Hydrogen and the Nuclear opportunity21 June 2023
Hydrogen could offer nuclear operators a price hedge and new revenue streams. The USA is investing in the option.
Above: Steel production using the direct reduction method is a key application for hydrogen
At the Nine Mile Point nuclear plant in New York State, USA, a ‘first of a kind’ project is under way. In a project supported by both the US Department of Energy and plant operator Constellation, the power plant is using an electrolyser to split water into hydrogen and oxygen to meet the plant’s hydrogen needs, feeding the resulting product into the station’s existing hydrogen storage system and supporting infrastructure.
Constellation has received a $5.8mn Department of Energy (DOE) grant to explore the potential benefits of onsite hydrogen production, in partnership with Nel Hydrogen, Argonne National Laboratory, Idaho National Laboratory, and the National Renewable Energy Laboratory. The clean Hydrogen Generation System operating at Nine Mile Point is rated at 1.25MW and produces 560kg of hydrogen per day, more than enough to meet the plant’s operational hydrogen use. It will also help set the stage for possible large-scale deployments at other clean energy centres in Constellation’s fleet that would couple clean hydrogen production with storage and other on-site uses. It might seem obvious that a nuclear power plant, with its huge generating capacity, would be able to use self-generated power to produce hydrogen to meet its needs. In fact, up to now hydrogen has been delivered to Nine Mile Point – as to other nuclear reactors – by truck. The hydrogen has most likely been produced, like most industrial hydrogen, by steam methane reforming of natural gas. In fact, 95 five per cent of hydrogen in the USA is currently supplied from fossil fuels.
But hydrogen has several important decarbonising roles to play.
It is fundamental to decarbonising industries that have to apply very high temperatures in their processes (such as making steel or concrete) and currently achieve those temperatures by burning fossil fuels (usually natural gas). Hydrogen is also a potential direct replacement for fossil fuels in other so-called ‘hard to decarbonise’, areas such as transport (particularly heavy goods vehicles).
There are also applications in the power sector and for the nuclear industry, hydrogen is an important opportunity. To understand why requires a digression to examine why hydrogen is also an important opportunity for the renewables industry.
Using weather-dependent renewables means a glut of power generated at times when conditions are favourable – PV farms on sunny days and wind farms in windy periods – with a variety of effects. At times of glut, the price achievable by generators drops dramatically (sometimes referred to as price cannibalisation) and in Europe there are already short periods when spot market prices are negative, because there is more power available than the system can transmit. When large scale solar – whether on rooftops and (as now required in France) car park canopies, or as ‘utility-scale’ ground-based solar farms – briefly fulfils all demand as generation rises and falls on sunny days, as happens in some regions.
At other times, when the weather is unfavourable, the price achievable by generators rises dramatically – but renewables generators are unable to take advantage of it.
These issues of managing production and demand are already well known to nuclear generators, which are also unable to respond to power market conditions – in this case, because nuclear plants are operated most efficiently at full power. With substantial nuclear capacity there may be a surfeit of power at time, such as the night time, when demand drops.
Power companies have dealt with this problem by offering cheaper rates at night time, largely but not exclusively for industrial users who have a 24-hour demand.
Hydrogen production could solve the problem for both types of low-carbon generation. If excess power is being generated at low (or even negative) prices it can power an electrolyser to produce hydrogen instead. This simultaneously avoids the nuclear operator having to find other customers to take power at low prices, and gives it an additional product to sell – and importantly one that can be relatively easily stored – and an opportunity to arbitrage between the two. They, like renewables operators, should see it not just as a market for excess power but also a hedge against periods when electricity prices plummet. (Nor should it be forgotten that oxygen is the by-product when of electrolysis of water and if it does not have the energy applications of hydrogen it should be noted that sales of industrial oxygen in the USA reached nearly $70bn in 2023, according to Future Market Insights, and are growing at nearly 9% year-on-year.)
This has clearly attracted Constellation’s interest beyond Nine Mile Point: it said that it is working with public and private entities representing every phase in the hydrogen value chain to pursue development of regional hydrogen production and distribution hubs and has committed to invest $900mn through 2025 for commercial clean hydrogen production using nuclear energy. This includes participation in the Midwest Alliance for Clean Hydrogen (MachH2), Northeast Clean Hydrogen Hub and Mid-Atlantic Hydrogen Hub, all of which are exploring projects to develop hydrogen infrastructure in collaboration with DOE.
A growing market
This need to solve the problem of variability will be a major factor in increasing the market demand for hydrogen many times over.
Variability is a major issue for electricity system operators and there are several solutions depending on the timescale. Over periods of one or two hours, batteries can absorb or release excess power. Batteries have other revenue streams, as their fast response means they are also able to help network operators keep within limits for frequency variations.
For example, the UK is a global leader in building out offshore wind farms and is also building large scale solar. The two are largely complementary, aided by battery storage, and the UK market now has over 60 GW of short-duration storage in operation or planned – more than a typical peak load.
Hydrogen is another option to manage short term variability, if used to replace methane in gas turbines or gas engine arrays. But it could also help solve the more difficult problem of longer duration variability. Again, the UK is a good example. It has ambitious targets to increase offshore wind capacity, largely in the North Sea, to 50 GW by 2030. At full generation that will supply most of the UK’s demand. But in some years, in the coldest winter periods – January and February – the UK and the North Sea as a whole see periods as long as two or three weeks of cold, calm weather. To an increasingly renewables-dependent system this has become known as a ‘wind drought’ – and the UK cannot rely on its neighbouring countries to fill the gap because they too are heavily dependent on North Sea wind farms affected by the same weather conditions.
This is why the market for hydrogen is expected to grow fast – and why it is an important market for nuclear operators.
At the moment, hydrogen produced by electrolysis using nuclear power is in a technology-readiness race with hydrogen produced from methane, which can be described as low carbon only if carbon capture and storage is incorporated into the process.
Nuclear is also in a race with hydrogen produced by electrolysis using renewable generation. In this case, the two options have some common technology development aims, such as reducing the cost of electrolysers. But their offer to the system is differentiated because nuclear has two additional potential benefits: access to high temperatures, which allows more efficient electrolysers to be used; and its large rotating machinery (in the form of the turbine generator) which provides valuable stability to keep electricity supply within voltage and frequency limits.
Electrolysis uses one of three technologies: alkaline, PEM or solid oxide electrolyser cells (SOECs). The alkaline process has been used for over a century and PEM versions can operate effectively at a range of loads with sub-second response times, which makes them particularly compatible with variable energy sources, such as sun and wind power. SOECs use a ceramic electrolyte at high temperatures and are the least commercialized of the three technologies but they have higher electrical efficiency than the other two systems and “are likely to be more cost-effective in scenarios where high-temperature heat is available, such as from nuclear power plants and concentrated solar power”.
US road map for nuclear hydrogen
The nuclear hydrogen programme has kicked off successfully. The Nine Mile Point experiment “tangibly demonstrates that our nation’s existing reactor fleet can produce clean hydrogen today,” said Dr. Kathryn Huff, Assistant Secretary for Nuclear Energy, adding “DOE is proud to support cost-shared projects like this to deliver affordable clean hydrogen. The investments we’re starting to make now through the Bipartisan Infrastructure Law and Inflation Reduction Act will further expand the
clean hydrogen market to create new economic and environmental benefits for nuclear energy.”
Joe Dominguez, president and CEO of Constellation, said in a statement, “Hydrogen will be an indispensable tool in solving the climate crisis, and Nine Mile Point is going to show the world that nuclear power is the most efficient and cost-effective way to make it from a carbon-free resource.” He further added, “In partnership with DOE and others, we see this technology creating a pathway to decarbonising industries that remain heavily reliant on fossil fuels, while creating clean-energy jobs and strengthening domestic energy security.”
Hydrogen is a key technology in US DOE’s Inflation Reduction Act, which includes measures to develop and mature clean hydrogen production. On 7 June 2021 hydrogen was announced as the first of the US DOE’s so-called ‘Energy Earthshots’, which focus efforts to accelerate the shift to clean energy by tackling specific barriers. The Hydrogen Shot catalyses innovation “in any hydrogen pathway with potential for meeting the targets—such as renewables, nuclear, and thermal conversion—providing incentives to diverse regions across the country”. Its key aim is to reduce the cost of clean hydrogen by 80 per cent within a decade to $1/kg – down from around about $5/kg for hydrogen produced now using electrolysis with renewable energy.
The US DOE says, “Achieving the Hydrogen Shot’s 80% cost reduction goal can unlock new markets for hydrogen, including steel manufacturing, clean ammonia, energy storage, and heavy-duty trucks” and potentially increasing the market for low-carbon hydrogen 500%.
Following the Hydrogen Shot announcement, a Hydrogen Road Map for the USA was consulted on and finalised in December last year.
It describes hydrogen as “enabling renewables through long-duration energy storage and offering flexibility and multiple revenue streams to clean power generation such as today’s nuclear fleet, as well as advanced nuclear and other innovative technologies”.
The Road Map notes that high-temperature electrolysis requires integration and optimisation with thermal sources such as nuclear plants to increase the efficiency of hydrogen production.
It says the USA currently has approximately 1,600 miles (2,575 km) of dedicated hydrogen pipeline and three geological caverns, including the world’s largest, which can store the equivalent of 350 GWh of thermal energy. It notes the importance of siting hydrogen production and storage close to customers, whether for hydrogen or its derivatives such as ammonia, and it sets out a series of objectives.
The Road Map’s targets include:
- 2022-2023: 1.25 MW of electrolysers integrated with nuclear for hydrogen production (met by the Nine Mile Point project)
- 2024-2028: at least 10 hydrogen demonstration projects, including those with nuclear, and 20 MW of nuclear heat extraction, distribution and control for electrolysis
- 2029-2036: 10Mt per year of clean hydrogen produced in the USA
Nuclear’s potentially important role also is clear in a discussion of challenges that may emerge during industrial scaling. In particular over the period 2027–2034. At that time the US DOE expects there to be competition for clean electricity. Not only is there anticipated demand for powering electrolysis for hydrogen production but and other areas of demand are also expected to emerge. This includes direct air capture which is likely to develop in parallel with electrification of buildings and transport. DOE says that “By 2030, up to 200 GW of additional renewables would be needed to power clean hydrogen via water electrolysis,” but nuclear could reduce this.
The Biden-Harris Administration has made funding of US$750mn available through the US DOE for research, development and demonstration efforts to dramatically reduce the cost of clean hydrogen. DOE plans to distribute the funding via a series of project funding calls for projects lasting two to five years. The first funding phase is open for applications until mid July.
It all adds up to a compelling case for low-carbon hydrogen and a role for nuclear, if the industry can take on the challenge.