Power Up: Is nuclear hydrogen a threat to Australia’s hydrogen ambitions?
Australia has grand ambitions to become a hydrogen producing superpower, a natural evolution from its current status as one of the world’s largest liquefied natural gas exporters.
On paper, there’s a lot going for us.
Without touching on hydrogen production by cracking natural gas and sequestering the resulting carbon dioxide (blue hydrogen) or other alternative methods, Australia seems to be perfectly suited for the production of green hydrogen given our wide expanses of unused land and high levels of sunlight.
This very suitability was behind billionaire Andrew Forrest’s opposition to Sun Cable’s original plan to send power generated by its 20GW solar farm and up to 42GW of storage by a 4,200km subsea link to Singapore.
Rather, the Squadron Energy boss believes that generated power is better used to produce green hydrogen and green ammonia.
However, outside the known challenges to the widespread adoption of the hydrogen economy – namely demand, transport and storage – they might be another threat to Australia’s plan to remain a major exporter of energy in the zero carbon future.
Europe has plans to decarbonise its heavy industry by incentivising investors and industries to shift away from hydrogen produced using fossil fuels to hydrogen produced using renewable electricity.
In a possible nod to France and its preponderance of nuclear power plants, which generate about 70% of its electricity, the European Commission published rules which allow hydrogen production facilities which use grid power in regions that meet a low CO2 emissions limit to count their production towards renewable targets as long as they sign a long-term power purchase agreement with a renewable electricity provider in their region.
This potentially paves the way for nuclear-powered electrolysis of water into hydrogen to count towards renewable targets.
While it is unlikely that Europe will be a purchaser of Australian hydrogen – just like how few spot LNG cargoes have made their way to the Old World despite record pricing – the development raises the likelihood that Asian countries with nuclear reactors (just China and Japan really) could pass similar rules.
China currently has an installed capacity of 56GWe, the world’s third largest fleet of civilian nuclear reactors, and has ambitious plans to drastically increase the number of reactors operating in the country.
While much of this is earmarked directly for electricity generation, there is very little stopping China from directing some of the power towards generating hydrogen, assuming of course that it develops sufficient demand.
Japan – another potential customer for Australian hydrogen – is also planning to increase nuclear’s share of power generation from less than 7% to between 20% and 22% by 2023.
Is there then an answer to this?
One likelihood is to accelerate our ability to produce hydrogen cheaply.
While green hydrogen costs are still relatively high, a large part of this comes from the cost of the electrolysers, which are also required for its nuclear-powered counterpart.
This levels the playing ground and means that the only real considerations are the cost of energy required to produce the hydrogen, its storage and transportation.
If Australia is able to reduce the price of its hydrogen exports to the point that it is cheaper than using nuclear energy, then this might not be so much of a threat after all.
Is that possible?
We will need the political will, industry participation and potential new technology to achieve this goal and it is anyone’s guess if we are capable of mustering this combination of factors or if the demand eventuates.