• Hydrogen
  • Hydrogen infrastructure
  • Microgrid
  • Energy Transformation

How Distributed Hydrogen Systems Contribute to the Energy Transition

Peter Asmus
Apr 20, 2021

Guidehouse Insights

The conversation has shifted from whether hydrogen will play a role in decarbonization to how and when it will play a role. As policy, decarbonization goals, greater renewables integration, and decreasing renewable electricity costs drive hydrogen demand, demand for necessary infrastructure will likely follow.

Most of the attention is on large hydrogen infrastructure plays. These initiatives are on the same large scale as offshore wind in Europe (and similar to the Biden administration’s commitment to offshore wind in the US). Bigger is better for these scenarios to make economic sense. This was the story told when Jeremy Rifkin’s book, The Hydrogen Economy, published almost 20 years ago. As a big fan of Rifkin’s work, I am surprised that some of the most viable hydrogen applications today are on the smaller scale, in microgrids deployed in some of the most remote parts of the world

Compelling Microgrid-Hydrogen Case Studies

Guidehouse Insights’ recent report, Distributed Hydrogen Systems Drive Clean Energy Microgrids, includes several case studies of such projects. A centralized approach is much more capital intensive and is dependent on subsidiary investments in transport and delivery. Europe is the global leader on hydrogen, unveiling a series of plans and scenarios including the Europe Hydrogen Backbone project. The project is launching with 10 countries and plans to have 14,292 miles of hydrogen pipeline capacity installed by 2040 at an estimated cost between $33 billion and $77 billion. The majority of this backbone (75%) would come from converting existing natural gas to hydrogen pipelines.

In contrast, distributed hydrogen systems can produce small quantities through electrolysis onsite to support microgrids or vehicle refueling systems. Consider the following microgrid applications:

  • One of the earliest demonstrations of the integration of distributed hydrogen into a microgrid was a plug-and-play mobile system for 600 workers at a geothermal power plant in Chile, developed by Enel Green Power and the microgrid controls firm ENGIE EPS.
  • The small island of Koh Jik, Thailand has 100 households and 300 inhabitants, all served by a microgrid. This microgrid proved that the cost of hydrogen at a small a scale might be competitive with diesel fuel delivery costs in such remote applications. 
  • The remote island of La Réunion in the Indian Ocean is home to 700 people. The Smart Autonomous Green Energy System microgrid’s goal was to provide energy autonomy for 10 days when solar resources are not available. 
Flexible Fuel Generation and Waste-to-Hydrogen Initiatives 

Another hydrogen-related trend linked to microgrids is represented by Bloom Energy’s and Mainspring Energy’s efforts to offer fuel-flexible generating assets that can segue to biogas and hydrogen as alternatives to natural gas become more viable. Then there is Ways2H, which has developed an advanced thermochemical process (see the figure below) with proprietary technology to convert carbonaceous wastes including municipal solid waste, medical refuse, plastics, and organics into renewable hydrogen. By greatly reducing the need for waste incineration, this technology allows local governments to meet waste management, clean power generation, and clean mobility goals. A pilot project currently under construction in California is being installed at a municipal waste transfer station with another private sector partner.

Converting Municipal Waste to Clean Hydrogen via Ways2H Technology

Converting Municipal Waste to Clean Hydrogen via Ways2H Technology

(Source: Ways2H)

These case studies and initiatives showcase that hydrogen also works on a small scale, especially in remote microgrids seeking to reach 100% renewable energy. The economics at these sites render distributed hydrogen cost-competitive today.