Getting H2 right

Transport costs from project to port can outweigh location benefits

For many export-focused inland hydrogen production projects, transporting the hydrogen to a port can incur high costs and remove other cost advantages that the project may otherwise have had, including access to low-cost, behind-the-metre renewable generation.

Selecting the optimal method of land-based transport requires consideration of the volumes being transported, distance to port, available infrastructure, and downstream demand profile. Incorrectly addressing these considerations can add unnecessary cost and create a supply chain that is not able to adapt to an evolving market over the coming decades. 

The four common methods for land-based transport are transmission pipelines, compressed hydrogen gas trucking, liquid hydrogen trucking, and the process of ‘moving electrons’ rather than ‘moving molecules’. We’ll consider each in turn.

1. Transmission pipelines
   
   Transmission pipelines generally represent the most efficient method of moving large volumes of gaseous hydrogen over vast areas of land (>1000km).  Constructing new ‘hydrogen-ready’ pipelines or converting existing gas pipelines to safely transport and store hydrogen will generally have high upfront costs but allow for long-term scalability of the project. This will provide a key benefit for hydrogen export projects, with many to be delivered in multiple stages. Operators are also able to utilise the pipeline’s storage function and generate additional future revenue by supporting other nearby projects or supplying to domestic customers.
   
   Australia has a well-established network of natural gas transmission pipelines and expertise in constructing and operating this infrastructure. Gas and energy infrastructure provider APA Group announced a pilot project to enable the conversion of the 43 km Parmelia Gas Pipeline in Western Australia to be 100% hydrogen-ready, enabling the delivery of hydrogen to existing customers in the Kwinana industrial precinct. New-build and conversion projects such as this are increasing internationally, with over 4000 km of hydrogen pipelines already in use globally.
   
   Once operational, a hydrogen gas pipeline requires low operational expenditure relative to the volume of hydrogen it can store and transport. However, along with the high upfront capital cost relative to other forms of transport, pipelines require central coordination among a number of stakeholders to overcome land rights and permitting, as well as upholding ongoing safety measures. They will likely require a very large hydrogen project, or multiple projects, to justify this initial investment of cost and development time.
   
   
2. Compressed hydrogen gas trucking 
   
   Hydrogen can be transported over land by trucks containing gas tubes pressurised between 200–700 bar. This is a cost-efficient mode of transport for small-scale projects, with a single high-pressure tube trailer storing approximately 600 kg of hydrogen.
   
   Relative to other forms of H2 transport, compressed trucks are cheap, easy to use and maintain, and the loading/unloading infrastructure is not complex compared to its liquid hydrogen counterpart. However, given that the flow of hydrogen in a vehicle-based delivery model is not uniform, hydrogen storage tanks will be required on either end of the transport route.
   
   The compressed hydrogen gas trucking option can provide delivery to multiple customers, and offer a quicker and lower-cost route to begin operations.
   
   
3. Liquid hydrogen trucking
   
   For longer distances and in the absence of a pipeline, trucking liquid hydrogen is more economical than trucking gaseous hydrogen for high market demands. Modern liquid hydrogen tankers have a capacity of approximately 4 tonnes of hydrogen.
   
   To maintain adequate pressure inside the insulated vessels, hydrogen must be vented at times as the liquid turns to gas. This is referred to as ‘boil-off’ and can result in significant losses of up to 5% H2 volume per day, depending on the technology used.
   
   The benefit of trucking liquid hydrogen compared to trucking hydrogen gas is that throughput is improved by a factor of approximately seven times, reducing the number of daily truck movements required, which  in turn reduces cost and operational emissions.
   
   
4. Electron movement
   
   The majority of Australia’s export-focused hydrogen projects are being developed at portside locations due to improved water access as well as a reduced requirement for land-based hydrogen transport. With little adjacent land available for colocated renewable energy production, portside projects rely on a strong transmission network that enables renewable electricity to be transported long distances to an electrolyser located closer to the point of export.
   
   From a cost perspective, network charges will be incurred by the project for connecting to the electricity grid. However, this cost can be partly overcome by incentive schemes designed to encourage hydrogen production, such as the NSW Hydrogen Strategy which exempts electrolysis projects from 90% of network charges.
   
   Because this approach uses an electrical network with a non-zero carbon intensity (as yet), particular attention must be given to emerging hydrogen certification schemes to ensure the project can still meet its certification requirements. We will address these considerations in our next article – navigating policy and regulation.
   

Australia must invest in the infrastructure that will support hydrogen export

Hydrogen is generally compatible with bulk commodity ports, where gas and even cryogenic liquid handling is commonplace. Although there are additional technical hurdles to be overcome for hydrogen (such as embrittlement risks and the need to maintain a very low liquid temperature), from an operational standpoint the majority of Australia’s bulk commodity ports are capable of accommodating hydrogen export infrastructure.

The Australian Government’s seven priority regional hydrogen hubs all have direct access to deepwater port infrastructure but will require coordination to maximise value-for-money and create hub infrastructure that is fit for purpose. Recent support for the Port of Newcastle and Gladstone aims to develop a coordinated public and private sector approach towards collocated hydrogen production, storage, usage and manufacturing capabilities within a portside hub.

A hydrogen export industry needs supporting infrastructure but, in reverse, a hydrogen industry also has the potential to offer support to infrastructure. In the transition to a low-carbon economy, hydrogen can provide a lifeline to port infrastructure and core assets that have traditionally relied on the fossil fuel industry. In September 2021, Canadian investor Brookfield announced its intention to increase its shareholding in Queensland’s Dalrymple Bay Coal Terminal.  This has been accompanied by a memorandum of understanding with North Queensland Bulk Ports Corporation and Itochu Corporation to conduct feasibility studies into green hydrogen production, storage and export from the port, laying an energy-transition pathway for an asset historically focussed on fossil fuel.

Three potential export forms are emerging as leaders among the 18 export-focused hydrogen production projects listed on HyResource.

There are also new and emerging technologies including compressed hydrogen tankers, which allow for reduced capital costs of both the ship and the loading infrastructure, and reduce efficiency losses from boil-off. Further, metal hydride technology – the process whereby hydrogen can be reversibly absorbed into the physical composition of an alloy – may be a strong competitor once initial technical hurdles can be overcome. 

The challenges of exporting hydrogen in molecular form may also be overcome by realigning the value chain of emerging green hydrogen-dependent products, including through the production of green steel, green aluminium and green methanol. The rising willingness of manufacturing companies to pay a green premium for sustainable materials gives Australia a chance to compete in global green products markets, particularly if bold action is taken in the short term to improve onshore capability.

The next ten years will be critical to the medium-term success of Australia’s hydrogen sector, as the first round of major capital deployments will be made to develop critical infrastructure and supply chains capable of exporting hydrogen at internationally competitive prices and volume and to position Australia at the forefront of the green hydrogen economy. 

Throughout our Getting H2 right series, we have looked at Australia’s path to building a competitive hydrogen industry, from engaging partners and offtakers and navigating policy and regulation, through to getting the price right and establishing a hydrogen-ready supply chain. These success factors will need to be considered by project developers and investors as projects progress towards construction and operation. The factors remain essential for both individual projects looking to secure financing, and for the development of the wider hydrogen economy.