Pipelines and organic carrier ships to dominate hydrogen distribution, says new report

A report out this week from Rethink Energy, part of Rethink Technology Research, shows that the bulk of the effort to transport hydrogen around the world will be split between pipelines and liquid organic hydrogen carriers (LOHC), often transported in ships – and points to the limiting cost factors which shall define each transport use case.
Pipelines and organic carrier ships to dominate hydrogen distribution, says new report
Hydrogen pipelines. Courtesy of Rawpixel.

The question of just how hydrogen will get around the world, and what it will cost, is key to putting in place global hydrogen infrastructure.

The research has been compiled in consultation with planned hydrogen hubs using their “rules of thumb,” and cost estimates. As the sector emerges it is not just the cost of manufacture that will set limits on where hydrogen facilities can be but the cost of transport will be over 50 percent of the equation, and matter far more than the cost of making hydrogen.

Importing hydrogen to resource-rich countries will add between $0.50 and $1.86 per kilogram, depending on the distance and the means through which it can be transported. With distribution accounting for nearly two-thirds of the final cost of hydrogen to the customer, these delivery mechanisms will dictate competition throughout the hydrogen market.

The logic behind this is laid out in Rethink Energy’s new Hydrogen research paper out now, entitled “Pipelines and hydrogen ships to dominate H2 distribution.”

By 2050, Rethink Energy has forecast that 735 million tons of green hydrogen will be produced each year, using renewable energy to power electrolysis. Spanning from aviation to steelmaking, the use of hydrogen to decarbonise new industries will be central to the economic shift away from fossil fuels towards those harnessing their own wind, solar, and hydropower resources.

The trade routes that have long defined the global energy map will have to be redrawn. Energy – both as hydrogen and electricity – will need new infrastructure focused on low-cost storage, distribution, and delivery.

“Globally, the average cost of hydrogen production will fall to $1.50 per kilogram by 2030” said Harry Morgan, Rethink Energy's chief hydrogen analyst. “While there will be a huge convergence in global production costs, which currently vary between $3 and $7 per kilogram, countries like Australia, with exceptional wind and solar resources, will see costs fall as low as $1.20 per kilogram. Conversely, resource-constrained countries like Germany are likely to see production costs remain above $2.60 per kilogram through to the end of the decade. The disparity between these two numbers opens a huge argument for countries like Germany to import hydrogen, rather than to produce it domestically.”

Over distances of up to 5,000 kilometres pipelines are likely to provide the most cost-effective means of delivery. As the hydrogen economy emergences, and as hydrogen hubs and valleys aggregate industrial activity with renewable energy, these pipelines – with their long lifecycles and low operational costs – will continue to be cost effective. Using compression to deliver hydrogen at greater densities and volumes, pipeline delivery over a 1,000-kilometer distance will cost just $0.54 per kilogram.

The economics of such hydrogen pipelines will be significantly boosted if – rather than building them from scratch – existing natural gas pipelines can be safely repurposed for future hydrogen networks. With modern gas infrastructure requiring simple changes to hardware (valves, compressors, etc.), such an approach could add to the capital requirement by up to 45 percent.

However, as distances get further, the large capital cost and lack of flexibility of a pipeline are limiting. Once beyond 7,000 kilometres, the ability to transport hydrogen onboard ships becomes more cost effective – adding around $1.45 per kilogram of hydrogen over this range.

Shipping hydrogen as a gas is hugely inefficient. Vessels with storage tanks of around 160,000 cubic meters, only around 13 tons of hydrogen can be carried onboard; very little if the vessel’s round trip takes more than one month. However, if hydrogen can be carried as a liquid – at extremely low temperatures, as a constituent part of ammonia (NH3), or as other liquid organic hydrogen carriers (LOHCs) – up to 19,000 tons can be carried by the same amount of storage capacity.

The cost of these approaches will depend on how efficiently hydrogen can be ‘packed’ and ‘unpacked’ from its respective carrier.

Liquid hydrogen, which required very little processing to be ‘unpacked,’ has distinct advantages here. However, maintaining temperatures of minus 250 degrees Celsius poses a huge engineering challenge; boil off losses from liquid hydrogen increase with distance, reducing competitiveness.

LOHCs – with reduced packing costs – come in at between $1.48 and $1.86 per kilogram over distances between 7,000 and 20,000 kilometres. Ammonia, despite being the densest carrier of hydrogen, is severely limited by the cost of cracking it into its pure hydrogen for consumption (approximately $1.4 per kilogram on average).

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Rethink Energy

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