Green Hydrogen — More Than Meets The Eye…

Green Hydrogen (GH2) truly excites me. And I wrote about it in the past when I described the potential for turning Grey Hydrogen of the Canadian Oil Sands into a GH2 — “en masse”. You can find more details in my post: “How To Green Canadian Oil Sands — It’s Easier Than You Think!”

Among other things, I said: “As if there was a “magic switch” out there and you could just flip it & miraculously land in the Never Land — running 100% on renewable energy. Unless you are utterly delusional or clinically naïve — you must accept the fact that big changes take time.

Even switching from Windows 1.0 to Windows 10 took Microsoft Corporation for more than 20 years! And your laptop still can’t keep you warm in winter or keep the lights on!

Fighting climate change has nothing to do with catchy slogans. It’s a massive shift toward greener energy and it’s so vast that it can succeed only if done gradually, thoughtfully, and responsibly”

And I added in my post: “Even the most hard-core environmentalists do understand that without “Green Hydrogen,” we will never achieve the proverbial Net Zero Energy in Transportation or Buildings. And using massive utility-scale wind/PV generators in addition to the stacks of electrolyzers is still TOO EXPENSIVE!

To give you an example, a utility-scale 20MW solar farm costs at least $10MM — at the very ambitious cost of $0.50/W. And a 20MW electrolyzer will cost you even more. So, you do the math, especially, if the hydrogen generation capacity grows to 100MW and beyond”…

Sarcasm, Sensationalism, and… Posturing

A lot has changed since my last post and the prices of electrolyzers came down, significantly. But for many Doubting Thomases, being sarcastic about green hydrogen is easy. Even Elon Musk used to call fuel cells “the fool cells” — and many people clapped and liked such a level of sensationalism…

Yet while laughing at green hydrogen, the same Elon Musk was promising us Level 5 Autonomous Driving (AD) Teslas already 6 years ago. But as I predicted then, we are still waiting for the AD’s Godot to arrive…

Personally, I see a much greater probability for Deere & Co. (DE:NYSE) to deliver autonomous tractors. After all, avoiding the highway safety concerns and fights with NHTSA is a smart strategy — the same way I advise many Fintech companies to avoid fights with the regulators such as SEC…

IMHO, Elon Musk could have delivered autonomous drilling through his Boring Company years ago — without being forced to put an endless number of technology gadgets on the roof of Tesla’s SUV. Otherwise, such AD-equipped cars may soon resemble the look of a Russian tank from WWII…

Yes, The Boring Company’s AD drills could have delivered significant savings to subway builders, and it would “bury” (no pun intended) the fights with regulators.

In contrast, what kind of ADs are we seeing above the ground today? Well, we see a lot of AD Robo-Taxis on our roads with the “hidden” human supervisor in the back seat or the trunk of a car…

This brings me to the real reason for writing this post as a continuation to my comments on COP26 in: How Will We Remember COP26?

Recently, the great debate between the pros and cons of GREY vs GREEN HYDROGEN intensified. But the fact remains: massive renewable energy generation requires massive energy storage solutions that can store the intermittent energy for months/years — and not just for a few hours as Lithium-ion and/or Flow batteries do…

Only GH2 can deliver such long-term energy storage to grid operators and offer unmatched revenue streams from wholesale price arbitrage, curtailment avoidance, frequency/voltage regulation, etc.

Moreover, the already EXISTING legislations in the US and Europe will soon have the greatest impact on Net Zero Buildings (NZB) — as such will have to deliver more energy to the grid than they consume. And all such buildings will have no choice but to rely on Fuel Cell generators using GH2 to meet the NZB regulations.

I don’t know when was it the last time that you visited the rooftops of downtown skyrises, but it’s not hard to see that there is not enough space there to install a meaningful amount of solar panels.

Such buildings will have no choice but to rely on Fuel Cell generators using Green hydrogen to meet the NZB standards. So, repeat after me: “There is no NET ZERO w/o the GH2 HERO”…

Taking Green Hydrogen To “Where No Man Has Gone Before”

It took more than 20 years for solar PV to stop counting on government subsidies before it became the cheapest form of renewable energy around the world. And yes, economies of scale eventually did the trick — leading to falling costs at unprecedented speed and scale.

However, any way you look at utility-scale solar PV farms, the drastic cost reductions are just improving the bottom line of the Income Statement. What is more important and often missing, is an innovative boost to the top line — the proverbial REVENUES.

The entire supply chain of renewable energy projects, from prospectors and developers to EPCs (Engineering, Procurement, and Construction) — can only succeed if the project offtaker is found. And you better make sure that your project is bankable enough to meet the offtakers’ IRR expectations…

Of course, bringing long-term PPAs (Power Purchase Agreements) signed with electrical grid operators and Power Authorities — does help. But even if the most ESG-inclined offtakers are prepared to accept the higher costs linked to climate change mitigation — there is still a huge risk of CURTAILMENT to consider…

According to Wikipedia: “In electric grid power generators, curtailment is the deliberate reduction in output below what could have been produced in order to balance energy supply and demand or due to transmission constraints. The definition is not strict, and several types of curtailment exist. “Economic dispatch” (low market price) is the most common. Curtailment is a loss of potentially useful energy, and may impact Power Purchase Agreements”.

So, if for whatever reason, the grid operator invokes the curtailment clauses of the PPA, the offtakers may lose a lot of money. This is a very significant risk that plagued many stand-alone wind farms and solar farms in the past…

Of course, one can slightly mitigate such risks with a slew of Flow or Lithium-ion batteries and store some of the unused energy. However, such remedies will not be good enough in cases of prolonged curtailments…

And this is where GH2 truly shines. To me, the fierce debates between the merits of Teslas vs. Toyota Mirais — are missing the point. In comparison to yet another VHS vs. Beta argument — the use of GH2 in electric grids is a true factor endowment.

As such, it offers a slew of unique benefits that are not present in transportation — especially, when we are comparing refueling vs. recharging times of small SUVs and sedans. So, it is time for all of us to stop barking at the wrong trees and perhaps even borough from Bill Clinton’s election campaign slogans referencing the economy: “It’s The GRID, Stupid”…

Two Revenue Streams Are Better Than One

Granted, over the last few years, Tesla’s 100MW+ batteries generated a lot of additional revenues to many offtakers in Australia by collecting standby fees and delivering auxiliary services to Australian grid operators. However, only GH2 will allow the offtakers to utilize ALL the curtailed energy and redirect such to the hydrogen production and storage facilities when needed.

And even much more mundane price arbitrage realities may be economically beneficial to the offtakers while considering switching back-and-forth between generating energy and/or GH2 production — to optimize their revenue streams using sophisticated AI algorithms…

But that’s not all. GH2 can also bring a different type of offtaker to the table — in addition to pension funds and sovereign wealth funds. I am talking about P&C insurers — that can benefit from the elimination of river floods…

I call it: “The GH2 Push/Pull Effect”. Simply put, since 1kg of Hydrogen consumes/releases 9 liters of water, we can “Pull” the water from the river to produce hydrogen AND prevent river floods — and we can “Push” the water back into the river to produce electricity during the drought periods…

According to World Atlas: “Freshwater is any naturally occurring water except for seawater or brackish water. Freshwater is found in lakes, rivers, ice-caps, streams, ponds, icebergs, glaciers, etc. Underground water may also be termed as freshwater.

Some countries have large freshwater resources. These countries enjoy enormous benefits due to their vast reserves of fresh water. Countries with the most freshwater resources are discussed below”.

So, the next time you hear about the countries embarking on ambitious GH2 policies and planning on using scarce water resources by condensing the air, or desalinating seawater — think about the detrimental effects such additional costs will have on the ROIs and the IRRs of your projects…

Of course, one can always disregard such concerns and ignore my opinions. But if you choose to proceed no matter what — remember the link between the cosmetics and the meat industry: “you can put lipstick on a pig, but it still a pig”…

I will leave the rest to your imagination. After all, it was Albert Einstein who once said: “Imagination is more important than knowledge. For knowledge is limited, whereas imagination embraces the entire world, stimulating progress, giving birth to evolution”

For More Information

Please see my additional posts on Linkedin, Twitter, Medium, and CGE’s website.

AI Boogeyman

You can also find additional info in my book on amazon: “AI Boogeyman — Dispelling Fake News About Job Losses”, and on our YouTube Studio channel… Thank you.

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