Last of a three-part series. To see the first two parts, click here and here.

As plug-in electric vehicle sales continue to putt along, automakers are increasingly pinning their hopes on hydrogen fuel cells as the clean vehicle technology of the future.

Fuel cell vehicles (FCVs) produce zero tailpipe emissions. On a life-cycle basis, FCVs running on hydrogen derived from steam-reforming natural gas—currently the most affordable way of making hydrogen—produce less than half the greenhouse gas emissions of a gasoline-powered car.

But in order to maximize the fuel's climate benefits, the entire hydrogen production stream needs to be low-carbon. The transportation sector makes up approximately 23 percent of all global energy-related carbon dioxide emissions, of which road transport is the largest and fastest-growing portion.

Using excess energy from renewable energy resources such as solar and wind to split water into oxygen and hydrogen—a process called electrolysis—could be the best solution for creating large supplies of sustainable hydrogen fuel.

"We think that to get real zero-emission vehicles, and that's on a well-to-wheel basis, having renewable electricity producing the hydrogen is really the most environmentally friendly and sustainable way to produce hydrogen," said Steve Szymanski, director of government business for the electrolysis system manufacturer Proton OnSite.

"Using natural gas to produce the hydrogen, while it may be cheaper today, still produces greenhouse gases," he said. "So as long as you're using renewable electricity and not some kind of brown electricity, that is really the most direct pathway to producing real, carbon-free hydrogen fuel."

The challenge will be to take the promise of renewable energy-powered electrolysis from the pilot level to commercial scale.

Scaling up: a slow-moving process
Deployment of hydrogen infrastructure to date has been slow and remains the most critical barrier to widespread adoption of FCVs. Car companies have been waiting for more hydrogen refueling stations before rolling out their vehicles. Station developers, on the other hand, have been waiting for car companies to sell more cars before building more stations.

Recently, the Department of Energy launched the $1 million H2 Refuel H-Prize competition to challenge engineers and entrepreneurs to develop affordable systems for small-scale hydrogen fueling to help bring hydrogen vehicle infrastructure into the mainstream.

California has also taken concerted policy steps to overcome the infrastructure challenge. Last year, the California Energy Commission (CEC) committed $20 million per year through 2023 to building out a "Hydrogen Highway" of up to 100 stations. The state also mandated that 33 percent of the hydrogen used in state come from renewable sources.

Using biogas produced by landfills or wastewater treatment plants is one way to make renewable hydrogen. Several companies are already using renewable sources of gas to make hydrogen at large-scale steam-reformation facilities and on-site production plants. The drawback is that biogas supplies are limited (ClimateWire, Nov. 18).

Hydrogen from electrolysis could offer a more sustainable solution. There is theoretically a limitless supply, due to the vast amount of water on Earth and opportunities for reuse.

An electrolyzer works by running an electrical current through water that splits it into oxygen and hydrogen. The separated hydrogen can be stored in a tank for later use or sent to a fuel cell, where it's recombined with oxygen to either power a building or propel a vehicle. The only byproducts are heat and water.

DOE and private companies have been developing and testing renewable hydrogen production methods for years. Hyundai Motor Co. is currently in the process of building a public fueling station in Chino, Calif., with "the capability" to produce hydrogen from electrolysis using renewable energy that's expected to open before the end of the year.

Despite this progress, the electrolysis of water is still too expensive for widespread commercial use. The average station supplied with hydrogen made from low-cost natural gas costs roughly $2 million. Stations that offer hydrogen produced by electrolysis could cost double that.

The University of California, Davis, estimates that the cost per gram of hydrogen produced from the electrolysis of water will remain more expensive than hydrogen produced from natural gas with carbon capture and sequestration well through the end of the decade.

Using electrolysis to balance the grid
"For electrolysis to compete at a large scale with reformed natural gas, we need to get the cost of our equipment down," said Szymanski. "We also need to be able to access some cheap electricity. That's really the thing that's the biggest driver in terms of the cost of hydrogen produced by electrolysis."

Using electricity from the central power grid to run an energy-intensive electrolysis machine is expensive and inefficient. Also, while electrolysis uses a renewable feedstock (water), burning fossil fuels at a power plant to run an electrolysis machine undermines the fuel's low-carbon attributes. Companies can buy renewable energy credits to offset the emissions from powering an electrolyzer, but that adds more cost to the project.

A promising way to make hydrogen from electrolysis both cleaner and more economically competitive is for companies to take advantage of surplus renewable energy assets.

In California, where renewable energy makes up 20 percent of retail electricity sales, an overproduction of solar and wind during the middle of the day forced the state to dump 19 gigawatt-hours of prepurchased renewable energy last year. Electrolyzers could effectively serve as energy storage by using that excess generation to make renewable hydrogen.

Like a battery, electrolysis is dispatchable, which means the system can rapidly adjust its power flow to stabilize electricity demand and supply on the grid. According to National Renewable Energy Laboratory research, electrolyzers are able to respond fast enough to offer utilities demand response and frequency regulation services.

The revenue from energy market participation isn't nearly enough to recuperate the original investment in a renewable hydrogen project. However, electrolysis systems that offer ancillary services and sell hydrogen fuel are more economically competitive.

The advantage of using hydrogen over batteries is that it can provide megawatt-hours of energy storage for days or even weeks at a time. Scaling batteries up to that power level would be prohibitively expensive. Pumped hydro is another large-scale energy storage technology but requires a reservoir of water on a hill and abundant water supplies.

Proton Onsite's M-series Proton Exchange Membrane (PEM) electrolyzer can produce enough hydrogen to store multiple megawatts of renewable energy instantly. The company plans to begin shipping in 2015.

Electrolysis has a bright future, according to Shane Stephens, chief development officer and principal at FirstElement Fuel, a California-based startup that was awarded $28 million by the CEC to build 19 hydrogen stations throughout the state. Yesterday, Honda announced it will loan almost $14 million to the hydrogen station provider. None of FirstElement's stations, however, will use electrolysis.

"As more and more renewable electricity gets put on the grid over time, you're going to have [surplus] issues. So I think if markets are designed the right way, an electrolyzer could offer you economic benefits by saying, 'When there's renewable energy available, we'll take it; when there's not, we'll turn down or shut off our electrolyzer,'" said Stephens. "Electrolyzers can be very dynamic like that. ... But it's a little ways down the road."

Europe leads in power-to-gas systems
Electrolysis is likely to take off first in Europe, where many countries have high penetrations of renewable energy, ambitious climate goals and high natural gas prices. While the number of FCVs available to offtake hydrogen remains low, European countries are keenly exploring the opportunity to store renewably generated electricity as hydrogen in the existing natural gas pipeline.

The process, known as power-to-gas, inserts hydrogen generated by electrolysis directly into the natural gas pipeline system. Using electrolysis in this way avoids wasting valuable excess renewable energy but doesn't require a fuel cell car or stationary fuel cell to use the hydrogen directly.

Natural gas blended with renewable hydrogen also produces less emissions than regular natural gas when used at a power plant or as a transport fuel. The existing natural gas network can support roughly 10 percent hydrogen before requiring alterations.

Power-to-gas demonstrates the versatility of hydrogen. It can be produced from fossil fuels or renewable sources, it can be used to generate power or transportation fuel, and it can help to clean up the natural gas supply.

Hydrogen is "a highly flexible energy vector and energy carrier capable of serving as a weapon against climate change in a future, integrated multi-sector energy system," said Mary-Rose de Valladares, manager of the International Energy Administration Hydrogen Implementing Agreement, which is developing a comprehensive road map on the production and utilization of hydrogen due for release early next year.

"One of our biggest challenges [with the strategic plan] is explaining the intersectoral relationships here," she said.

According to the National Renewable Energy Laboratory, the United States, Germany, Canada, Spain and the United Kingdom have all built hydrogen storage projects from renewable electricity. As of 2012, there were 41 realized projects and seven planned.

Germany is currently the market leader with 22 green hydrogen storage and power-to-gas projects as of 2012. In July, Canada announced a power-to-gas project that will deliver 2 megawatts of storage capacity for grid management and regulation services.

There is relatively less interest in power-to-gas in the U.S., where hydrogen from electrolysis, even by taking advantage of cheap excess renewable energy, would have a tough time competing against abundant, low-cost shale gas.

Japan is also considering power-to-gas projects using excess renewable energy—mostly wind—to create hydrogen and blending it with natural gas to lower its carbon intensity. However, Japan's Ministry of Economy, Trade and Industry does not envision a shift to low-carbon hydrogen until the 2035-40 time frame.

Over time, as the number and size of electrolysis systems grow, the cost of producing renewable hydrogen using this method will drop. But to speed up the process, in light of the urgency needed to tackle transportation emissions and mitigate climate change, policy intervention may be required.

"In order to really make renewable hydrogen competitive with hydrogen from fossil fuels, we're going to have to go back to internalizing the externalities," said de Valladares. "It's probably going to require putting some kind of price on carbon."

Reprinted from Climatewire with permission from Environment & Energy Publishing, LLC., 202-628-6500