Distributed Hydrogen Systems Drive Clean Energy Microgrids

Declining costs and increased adoption of hydrogen technologies such as fuel cells, electrolyzers, and fuel cell vehicles have provided a platform for infrastructure development discussions. As electricity accounts for 70% of hydrogen production costs via electrolysis, the steep decline in solar PV and wind costs is enabling an emerging green hydrogen economy. The conversation has shifted from whether hydrogen will play a role in decarbonization to how and when hydrogen will play a role. As hydrogen demand continues to be driven by policy, decarbonization goals, greater renewables integration, and decreasing renewable electricity costs, the demand for the necessary infrastructure will likely naturally follow.

Microgrids offer unique applications for distributed hydrogen but face barriers. Most microgrids are retrofits incorporating both fossil and renewable generation technologies and fuels. Increasingly, new microgrids also integrate some forms of energy storage (typically different kinds of batteries) while incorporating load management and EVs as a grid resource. This dynamic shapes future development strategies because microgrids lend themselves to incremental upgrades.

This Guidehouse Insights report focuses on distributed systems. As of early 2021, more attention has been placed on large scale infrastructure in the industrial sector-plays that match the level of scale of offshore wind in Europe. Bigger is better for these scenarios to make economic sense. For microgrids-self-sustaining networks of distributed energy resources (DER) that can operate autonomously as a single controllable entity-such endeavors bear little in common with near-term opportunities. The majority of microgrids deploying distributed hydrogen systems as of early 2021 have been remote microgrids developed in locations where there is no traditional grid, let alone pipeline infrastructure for natural gas that could be repurposed for hydrogen. Hydrogen was the key enabling technology to reach 100% renewable energy for most of the case studies presented in this report.

KEY QUESTIONS ADDRESSED:

• What are the distinctions between black, brown, grey, blue, and green hydrogen?

• Which microgrids across the globe have already integrated distributed hydrogen systems?

• What are the most common microgrid use cases supporting investments in distributed hydrogen?

• What is the biggest challenge facing distributed hydrogen systems for larger microgrids, such as those serving hyperscale data centers?

• What strategic partnerships have already been created with companies such as EDF and ENGIE in the distributed hydrogen space?

WHO NEEDS THIS REPORT:

• Hydrogen electrolyzer providers
• Fuel cell companies
• Hydrogen infrastructure component suppliers
• Microgrid developers
• Microgrid project designers
• Energy storage purveyors
• Government regulators
• ESG investors
• Investor community

Table of Contents

Spark

Context

Recommendations

Hydrogen Emerging as a Key Storage Pathway for Microgrids

Exploring Hydrogen Energy Storage Use Cases for Microgrids

• With Hydrogen, Microgrids Offer Resiliency, Renewables Integration, and Clean Mobility Services
  • Cerro Pabellón, Chile
  • Koh Jik, Thailand
  • Stone Edge Farm, US
  • Renewable Energy Integration Demonstrator - Singapore
  • Vargarda, Sweden
  • Smart Autonomous Green Energy System, La Réunion

• Broader Hydrogen and Microgrid Initiatives Show Why They Go Hand in Hand
  • Ways2H
  • Hynamics
  • Bloom Energy

Distributed Hydrogen Fits Well with Microgrid Trends

• Comparing Large-Scale Storage Options to Small-Scale Distributed Applications
• Storage Challenges Persist for Distributed Hydrogen Systems
• Leveraging the Natural Gas Pipeline Grid
• Fuel Cells Play an Increased Role in Microgrids
• Emerging Flexible Fuel Generators Can Bridge the Hydrogen Future

Incremental Innovation and Strategic Partnerships Should Drive Hydrogen Adoption in Microgrids

• Develop an Incremental Approach to Hydrogen Deployment
• Learn about the Impacts of Distributed Hydrogen Systems on Microgrid Design and Controls
• Forge Strategic Partnerships for Multiservice Microgrids
• Choose Projects Initially in the Most Challenging Markets

LIST OF CHARTS AND FIGURES

• Selected DER Capacity by Technology, World Markets: 2029

• Stone Edge Farm Hydrogen Infrastructure

• Converting Municipal Waste to Clean Hydrogen via Ways2H Technology

• Comparing Onsite Fuel Storage Needs for Diesel versus Hydrogen Options