Study Finds Hydrogen Peakers Beat Batteries, But Not Gas Peakers

Hydrogen fuel could be a more economical solution to the intermittency of renewable energy resources than lithium-ion batteries, but it is not an economic match to natural gas-fired peaking plants at current market prices, according to a new report from researchers at the MIT Energy Initiative (MITEI).

Hydrogen is attracting a lot of interest as an alternative fuel for power peaking power plants. Several public power utilities, particularly on the West Coast, are exploring hydrogen as an alternative to natural gas and are looking at projects to produce so-called green hydrogen by using renewable resources to power electrolyzers that produce the gas from water. Utilities ranging from the Los Angeles Department of Water and Power and the Northern California Power Agency to the Douglas County PUD and the Nebraska Public Power District have embarked on hydrogen pilot projects.

While there has been a rapid rise in the deployment of lithium-ion batteries to aid in the integration of intermittent resources such as wind and solar power, batteries are sized to produce power for hours at a time and are best used to address daily imbalances between electric supply and demand, the authors of the report in Applied Energy said. (The online version of the article was published in July; the print version is due out in October.)

The report’s authors, Drake Hernandez and Emre Gencer, used a least cost of energy (LCOE) approach to analyze the economics of meeting seasonal energy imbalances, comparing hydrogen-fired gas turbines (HFGT) and lithium-ion battery systems (LI).

They found that the LCOE associated with meeting seasonal energy imbalances is $2,400 per megawatt hour (MWh) using a hydrogen-fired gas turbine and $3,000/MWh using a lithium-ion battery system. If a gas turbine is fired with “blue” hydrogen, that is, hydrogen produced by reforming natural gas, the average LCOE decreases to $1,560/MWh. On average, reforming hydrogen rather than electrolytic hydrogen turned out to be the cheapest option for replacing peaking plants, the report found.

Nonetheless, “the power prices required to justify investment in an HFGT to replace a natural gas-fired gas turbine are considerably higher than those seen in the market today,” the authors said.

“Our study’s essential takeaway is that hydrogen-fired power generation can be the more economical option when compared to lithium-ion batteries—even today, when the costs of hydrogen production, transmission, and storage are very high,” Hernandez said in a statement.

The study also looked at the economics of retrofitting natural gas plants to burn hydrogen, as opposed to building entirely new facilities, and found the price for converting a fossil fuel plant to burn hydrogen is high and such conversions likely would not take place until more sectors of the economy embrace hydrogen, either as a transportation fuel or for varied manufacturing and industrial purposes.

The authors also noted that “enormous investments” would be necessary to expand hydrogen production facilities to meet grid-scale needs. “With any of the climate solutions proposed today, we will need a carbon tax or carbon pricing; otherwise, nobody will switch to new technologies,” Gencer said in a statement.

The study looked at all peaking plants in California, using 2019 as the base year. The researchers looked at the costs of running natural gas-fired peakers, defined as plants operating 15 percent of the year to make up for intermittent energy resources. They also determined the amount of carbon dioxide released by those plants and the expense of abating those emissions.

The American Public Power Association recently issued a report that offers a perspective on where the emerging hydrogen market is in the U.S. and globally, what is driving the growing interest in hydrogen and what obstacles are preventing hydrogen technology from being able to scale-up.