economy. (See above diagram).

Fuel cells work like batteries, but they do not run down or need recharging. They produce electricity and heat as long as fuel is supplied. A fuel cell consists of two electrodes, a negative electrode (or anode) and a positive electrode (or cathode), sandwiched around an electrolyte. A fuel, such as hydrogen, is fed to the anode, and air is fed to the cathode. In a hydrogen fuel cell, a catalyst at the anode separates hydrogen molecules into protons and electrons, which take different paths to the cathode. The electrons go through an external circuit, creating a flow of electricity. The protons migrate through the electrolyte to the cathode, where they unite with oxygen and the electrons to produce water and heat. At the end of the day fuel cells have been around and have been proven to work but the issue is the same haunt for most all hydrogen applications – STEEP MANUFACTURING COSTS.

Fuel cells have application in industrial generation of electricity, but this application is not yet at scale. However, fuel cells in mass produced electric cars may in fact be just around the corner. The Swedish company Bosch is working on this issue. On the surface of it, there’s very little to distinguish a fuel-cell car from one that runs on gasoline or diesel. Once its fuel has been topped up, which takes just a few minutes, the car’s range is over 500 kilometers. However, there is one crucial difference; an electrical powertrain produces zero local emissions and that’s why hydrogen technology is sure to figure prominently on the road to low-carbon transportation, especially when it comes to electrifying heavy trucks. To bring costs down, companies are focusing their attention on the fuel-cell stack, the heart of the hydrogen powertrain. This stack of proton-exchange membrane fuel cells (PEMFC), also known as polymer electrolyte membrane (PEM) fuel cells, is where an electrochemical exchange of the reactant gases hydrogen and oxygen produces electricity. Fuel stacks in the future may offer 160-200 HP per vehicle and more and larger stacks which have the capacity to move large trucks. This suggests future solutions in this arena are coming as engineers are now focusing to address this major cost hurdle with more energy efficiency and capacity.

What’s here now:

Natural Gas: The role of natural gas in power generation is perhaps the most contentious issue among North American demand segments. State and independent system operator (ISO) policies are diverging, reflecting different attitudes toward natural gas. East and West Coast states are moving away from gas-fired power generation, while Midwest, southern mid-Atlantic, and southern regions are continuing to rely on gas playing a major role in generation.

In a base-case scenario, gas-fired power generation will displace coal capacity in the medium term and legacy nuclear generation over the longer term. Although mandate-based investments in renewables will grow significantly, the flexibility afforded by gas-fired power generation will continue to be in demand. Alternative sources for peaking flexibility, such as energy storage—including pumped hydroelectric and utility-scale batteries—and demand aggregation and response, are unable to affordably provide the same reliability as gas-fired power plants. Nevertheless, gas-fired peaking units will move from one of base-and-peaker supply to an ultra-flexible one, with far fewer hours run and lower utilization, especially along the West Coast and in the Northeast. For example, 2020 load factors of 25 to 45 percent will drop to below 5 percent in NYISO and between 14 and 18 percent in the ISO-NE and CAISO by 2040.

Energy solutions and the application and distribution of energy resources is a complex array of technology, costs, and matching the right generation solution to the required application. In all of this, understanding the data and how that data drives decisions for both soft and hard cost energy usage reduction can have profound impacts on budgets and investments, for good or bad. If you are looking for better ways to sort out and manage these moving variables in the energy world, contact us. We can help.

Sources: Bloomberg, Power News, Morgan Stanley, U.S. Energy Information Agency (EIA)

James E. Morin/Chuck Eubank

[email protected]

March 1, 2023