ISLAMABAD: National Energy Efficiency and Conservation Authority (NEECA) has started consultation on economic viability of hydrogen in electricity generation during winter.
Hydrogen holds a prominent position among renewable energy vectors due to its high-energy content, environmental compatibility and ease of storage and distribution. The role of hydrogen generated from renewable sources is critical in the changing landscape of global energy.
According to Managing Director, NEECA, SardarMohazzam, cognizant of this fact, National Energy Efficiency and Conservation Authority and Asian Development Bank (ADB) have jointly conducted a study on hydrogen energy titled “Pakistan Renewable Hydrogen Energy Pre-feasibility Study’ to explore the most feasible value chains for production, storage, distribution, and utilization of renewable hydrogen in the country.
The study identified the following hydrogen value chain cases for financial modelling to assess their economic viability under a range of current and hypothetical future scenarios:
(i) Hydrogen electrolysis from hydroelectricity on the existing Ghazi-Barotha dam and admixing of the hydrogen at a low concentration into the local natural gas grid; (ii) run of the river hydro power remote micro-grid with a portion of the power diverted for hydrogen production during 10 months of hydro power generation. The hydrogen would be stored and released to a fuel-cell for two winter months when the hydro plant would be winterized to avoid ice damage, and (iii) using solar power from the Quaid-e-Azam solar park to produce hydrogen on an electrolyser for admixing at a low concentration into the local natural gas grid. To deliberate further on the proposed cases, NEECA arranged a kick off meeting with the key stakeholders on Wednesday, wherein the participants discussed different options to use hydrogen for electricity generation and its economic viability. This study proposed 13 value chains for the production, storage, distribution, and utilization of renewable hydrogen. Above three of them were selected, in discussion with the project stakeholders, for financial modelling to assess their economic viability under a range of current and hypothetical future scenarios.
Through the course of this study and the sensitivity cases considered in the financial analysis, various conclusions have been drawn for potential policy changes in Pakistan that will support the development of the hydrogen economy in support of the national renewable energy strategy and its commitment to the Paris Agreement goals for climate neutrality. These are: (i) review the power pricing tariffs to enable the use of excess potential curtailed hydroelectric power to be allocated at very low cost or free of charge, for hydrogen generation during periods of excess water flow and low electricity demand. This will leverage the existing capital that has been invested in major hydro projects and ensure that they are able to produce power at their maximum capacity for the maximum benefit of the nation.
(ii) Implement policy that will attribute a cost to CO2 emissions (e.g., a tax on fossil fuel power generation, a tax on transportation fuels or a tax on CO2 emissions). Renewable hydrogen has huge potential to curtail CO2 emissions by displacing fossil fuels but in the absence of any financial penalty for CO2 emissions, the cost of green hydrogen cannot compete with the cost of fossil fuel power generation, e.g., from imported LNG from Kuwait.
(iii) Review the power pricing tariff to enable the purchase of power during periods of low demand at a low price and allow the sale of power to the grid when demand is high at a high price. This will generate a business case to produce hydrogen as an energy storage medium to support grid balancing and will contribute to a secure power supply on a year-round basis, even at times of maximum power demand during the summer months when air-conditioning systems are in use. The price of imported LNG from Kuwait is very low compared to international bench marks. This is of great benefit to Pakistan but means that energy and power costs surge in winter months when additional non-contracted LNG purchases are required. The production of hydrogen with high-capacity seasonal storage for use during these winter months for heating or power generation would help to reduce the cost of the winter LNG imports and reduce the pressure on foreign currency reserves.
To enable this, a clear policy that would allow underground hydrogen storage in salt caverns (subject to suitable environmental and safety impact assessments) could be prepared. The analysis suggests that the current power tariff prices for solar renewable power generation may be higher than current best practice technologies would permit. As the cost of renewable power generation is expected to fall over time, a tariff that accurately reflects the power generation cost would support hydrogen generation in the future.
Copyright Business Recorder, 2023