Policy & Socio-Economics
Market-based Asset Valuation of Hydrogen Geological Storage
Jul 2023
Publication
Because of hydrogen's low energy density hydrogen storage is a critical component of the hydrogen economy particularly when large-scale and flexible hydrogen utilization is required. There is a sense of urgency to develop hydrogen geological storage projects to support large-scale yet flexible hydrogen utilization. This study aims to answer questions not yet resolved in the research literature discussing the valuation of hydrogen geological storage options for commercial development. This study establishes a net present value (NPV) evaluation framework for geological hydrogen storage that integrates the updated techno-economic analysis and market-based operations. The capital asset pricing model (CAPM) and the related finance theories are applied to determine the risk-adjusted discount rate in building the NPV evaluation framework. The NPV framework has been applied to two geological hydrogen storage projects a single-turn storage serving downstream transportation seasonal demand versus a multiturn storage as part of an integrated renewables-based hydrogen energy system providing peak electric load. From the NPV framework both projects have positive NPVs $46 560 632 and $12 457 546 respectively and International Rate of Return (IRR) values which are higher than the costs of capital. The NPV framework is also applied to the sensitivity analysis and shows that the hydrogen price spread between withdrawal and injection prices site development and well costs are the top three factors that impact both NPV and IRR the most for both projects. The established NPV framework can be used for project risk management by discovering the key cost drivers for the storage assets.
Hydrogen, A Less Disruptive Pathway for Domestic Heat? Exploratory Findings from Public Perception Research
Aug 2023
Publication
The disruption associated with heat decarbonisation has been identified as a key opportunity for hydrogen technologies in temperate countries and regions where established distribution infrastructure and familiarity with natural gas boilers predominate. A key element of such claims is the empirically untested belief that citizens will prefer to minimise disruption and perceive hydrogen to be less disruptive than the network upgrades and retrofit measures needed to support electric and other low carbon heating technologies. This article reports on exploratory deliberative research with residents of Cardiff Wales which examined public perceptions of heating disruptions. Our findings suggest that concerns over public responses to disruption may be overstated particularly as they relate to construction and road excavation for network upgrade. Disruptions arising from permanent changes to building fabric may be more problematic for heat pump retrofit however these may be greatly overshadowed by anxieties over the cost implications of moving to hydrogen fuel. Furthermore the biographical patterning of citizen preferences raises significant questions for hydrogen roll-out strategies relying on regionalised network conversion. We conclude by arguing that far from a non-disruptive alternative to electrification hydrogen risks being seen as posing substantial disruptions to precarious household finances and lifestyles.
Linking Cost Decline and Demand Surge in the Hydrogen Market: A Case Study in China
Jun 2023
Publication
Hydrogen is crucial in achieving global energy transition and carbon neutrality goals. Existing market estimates typically presume linear or exponential growth but fail to consider how market demand responds to the declining cost of underlying technologies. To address this this study utilizes a learning curve model to project the cost of electrolyzers and its subsequent impact on hydrogen market aligning with a premise that the market demand is proportional to the cost of hydrogen. In a case study of China’s hydrogen market projecting from 2020 to 2060 we observed substantial differences in market evolution compared to exponential growth scenarios. Contrary to exponential growth scenarios China’s hydrogen market experiences faster growth during the 2020–2040 period rather than later. Such differences underscore the necessity for proactive strategic planning in emerging technology markets particularly for those experiencing rapid cost decline such as hydrogen. The framework can also be extended to other markets by using local data providing valuable insights to investors policymakers and developers engaged in the hydrogen market.
The Roadmap for a Green Hydrogen Economy in Trinidad & Tobago
Nov 2022
Publication
This publication presents the results of a pre-feasibility study to introduce a green hydrogen (GH2) market in Trinidad and Tobago (T&T). The study analyzed the potential supply and competitiveness of producing GH2 in T&T and the actions needed to build a foundation for producing green ammonia and methanol. The study updated previous estimates of renewable energy generation potential in the country. The study also highlighted Trinidad and Tobago's comparative advantage to produce GH2 with its ability to capitalize on existing infrastructure its know-how and capabilities and its long-standing trade relations. Lastly the study identifies demonstration projects and created a roadmap for developing a low carbon hydrogen economy in Trinidad and Tobago.
OIES Podcast - Key Energy Themes for 2024
Jan 2024
Publication
In this latest OIES podcast James Henderson talks to Bill Farren-Price the new Head of the Gas Programme about some of Key Themes identified by OIES research fellows for 2024. After a review of the outcomes from 2023 we look at the oil and gas markets and discuss a common theme around the contrast between the fundamental tightness in both markets compared with the relative softness of prices. We then move onto a number of energy transition issues starting with some of the key actions from COP28 that need to be implemented in 2024 and following with a review of the outlook for carbon markets hydrogen developments and offshore wind. We also consider the impact of emerging competition between regions over green industrial policy. Finally we consider some of the key geopolitical drivers for 2024 with the influence of China being the most critical. However in an election year for so many countries it will be critical to follow the key policy announcements of the main candidates and of most critically the outcome of the US election in November.
The podcast can be found on their website
The podcast can be found on their website
An Overview of Hydrogen’s Application for Energy Purposes in Lithuania
Nov 2023
Publication
Hydrogen has emerged as a promising climate-neutral energy carrier able to facilitate the processes of the European Union (EU) energy transition. Green hydrogen production through the electrolysis process has gained increasing interest recently for application in various sectors of the economy. As a result of the increasing renewable energy developments in the EU hydrogen is seen as one of the most promising solutions for energy storage challenges; therefore the leading countries in the energy sector are heavily investing in research of the technical obstacles for hydrogen applications and assessment of the current hydrogen market which in turn leads to the acceleration of the upscaling of hydrogen production. The main objective of this article was to provide a comprehensive overview of various green hydrogen production transportation and industrial application technologies and challenges in Europe with a separate analysis of the situation in Lithuania. Various water electrolysis technologies and their production costs are investigated along with recent developments in storage and transportation solutions. In addition the performances and limitations of electrochemical processes are presented and analysed research trends in the field are discussed and possible solutions for performance and cost improvements are overviewed. This paper proposes a discussion of perspectives in terms of future applications and research directions.
Risky Business? Evaluating Hydrogen Partnerships Established by Germany, The Netherlands, and Belgium
Dec 2023
Publication
Following the introduction of the EU’s Hydrogen Strategy in 2020 as part of the European Green Deal some EU member states have deployed a very active hydrogen diplomacy. Germany The Netherlands and Belgium have been the most active ones establishing no less than 40 bilateral hydrogen trade partnerships with 30 potential export countries in the last three years. However concerns have been voiced about whether such hydrogen trade relationships can be economically feasible geopolitically wise environmentally sustainable and socially just. This article therefore evaluates these partnerships considering three risk dimensions: economic political and sustainability (covering both environmental and justice) risks. The analysis reveals that the selection of partner countries entails significant trade-offs. Four groups of partner countries can be identified based on their respective risk profile: “Last Resorts” “Volatile Ventures” “Strategic Gambits” and “Trusted Friends”. Strikingly less than one-third of the agreements are concluded with countries that fall within the “Trusted Friends” category which have the lowest overall risk profile. These findings show the need for policy makers to think much more strategically about which partnerships to pursue and to confront tough choices about which risks and trade-offs they are willing to accept.
Identifying and Analysing Important Model Assumptions: Combining Techno-economic and Political Feasibility of Deep Decarbonisation Pathways in Norway
Mar 2024
Publication
Understanding the political feasibility of transition pathways is a key issue in energy transitions. Policy changes are a significant source of uncertainty in energy system optimisation modelling. Energy system models are nevertheless continuously being updated to reflect policy signals as realistically as possible. Using the concept of transition pathways as a starting point this cross-disciplinary study combines energy system optimization modelling with political feasibility of different transition pathways. This combination generates insights into key political decision points in the ongoing energy transition. Resting on actor support structure and political feasibility of four main pathway categories (electrification hydrogen biomass and energy efficiency) we identify critical model assumptions that are politically significant and impact model outcome. Then by replacing the critical assumptions with technical limitations we model a scenario that is unrestrained by assumptions about policy we identify areas where political choices are key to model outcomes. The combination of actor preferences and modelled energy system consequences enables the identification of future key decision points. We find that there is considerable support for electrification as the main pathway to net-zero. The implications of widespread electrification in terms of energy production and grid capacity lead us to identify challenging policy decisions with implications for the energy transition.
Renewable Energy Potentials and Roadmap in Brazil, Austria, and Germany
Mar 2024
Publication
The emerging energy transition is particularly described as a move towards a cleaner lower-carbon system. In the context of the global shift towards sustainable energy sources this paper reviews the potential and roadmap for hydrogen energy as a crucial component of the clean energy landscape. The primary objective is to present a comprehensive literature overview illuminating key themes trends and research gaps in the scientific discourse concerning hydrogen production and energy policy. This review focuses particularly on specified geographic contexts with an emphasis on understanding the unique energy policies related to renewable energy in Brazil Austria and Germany. Given their distinct social systems and developmental stages this paper aims to delineate the nuanced approaches these countries adopt in their pursuit of renewable energy and the integration of hydrogen within their energy frameworks. Brazil exhibits vast renewable energy potential particularly in wind and solar energy sectors positioning itself for substantial growth in the coming years. Germany showcases a regulatory framework that promotes innovation and technological expansion reflecting its highly developed social system and commitment to transitioning away from fossil fuels. Austria demonstrates dedication to decarbonization particularly through the exploration of biomethane for residential heating and cooling.
Circular Economy for the Energy System as a Leverage for Low-carbon Transition: Long-Ter, Analysis of the Case of the South-East Region of France
Mar 2024
Publication
The circular economy is a decisive strategy for reconciling economic development and the environment. In France the CE was introduced into the law in 2015 with the objective of closing the loop. The legislation also delegates energy policy towards the French regions by granting them the jurisdiction to directly plan the energy–climate issues on their territory and to develop local energy resources. Thereby the SUD PACA region has redefined its objectives and targeted carbon neutrality and the transition to a CE by 2050. To study this transition we developed a TIMESPACA optimization model. The results show that following a CE perspective to develop a local energy system could contribute to reducing CO2 emissions by 50% in final energy consumption and reaching almost free electricity production. To obtain greater reductions the development of the regional energy systems should follow a careful policy design favoring the transition to low energy-consuming behavior and the strategical allocation of resources across the different sectors. Biomethane should be allocated to the buildings and industrial sector while hydrogen should be deployed for buses and freight transport vehicles.
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