The Promise of Green Hydrogen

Although hydrogen gas emits only water, it does not naturally exist in its pure form and must be generated from another hydrogen-carrying source – usually methane (CH4) – through a process called steam-methane reforming. Cheap and well-established, this process is also highly polluting, generating 10 tons of greenhouse gases for every ton of hydrogen. Hydrogen formed from steam methane-reforming is dubbed “grey hydrogen.”

Electrolyzers can generate hydrogen from water by splitting it into oxygen and hydrogen, but high energy demands make this process costly. According to the International Energy Agency (IEA), electrolysis currently accounts for less than 5% of global hydrogen production. The International Renewable Energy Agency (IRENA) says that at US$650 per1000/kW, investment costs are still too high for mass installation.

“Electrolyzer technology from a reliability perspective is a mature technology, but not from a cost competitiveness perspective,” notes Olivier Blanchard, General Manager of Air Liquide Far Eastern Ltd., a joint venture between Paris-based Air Liquide and Taiwan’s Far Eastern Group.

Air Liquide is a supplier of industrial gases to Taiwan’s semiconductor and electronics manufacturers, oil refineries, and other industries. Such firms as Air Liquide, Germany’s BASF, and U.S.-Taiwan joint venture Air Products San Fu supplied 458.5 million cubic meters of hydrogen to Taiwan between November 2019 and November 2020, according to the Ministry of Economic Affairs. All of this was high-emissions grey hydrogen.

Air Liquide is also a global champion for hydrogen energy as a key means to decarbonize the economy. It was one of the 13 founding members of the Hydrogen Council, a global association of executives in energy, transportation, and industry formed in 2017 to promote industry awareness and investment. This past April, Air Liquide Far Eastern announced that it was investing nearly US$242 million (NT$6.75 billion) to deploy multiple electrolyzers in its new hydrogen production facilities in the Science Parks of Tainan and Hsinchu, among other plants. The company says the use of electrolysis technology when supplied with renewable energy will reduce CO2 emissions by an estimated 35,000 tons per year.

Electrolysis, an environmentally friendly hydrogen production process, accounts for less than 5% of hydrogen generated globally due to its high costs.

While Air Liquide’s electrolyzers will avoid direct greenhouse gas emission caused by methane steam reformation, they would still cause high emissions through power consumption. These electrolyzers would rely on grid power, 80% of which is still generated through fossil fuels, according to the state-owned Taiwan Power Co. (Taipower). Air Liquide intends to use renewable energy as the power source for these new plants, so that water electrolysis can truly achieve “zero emissions.”

The wide deployment of emissions-free, fuel-free renewable power can overcome the high energy demands associated with electrolysis. In many nations, particularly in northern Europe, renewable energy is widely abundant, making “green hydrogen” both emissions free and financially feasible.

Hydrogen likewise solves the issue of renewable energy intermittency – fluctuations in energy production caused by environmental conditions, which can cause either unpredictable lulls in power or an excess during peak times. Germany, for example, often generates more renewable energy than it can use, and must offload it onto the Polish or Czech grids at a price.

This excess power can be stored in megawatt-scale batteries, which are becoming more economical but for which supply is still limited. Instead, this excess power can be directed toward electrolyzers that generate hydrogen, to then be used in fuel cells to generate electricity again.

Taiwan does not have an abundance of green energy – at least, not yet. So far, Taiwan’s 5,867MW of installed solar capacity, 128MW of offshore wind, and 725MW of onshore wind have yet to generate surplus power. In 2020, renewables, including hydroelectric dams, generated no more than 6% of Taiwan’s total demand, and even on the sunniest days solar generates only about 10% of the total, according to Taipower.

But renewable energy’s share of power supply and generation is mounting steadily. Solar power installations made record gains in 2020, though it has another 14GW to go to meet the government’s goal of 20GW by 2025. And although Taiwan’s offshore wind sector hit some speedbumps in 2020, interest remains high. Developers have crowded into the market, proposing up to 20GW in projects in bids for the 5GW of capacity at stake in the upcoming third round of project allocation. Taiwan aims to add 5.7GW by 2025 and a further 10GW by 2035.

Regardless of how realistic these goals are, Taiwan will certainly see a large influx of renewable energy over the coming years, potentially destabilizing the grid. Solar power capacity of 20GW would generate up to 1,000MWh or more of electricity, meeting 30% of Taiwan’s peak demand. 

With solar and offshore wind power combined with Taiwan’s inflexible nuclear, coal, and natural-gas baseload capacity, which constantly generates over 2,000MWh, Taipower would be hard-pressed to manage the total. As an island, Taiwan cannot transmit excess power to other grids or draw power from neighbors if there is a lack of wind or sunlight. Redirecting excess solar and wind power to electrolysis plants that could in turn feed fuel cell power generation would solve the intermittency issue.

“Although Taiwan does not currently have an excess of renewable energy, it will in the next three to five years and we need to start preparing for this now,” says TFCP’s Meg Lin.