Hydrogen-based industry from remote excess hydroelectricity

EnergJ’, Vol. 22. No. 4, pp. 397403, 1997 K> 1997International Association for Hydrogen Energy Elsevier ScienceLtd Printed in Great Britain. All rights reserved PII: SO360-3199(96)00098-5 0360-3199/97 $17.00+0.00 ht. J. Hydrogm

Pergamon

HYDROGEN-BASED

INDUSTRY FROM REMOTE HYDROELECTRICITY

N. OUELLETTE,

H.-H. ROGNER

Institute for Integrated Energy Systems, University

of Victoria,

(Reeked

EXCESS

and D. S. SCOTT

Box 3055, Victoria, British Columbia, Canada V8W 3P6

15 May

1996)

Abstract-This paper examines synergies, opportunities and barriers associated with hydrogen and excess hydroelectricity in remote areas. The work is based on a case study that examined the techno-economic feasibility of a new hydrogen-based industry using surplus/off-peak generating capacity of the Taltson Dam and Generating Station in the Northwest Territories, Canada. After evaluating the amount and cost of hydrogen that could be produced from the excess capacity, the study investigates three hydrogen utilization scenarios: (1) merchant liquid or compressed hydrogen, (2) hydrogen as a chemical feedstock for the production of hydrogen peroxide, (3) methanol production from biomass, oxygen and hydrogen. Hydrogen peroxide production is the most promising and attractive strategy in the Fort Smith context. The study also illustrates patterns that recur in isolated sites throughout the world. C 1997 International Association for Hydrogen Energy. All rights reserved

INTRODUCTION Local energy sources vary within the Northwest Terriwith oil, natural gas, wood, hydro and wind developed to varying degrees at different locations. However, most energy is used in the form of refined petroleum products most of which are imported from other areas of Canada. The Government of the Northwest Territories wants to achieve lower cost of energy supply, reduce the use of fossil fuels and encourage economic development. Therefore, government policies promote both the use of local resources and the development of local industries. The surplus/off-peak capacity of the Taltson Dam and Generating Station, located in the Fort Smith area (Fig. l), presents an opportunity of this kind. Historically, the Taltson Dam provided electricity to a lead-zinc mine in Pine Point. Since the closure of the mine in the late 1980’s, a minimum of 8.5 MW surplus power is available year round. During off-peak periods, excess capacity increases to about 15 MW. Overall, about 63% of the electrical resource is unused (Fig. 2). The availability of low marginal cost excess electricity suggests that energy-intensive industries may be viable in tories,

the region.

Fort Smith’s

Sustainable

Development

Com-

mittee explored this opportunity and envisioned a hydrogen initiative, which would introduce an environmentally attractive local industry. IESVic was asked to investigate the short-term techno-economic feasibility of such a venture [1,2]. In the proposed Fort Smith facility, hydrogen is pro397

duced by water electrolysis. Two by-products can also be recovered: oxygen which is inherent to the reaction and heavy M’ateu using some additional technology. The IESVic study investigates three hydrogen utilization strategies: merchant hydrogen; hydrogen peroxide production; and methanol production.

STUDY

METHODOLOGY

The analysis evaluated product capacities allowed by the excess power and determined production costs using full life-cycle costs analysis. Scenario development examined different technology choices and plant configurations. The selection of a technology or process was constrained to proven technologies, while performance and cost data was usually obtained directly from manufacturer. The electricity rate is a key parameter in the study. The base case assumes 1 cent/kWh. A low rate is justified since: the electrolysis

technology

selected

constitute

an

interruptible use of power:, the marginal cost of producing the excess electricity is around 0.15 cent/kWh; and since no option exists to use the excess capacity of the dam, a hydrogen plant could generate up to one million dollars in additional revenues for the Northwest Territories Power Corporation. The electricity rate, along with other key parameters, were varied in a sensitivity analysis. All cost figures are given in Canadian dollars at 1993

N. OUELLETTE

(‘I (11

-

Population Northwest Territories 55 000 2500 Fort Smith

Road Distance ii Fort Smith to: I Hay River Yellowknife I

I

280 km 750 km 1230 km

Edmonton

Fig. 1. Fort Smith location

Maximum Generation Capacity 21 MW

i I I

Excess Capacity

”

Jan

Feb Mar

Apr May Jun

Jul

Aug

Sep Ott

Nov Dee

Fig. 2. 1991 day and night electricity production at the Taltson Dam Generating Station. Data provided by the Northwest Territories

Power Corporation.

prices and exchange rates. A plant factor of 94.5% and a real rate of interest of 8% are used. Because of a space limitation, we decided to concentrate exclusively on

results in this paper. More information on underlying premises and data concerning the study can be obtained by writing to the authors.

REMOTE EXCESS HYDROELECTRICITY HYDROGEN

PRODUCTION

We selected the Electrolyser Corporation Ltd. EI-250 unipolar water electrolysis technology for the study. An advantage of this technology for this application is its ease of operating at varying load conditions. The current load can be changed rapidly between 20 and 120% of nominal. The optimum operating level (current density) is a trade-off between capital and electricity cost. The higher the production rate per cell, the better the capital investment is utilized. On the other hand, the higher the rate of production in the cell, the less efficient the cell becomes and therefore the higher the electricity cost per unit of gas produced. In this study, whenever possible. the electrolyser operated at maximum capacity: 120% of rated nominal capacity.

The first scenario utilized almost all the excess power available, This means that the electrolyser is sized to meet the peak power availability (15 MW) which occurs during the summer months (Fig. 3). The second scenario uses a power level that can be sustained throughout the year. The electrolysis plant can be coupled to a short term storage facility for daily load following and still ensure the steady supply of hydrogen to downstream processes. Rrsults

Figure 4 compares the cost of producing raw hydrogen gas in Fort Smith to the cost typically associated with steam methane reforming (SMR). Some observations follow: With capacities ranging from 4 to 7 tonnes per day. a Fort Smith hydrogen plant is at the lower end of conventional production plant sizes. In Canada, the largest producers operate steam methane reforming plants with capacities up to 400 tonnes per day. On the other hand, water electrolysis plants exist throughout the country with capacities ranging from 0.3 to I. I tonnes per day. . It may be worthwhile to oversize the electrolyser for

l

z3 *O

Scenario 1

F *O 3

Scenario 2

Annual Cycle

Fig. 3. Hydrogen production scenarios. The shaded lines show the monthly average excess capacity (1991). The vertical lines show the range of load fluctuation around the average. The shaded area represents the electricity used by the hydrogen production plant.

l

l

399

load following purposes. Below I5 MW, the specific capital cost of the electrolyser ($;‘kW) increases rapidly as capacity decreases. Therefore, depending on the electrolyser load factor (a function of the load profile), economies of scale may prevail over underutilization of capital. Raw electrolytic hydrogen production cost doubles when the electricity rate is increased from 1 to 4 cents/kWh (electricity accounts for typically 40% of the raw gas cost). Electricity costs are certainly the dominating factor in an energy intensive industry like electrolytic hydrogen production and will be the key factor in the feasibility of such a venture. Electrolytic hydrogen produced in Fort Smith can be cost competitive with larger scale steam methane reforming plants. The potential for relatively low cost hydrogen production in Fort Smith suggests that there is an 0pportunii.y for developing local industry based on raw hydrogen gas.

Oxygen and heavy water constitute two potential byproducts. Unlike oxygen. which is inherent to the reaction, heavy water recovery requires additional technology. The Combined blectrolysis and Catalytic Exchange-Heavy Water Process (CECE-HWP) has been developed in Canada for this and other heavy water applications. The market for heavy water is mainly as a moderator in Canada’s CANDU reactor. Because of its high price ($3OO/kg of heavy water) and the small quantities (0.82 g per kg of HJ. the heavy water credit is insensitive to location. By-product credits can amount to a maximum of 45% of the raw gas cost with 15% attributed to heavy water and 30% to oxygen. However, these benefits should not be the determining factor for the project feasibility. THE MERCHANT

HYDROGEN

OPTION

Unless a local market is,established, Fort Smith hydrogen must be exported. This requires the hydrogen gas to be either compressed or hquefied for transportation.

Hydrogen is compressed to I75 bars in multistage reciprocating compressors. Compressed hydrogen is stored and shipped by means of tube-trailers consisting of nine high pressure cylinders mounted on a chassis equipped with piping and valves. The plant site has suticient storage to store one week of iaverage production.

The nitrogen precooled Claude cycle is considered standard cycle today for large-scale commercial liquid hydrogen plants (>4.5 tonnes per day). Unfortunately, this cycle is expensive at l.ower capacities. An alternative for small scale plants is hydrogen liquefaction using an

400

N. OUELLETTE ei al. 3.5

Fort Smith Electrolytic Hydrogen --a

0.04 $/kWh

-@b

0.0015$/kWh

0

30 40 20 10 Plant Capacity (tonnes H2 per Day)

v

250

Fig. 4. Electrolytic hydrogen production in Fort Smith. Production costs in Fort Smith are shown for three electricity rates. Plant capacity is 7 tpd for Scenario 1 and 4 tpd for Scenario 2. SMR cost derived from ref. [3] with natural gas at $2/GJ. auxiliary helium gas refrigerator. At temperatures below liquid hydrogen, helium is still a gas. Therefore, the helium can be refrigerated (not liquefied) in its own cycle and used to condense hydrogen through a series of heat exchangers. Variable load operation is not suitable for hydrogen liquefaction. Therefore, seasonal load following requires intermediate storage. Above ground pressure vessels constitute the only practical option in Fort Smith. Results Results for merchant hydrogen production are presented in Fig. 5, using the two scenarios introduced earlier (Fig. 3). Some observations follow: The energy required for compression or liquefaction reduces the hydrogen production capacity of the proposed Fort Smith facility. For the case of liquefaction, this reduction is significant. 0 Scenarios requiring seasonal storage are impractical. l Liquid hydrogen is likely to be preferred over compressed hydrogen. A single liquid hydrogen tank trailer can transport over 3000 kg of hydrogen whereas a compressed gas tube trailer is limited to around 350 kg. l The cost of liquid hydrogen is strongly influenced by the capital cost of the liquefier. Magnetic liquefaction of hydrogen, presently in development, could well enhance small scale liquid hydrogen production. This technology is expected to not only improve liquefaction efficiency but also reduce capital cost, especially for plants of capacity lower than 10 tonnes per day. l Merchant hydrogen produced in the Northwest Territories compares favourably in the North American hydrogen market. The upper end of market prices in Fig. 5 represents high purity hydrogen or long disl

tance shipment. These markets are the most promising for Fort Smith merchant hydrogen. THE HYDROGEN

PEROXIDE

OPTION

The largest use of hydrogen peroxide (H,O,) today is by far as a non-polluting bleaching agent in the textile and pulp and paper industry. The pulp and paper industries of Northeastern British Columbia and Northern Alberta could constitute a market for hydrogen peroxide produced in Forth Smith, alleviating the potential handicap of high transportation costs associated with most Northwest Territories industrial export products. Although this market is presently saturated, pressing environmental concerns over traditional bleaching agents chlorine and chlorine dioxide will increase the demand for hydrogen peroxide and create the need for additional capacity. A review of four manufacturing processes (alkaline and acidic electrolytic processes, direct combination of hydrogen and oxygen and anthraquinone autoxidation process) has revealed that the anthraquinone process, which represents the industry standard today, is the most suitable for the Fort Smith context. In the anthraquinone process, a cyclic reaction of the quinone with hydrogen and an oxygen containing gdS yields hydrogen peroxide in a water solution which is then purified, concentrated and stabilized. Energy requirements include electricity for compressors, pumps, and ancillaries as well as process steam. In Fort Smith, the two possible sources of heat for steam generation are electricity and heating oil. Scenario development The anthraquinone process requires a constant supply of hydrogen to optimize operation performance. Hydrogen production under seasonal load following is therefore

REMOTE EXCESS HYDROELECTRICITY

Compressed

401

Liquefied

q

Tube Trailer (7 day storage)

m

Compressor

n

Seasonal Storage

0

Liquefier

n

Electrolyser (Raw Gas Cost) Market Prices (Include Transport)

"

SC.1 6.5 t/d

SC. 2 S.St/d

"

SC.1

SC. 2 2.5 t/d

4tld (PeW Fig. 5. Merchant hydrogen production in Fort Smith. Market prices (obtained from Liquid Air and Linde) vary with quantity and delivery distance. Prices also vary with purity in the case of compressed.

impractical. Scenarios for hydrogen peroxide production are presented in Fig. 6. Results Results for the three scenarios are presented in Fig. 7. Scenario 3 is preferred, benefiting from economies of scale over Scenario 1 and from lower steam production cost over Scenario 2. Estimated production cost from existing producers were also constructed for comparison. The comparison shows that a Fort Smith plant benefits from lower hydrogen and electricity supply costs over conventional producers, given a favourable electricity rate is applied. However, these benefits are more than offset by the poor economies of scale associated with the small scale of production.

THE METHANOL

OPTION

Methanol production from biomass, hydrogen and oxygen was also examined. Conventional biomass based methanol production processes are hydrogen deficient. That is to say, the hydrogen content of the biomass is insufficient for complete conversion into methanol. Consequently, one has to add hydrogen to the process or reject some of the biomass’ carbon in the form of CO? emissions. Most processes also require supplemental oxygen for the intermediate conversion of the biomass into a synthesis gas. A readily available supply of hydrogen and oxygen, therefore, should improve the overall productivity of biomass derived methanol. In the case of Fort Smith, biomass is either wood chips or partially burnt residual wood from forest fires. Typical methanol markets include transportation (admixed with

wO Annual Cycle Annual Cycle Annual Cycle Fig. 6. Hydrogen peroxide production scenarios. In Scenario 1, all steam is produced using electricity; in Scenario 2, all steam is produced using imported heating oil; and in Scenario 3, steam is partly produced from seasonal off-peak excesspower and partly from imported heating oil when peak excesspower is insufficient.

402

N. OUELLETTE

C/ L/I.

Fort Smith Scenarios

Estimates for Existing Producers

800 8 2 ‘s

I

.-.

MarKet rrice

‘32Fixed Operating Costs IChemicals Cl Steam I Electricity

600

LZ Hydrogen m Investment

z 5 53 n ce

.1

7

1000

400

200

cl Steam from Electricity 12 M/y

Steam from Steam from Fuel Electricity and Fuel 18 M/y 18 k-t/y

StandAlone Plant

Industrial Area

36 k/y

36 WY

Fig. 7. Hydrogen peroxide production in Fort Smith. A stand alone plant produces hydrogen and steam on-site. In a plant located in an industrial area, hydrogen is available as a by-product of a nearby chemical plant and industrial process steam can be purchased.

or pure) and electricity generation in Northern communities. If produced competitively, use of biomethanol produced in Fort Smith replaces imported gasoline or diesel in the Territories and thus reduces overall energy costs as well as the dependence of fuel imports. Based on the technology overview, the SERI downdraft gasifier and the LURGI methanol reactor were selected for the analysis. gasoline

Scenario decelopment In the first scenario, the biomass conversion is maximized and no carbon dioxide is emitted. The second scenario uses all the oxygen available from the electrolysis plant. Making use of all the oxygen almost doubles the methanol production capacity. However, by doing so, the consumption of wood is more than doubled and the plant produces carbon dioxide emissions. Results The preliminary evaluation showed that the option of producing biomethanol in Fort Smith to utilize the excess capacity of the Taltson Dam via electrolytic hydrogen and oxygen is economically unattractive. This is illustrated in Fig. 8 where the production cost of methanol in Fort Smith exceeds the current market price of imported methanol.

CONCLUSIONS:

SPECIFIC

TO FORT SMITH

Given a favourable electricity rate, electrolytic hydrogen can be produced at a competitive cost compared to other commercial production in North America. Low cost hydrogen production in Fort Smith represents an opportunity for the community to develop a local industry based on this raw hydrogen gas. However, the marketability of hydrogen produced in the Fort Smith area suffers from its distance to potential hydrogen markets. Moreover, the scale of hydrogen production, determined by the availability of surplus electricity, is small compared to the production scales achievable with SMR. Unless natural gas prices increase substantially, SMR hydrogen located closer to the market place holds a competitive edge over electrolytic hydrogen from remote locations (see Fig. 5). In the absence of any carbon or greenhouse gas emission tax, methanol synthesized from biomass, hydrogen and oxygen cannot be produced competitively even for the local market (see Fig. 8). Consequently, of all options examined, hydrogen peroxide production appears most promising and attractive. Hydrogen peroxide offers the largest margin between production costs and market prices. In addition, there is a locational advantage which offsets the slightly higher production costs at Fort Smith versus larger scale hydrogen peroxide production elsewhere. The pulp and paper industry represents a nearby market for hydrogen per-

REMOTE

EXCESS HYDROILECTRICITY

403

15 million litres/year 0.32

EZGiydrogen & Oxygen II Investment

30 million litres/year I---------E: L.‘$?I. //.I

!” ~:q.$q

Merchant Methanol Delivered to Fort Smith

0.06

O.OC Complete Conversion of Carbon Oxides

Full Oxygen Utilization

Fig. 8. Methanol production oxide with an almost certain potential for increasing demand. A production plant can be configured to utilize a significant portion of the excess capacity of the Taltson Dam. Finally, hydrogen peroxide generates more value added, i.e. contributes more to local economic growth through job creation and collateral benefits, than neat hydrogen exports. The next steps in the investigation include a detailed market study for hydrogen peroxide and identification of investors. Most hydrogen peroxide plants are owned and built by less than a dozen large producers. Existing producers therefore constitute the most probable investors. The steering committee decided it is worthwhile pursuing the investigation for hydrogen peroxide.

CONCLUSIONS:

IN GENERAL

CONTEXT

We conclude with general observations concerning the synergies between hydrogen and energy resources in remote areas. In particular. we identify opportunities and barriers. 0 In many cases. energy resources in remote areas of the world remain unexploited because the distance barrier between the source and the end-users precludes viable economics. Still, hydrogen is a means for storing and transporting energy harvested from non-fossil energy sources and, therefore, represents an opportunity for remote areas to use local energy resources. l Hydrogen can be sold as a commodity on the merchant market, or used in the production of hydrogenbased chemical commodities. However, in general, the option of exporting a hydrogen or hydrogenbased commodity will suffer from high transportion costs due to the large distance barrier associated with remote areas. l In the long term. the most promising option for

in Fort Smith

remote regions is to use hydrogen as an meryy curdirectly in communities, either for transportation purposes or the production of electricity. However, near-term direct uses of hydrogen in remote communities a.re precluded by the high capital cost barrier of hydrogen end-use technologies. w/q’

This shows that there is an immediate need and business development opportunity for manufacturing medium efficiency!low capital cost hydrogen end-use technologies. These technologies would serve the development of remote regions around the world. They could also represent a product development and utilization opportunity for developmg countries, since in industrialized

nations,

technology

development

tends to em-

phasize high efficiency. A~,lino~~,lc,l!clcri~~,/l~.\ --Support for this research was provided by the Science Institute of the Northwest Terrllories. the Department of Energy. Mines and Petroleum Resources (Government of the Northwest Territories). the Northwest Territories Power Corporation, the Town of Fort Smith and the Department of Economic Development and Tourism (Government of the Northwest Territories).

REFE:RENCES I. N. Ouelette. H.-H. Rogner. P. Crane and D. S. Scott. Production and Utilization of Electrolytic Hydrogen from Excess Generating Capacity at lthe Taltson River Darn-Part 1: Hydrogen Cost and Availability. IESVic~ report TR93-108. March (1993). 2. N. Ouellette. H.-H. Rogner and 0. S. Scott, Production and Utihzation of Electrolytic Hydrogen from Excess Generating Capacity at the Taltson River Darn-Part II: Hydrogen Peroxide and Methanol, IESC’ic report TR93-1 I I, August 1993. 3. R. B. Moore and D. Nahmias. Gaseous Hydrogen Markets and Technologies. Proceedings of the First Annual Meeting of the National Hydrogen Association. Washington. DC. March (1991).