The myth of producing ‘green’ hydrogen using nothing but wind and solar is yet another effort by crony capitalists to separate taxpayers from their money.

If ‘green’ hydrogen was economically feasible, then entrepreneurs would be throwing every penny they could muster at something with so much (apparent) promise.

The fact that their first port of call is government-backed subsidy slush funds says it all, however.

Putting aside the (woeful) economics, the physics of producing, storing and distributing a highly volatile and corrosive gas means none of this has a hope of coming to fruition. It’s the reason why there is not one single commercial green hydrogen producer anywhere in the world.

The King of Australia’s crony capitalists, Andrew Twiggy Forrest – this Country’s leading mouthpiece for green hydrogen – is long on rhetoric, but short on rational argument, and even shorter of the desire to put his own money where his mouth is.

As the team from Jo Nova and Eric Worrall explains below, Forrest’s grand green hydrogen plans haven’t a snowball’s chance in Hades of ever getting off the ground.

Renewable energy is too expensive to make “green hydrogen” — Twiggy goes to Arizona instead
Jo Nova Blog
Jo Nova
30 April 2024

Only 18 months ago the Australian government gave $14 million dollars to Andrew “Twiggy” Forrest to figure out if his team could build a 500MW electrolyser to make hydrogen gas on an island near Brisbane. It was going to be a glorious Australian green-techno future, the largest hydrogen plant in the world, but it’s missed three deadlines in the last three months to greenlight the project. Instead the Australian company is going overseas.

As Nick Cater points out this part of the made-in-Australia renewable superpower is going to be made-in-Arizona because they still have cheap electricity — a miraculous 7.5c a kilowatt hour!

Australia’s manufacturing decline is a story of broken promises and failed industry welfare programs
Nick Cater, The Australian

Bowen described the project’s success as “critical” to Australia’s ambition to be a green energy superpower.

It turns out abundant sun was not such a competitive advantage in the manufacture of green hydrogen. Low taxes, fiscally responsible government and cheap and reliable carbon-free energy are far more appealing drawcards for investors.

The future is already being built in Buckeye, Arizona, where Fortescue is investing $US500m ($765m) in a green hydrogen plant it says will be up and running by 2026.

In 2023, manufacturing in Arizona grew faster than in any other state. It includes energy and water-intensive industries such as silicon chip manufacturing, with Arizona coming from nowhere to fourth place among US states.

..It isn’t hard to work out why. Arizona’s top state income tax rate is 2.98 per cent. … For energy-hungry industries such as hydrogen and the IT sector, however, the biggest attraction is the industrial electricity price: 7.47 cents a kWh in Arizona compared to 18 cents in California.

Our electricity prices are twice as high as any hydrogen industry could bear
We are so far out of the running. Last month the boss of Fortescue Energy said he was hoping our prices would fall (by half!), and cites Norway as an example of “cheap renewable energy” as if we could emulate that. It’s a bit rich given that the only renewable energy Norway uses is hydropower (96%). Norway has 31GW of hydropower while we have 4GW and can’t even tack on a 2GW pumped hydro dessert. To put it bluntly, Norway has a thousand fjords and a half million lakes and Australia has no fjords and about fifty salt lakes.

Fortescue says hydrogen hopes rest on a halving of power prices
Peter Kerr, Australian Financial Review, March 11 2024

Mr Hutchinson [Fortescue Energy boss] told The Australian Financial Review Business Summit that high power prices were the main impediment at Gibson Island. “We’ve been working very, very hard on it,” he said. “But it’s tough based on the current power prices when we’re looking at competing globally. It’s a tough decision.

The company expects to approve a green hydrogen project in Norway this year which would be powered by carbon-free hydroelectricity. “If you look around the world where you can get cheap renewable power, competitive renewable power is below $US30 a megawatt hour,” he said.

Impossible Triangle Puzzle.The irony is that to make hydrogen he needs the cheap power we used to have on the Australian national grid before we started adding renewables (after 2008 when Kevin Rudd was elected). For twenty years the whole Australian grid price was about $30 a megawatt hour. At a point after 2012, when the carbon tax was added, electricity prices rose up beyond the $50 per megawatt hour price limit that makes hydrogen industry unrealistic, and never came back down.

Once upon a time, Australia had electricity so cheap no one would have bought hydrogen. Now electricity is so expensive, hydrogen might be competitive, except no one can afford to make it.

Like the Penrose impossible triangle, just keep going left and it never makes sense.

Reference: AER quarterly wholesale electricity prices 1999- 2023

Jo Nova Blog

Fortescue: Biden Forcing Green Hydrogen Producers to Use Renewables Drives Up Prices
Watts Up With That
Eric Worrall
24 April 2024

“… The “hourly matching” rule will force hydrogen producers to either cease production when renewables are not available … or sign up for excess renewable power …”

Fortescue slams Biden administration’s green hydrogen tax rules
Peter Ker Resources reporter
Updated Apr 21, 2024 – 2.09pm, first published at 2.00pm

Fortescue says the proposed design of the Biden administration’s green incentives scheme could triple the cost of low-carbon hydrogen projects …

The iron ore group has an ambitious strategy to become a major force in hydrogen and renewable energy …

…

But Fortescue’s enthusiasm has waned since the US Treasury issued draft regulations known as “45V” which provide the detail on eligibility for the tax credits. Fortescue’s biggest problem is the requirement that companies must match each hour of production to an hour of renewable power generation and consumption to be eligible.

The rule is designed to ensure that subsidies are not given to hydrogen made from fossil fuel power during times when solar and wind power are not available.

The “hourly matching” rule will force hydrogen producers to either cease production when renewables are not available – an option that would undermine productivity and viability – or sign up for excess renewable power from diverse sources to improve the chances of having clean energy available from at least one source at all times.

…

“If I am building a gigawatt of electrolysers in Texas I may only need a gigawatt of energy at any time, but I have to buy seven times that to ensure that I have all the probabilities working, so I know I can match in that hour, which means the bulk of what I buy I don’t need,” he told a Bloomberg podcast.

…

Read more (paywalled): https://www.afr.com/companies/energy/fortescue-slams-biden-administration-s-green-hydrogen-tax-rules-20240419-p5fl78

You can understand Fortescue’s distress. Who could have imagined Biden would insist green projects actually be powered by renewables?

As Fortescue helpfully explained, renewables are so unreliable they would have to build or buy 7x overcapacity to ensure continuity of supply, which would be prohibitively expensive. A bit like how attempting to power the entire economy using renewables would be prohibitively expensive.
Watts Up With That?

 

We keep getting told that wind and solar renewables are cheap, yet our bills keep going up. So, what’s going on?

From the EIGEN VALUES Substack

DAVID TURVER

Last week, I decided to write a Twitter/X post to summarise how much we are paying for renewables. It got far more traction than I anticipated, so I thought it would be helpful to convert it and extend it a little to make a bonus article on Substack that can act as a succinct response to all those who still insist on claiming renewables are cheap.

In the UK, renewables are subsidised by three different schemes. Feed-in-Tariffs (FiTs) fund mostly solar power. The latest report for 2022-23 shows the scheme cost over £1.7bn and average total payment was ~£193/MWh, about 3X the current cost of gas-fired power at around £65/MWh (see Figure A).

Contracts for Difference (CfDs) fund a range of technologies, but most of the subsidy goes to offshore wind. Latest data from the LCCC shows the subsidy per MWh fell dramatically during the energy crisis, but is now back at £95/MWh for offshore wind, £73/MWh onshore and £60/MWh for solar. April 2024 was a record month for overall subsidies with £268m paid out with average strike prices at £146/MWh for offshore wind, £113/MWh for onshore and £110/MWh for solar power (See Figure B).

The CfD subsidy for burning trees in biomass plants rose from about £7/MWh in March to nearly £60/MWh in April. This encouraged more biomass generation and the total subsidy paid for biomass jumped from £2m in March to over £34m in April 2024. The total CfD subsidy paid for the last 12 months is over £2bn, and the trend is clearly upwards.

By far the biggest subsidy scheme is Renewables Obligations Certificates, costing over £7bn per year. This scheme awards certificates for each MWh generated, a different number depending upon technology. April reference prices for intermittent renewables have been around £53/MWh, meaning the average price paid for offshore wind under the ROC scheme has been £176/MWh, onshore £118/MWh and solar £146/MWh including the value of the certificates (See Figure C).

Future renewables are also going to be more expensive than current market rates. The Government’s announcements of prices for their Allocation Rounds are often quoted in 2012 money. In 2024 money, Allocation Round 6 (AR6) is offering £102/MWh for fixed offshore wind, £246/MWh for floating offshore wind, £89/MWh for onshore and £85/MWh for solar power, all far higher than current market prices (see Figure D).

It should be noted that FiTs, ROCs and CfDs are all index-linked, so prices will continue to rise with inflation. It is clear our bills are going to continue to rise for the foreseeable future as cheap gas is forced out in favour of expensive renewables.

In addition, we pay extra for balancing the grid when the wind is not blowing (or blowing too hard) and the sun is not shining. In the year ending March 2024, these balancing services cost £2.46bn. Most of these costs should be attributed as a cost of intermittent renewables. That’s a total of over £12bn being paid to or because of renewables each year.

More costs are coming down the line as the National Grid ESO has announced £54bn of spending on the electricity network infrastructure up to 2030 and a further £58bn in the 2030-2035 period, a total of £112bn, or over £10bn per year for more than a decade.

I hope it is clear to all now that renewables are not cheap and are never going to be.

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