Hydrogen use cases and the future of energy diversification

16-minute read

Quick summary: As we explore diverse use cases of hydrogen, we’ll provide a comprehensive understanding of the role it can play in shaping a more sustainable energy landscape.

As the global community grapples with the pressing challenges of climate change and the need for sustainable energy solutions, the search for alternative energy carriers has taken on renewed urgency. Rapid advances in wind, solar, and battery technology over the past decade have led to increasing penetration of renewables into the mixture of generating sources for the electric grid.

To address the need for a diverse renewable energy portfolio, hydrogen has emerged as a potential asset for governments looking for a reliable way to arrive at a zero-emissions energy sector. Long touted as a multi-faceted energy storage solution, hydrogen has gone through a myriad of highs and lows as a promised “prince of energy.”

Currently, the needle falls somewhere in between the promise of a miracle energy source and the risk of an overhyped money-pit. A large-scale hydrogen economy with robust infrastructure that brings low-cost hydrogen across the United States will lead to massive growth, but that looks like it’s still years away, with large CAPEX-shaped problems standing in its way. Where the future will take hydrogen remains uncertain, but what isn’t uncertain is the plethora of ways hydrogen can be used in the economy to reduce emissions and increase reliability in multiple sectors.

This article will explore these diverse use cases of hydrogen. By examining the advantages, challenges, and outlook of hydrogen deployment in areas such as transportation, power generation, industrial processes, and energy storage, we’ll provide a comprehensive understanding of the role hydrogen can play in shaping a more sustainable energy landscape.

Hydrogen’s role in transportation

Hydrogen shows great promise in heavy-duty transportation, where battery electrification faces limitations. For large vehicles like trucks and buses, hydrogen fuel cells offer longer range and faster refueling compared to batteries. Due to similar constraints, in maritime shipping, hydrogen can provide the high energy density needed for long-distance voyages where current battery technology is too expensive and heavy.

Consumer vehicles using hydrogen as a fuel are not necessarily new, but there is renewed interest in developing hydrogen-powered cars due to a few key advantages over batteries that could make a world run by hydrogen cars more efficient and reliable for customers.

However, it’s painfully obvious that the cars driving around on roads today are not millions of hydrogen cars, but still mostly internal-combustion-engine (ICE) cars with a small percentage of electric vehicles. Battery technology and manufacturing has grown significantly in the last decade, with the battery electric vehicle (BEV) market share growing every year.

The small number of commuter hydrogen vehicles available, like the Toyota Mirai, have faced severe challenges with fueling stations closing and lack of support for the promised infrastructure. These are hurdles that have clear solutions, but without widespread adoption of hydrogen infrastructure, they will remain big enough to scare most consumers away.

Therefore, it is likely that hydrogen’s role in the transportation sector will primarily focus on large-scale vehicles, and only when (or if) a large amount of hydrogen infrastructure can drive down costs will hydrogen commuter vehicles begin to compete with BEVs.

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BEV fleets for trucks or buses also require centralized charging infrastructure that can place strain on grids that are not suited for large increases in load. With widespread adoption of commuter EVs, grid strain becomes an even larger issue, and the necessary infrastructure needed for larger-capacity energy grids is comparable to the capital needed for hydrogen infrastructure. New battery technology like solid-state lithium batteries may eventually solve this issue, but hydrogen has many advantages that can make it an attractive alternative.

Trucks, buses, and trains

By using hydrogen that is run through a fuel cell to create energy, hydrogen trucks offer longer range and faster fueling times than their battery-powered counterparts. By compressing and storing hydrogen in high-strength tanks, trucks can carry large amounts of fuel and increase range. Furthermore, the time needed to refuel these tanks is much shorter than charging times for electric trucks, reducing stops and allowing freight to be delivered quicker and at a lower cost. Semi-trucks, buses, and construction vehicles can all benefit from longer run times that hydrogen allows, and, compared with battery technology that is expensive and heavy, hydrogen can be cost effective (more on that later).

Hydrogen-powered trains offer an alternative to diesel locomotives on non-electrified routes. Certain rail lines are not conducive to electrification due to either infrastructure restrictions or routes that are too remote. When long distances and non-ideal charging logistics appear, hydrogen offers a unique solution for transportation. Refueling can be quick to get trains back on track quickly, and large hydrogen storage tanks can provide range for routes that travel through remote areas of the country.

Maritime shipping and aviation

Long-distance shipping routes may also be a strong contender for hydrogen transportation technology. Due to the same reasons we see with heavy transport like trucks, a large ship that is run on batteries would require an enormously large and heavy amount of battery cells, and the cost would be very high. Hydrogen boasts a high energy density by weight, making it advantageous for long-distance shipping, where storage tanks would be relatively lighter compared to the battery weight requirements.

There’s also potential for retrofitting existing ships to use hydrogen fuel, which could ease the transition (albeit with caveats about technical feasibility). With long-distance shipping making up a crucial leg of the global supply chain, there is a narrow path here for hydrogen. Higher costs in the name of reducing emissions will likely hurt global economies, and supply chain issues could further limit other renewable energy technologies. Hydrogen may offer the only zero-emission energy solution for ships, however, and the sheer size of the ships makes hydrogen a much more attractive option than electrification.

Sustainable aviation fuels are increasingly gaining research funding, as a way to reduce air-travel emissions will be necessary to reduce transportation carbon intensity as a whole. Hydrogen holds promise as an aviation fuel due to its potential to significantly reduce the environmental impact of air travel. Hydrogen can be used in modified gas turbine engines or fuel cells, offering flexibility in implementation.

The physics of powering air travel mimics many of the characteristics of trucking and shipping, which is why aviation fuel offers a possible spot in the hydrogen economy. With weight a primary concern, hydrogen use in either fuel cells or combustion engines could reduce airline emissions. Sustainable aviation fuels are also a key area of research in fuel blending, where injecting hydrogen into traditional gas fuel can reduce overall CO2 output by increasing fuel yield with a green fuel.

The bottom line on using hydrogen in transportation

Range and weight are huge considerations in long-distance trucking, where every minute and dollar saved has large ripples into the economy by affecting supply chain costs. Such a large influence means the drive to reduce emissions will be difficult in this area, and only if carbon-free solutions are cheap and effective will there be widespread adoption.

However, with the high costs of current fuels like diesel and possible externalities like a carbon tax, consumers in this area are likely to pay a premium on fuel solutions that other use cases can’t rely on. Driving down emissions while incorporating economical solutions is a delicate balancing act, but in long-distance transportation, companies might be more willing than most to pay slightly more for hydrogen if it means even slight increases in efficiency and cost savings compared to current polluting solutions.

However, hydrogen use in transportation still faces huge hurdles when competing with gasoline and electric options. Most cost forecasts that predict hydrogen as a cheap alternative fuel assume robust infrastructure and an economy of scale that needs large investments and long implementation times.

This future of a cheap hydrogen economy would be a game changer for a reliable zero-carbon-energy future, and it’s possible that it is necessary. On the other hand, such a future is relying on large capital investments that will be difficult to bet on, considering current high interest rates and other technologies that can eat into hydrogen’s market share. This theme will be consistent in most of the use cases identified in the rest of this paper.

Power generation

As hydrogen is a molecule that acts as an energy carrier, one of its most obvious uses is as a source of energy for the grid. Hydrogen can play a crucial role in power generation, especially for grid stability and backup power. Stationary power plants running on hydrogen can provide clean, dispatchable electricity using hydrogen fuel cells as reliable backup power for critical infrastructure. Integrating hydrogen as an alternative storage and generation device in multiple instances—like microgrids or distributed energy resources—can provide reliability to various power systems. An integrated portfolio of energy is going to be necessary for electrical systems as we progress in the next few decades, and hydrogen offers numerous use cases where it can become a possible player.

Fuel cell backup power

Running hydrogen through a fuel cell that combines pure hydrogen gas with air offers energy whose only byproduct is water vapor. The combination of two hydrogen molecules with an oxygen molecule expels an electron, which is sent to the load source, and the byproduct H2O is disposed of as exhaust.

Sources of clean, renewable energy are not necessarily boundless, so hydrogen offers a generation source that is valuable in a renewable electric grid that will place considerable weight on diverse sources of energy. Reliability increases with the amount of available generation in a 100 percent renewable grid, providing an area for hydrogen to penetrate the generation market with its ability to be stored and used on short notice (more on long term-storage below). Building a block of fuel cells at a generating facility offers dispatchable energy that can help meet peak loads and smooth power supply.

Since hydrogen can be stored in tanks near the fuel cells, it can offer an adaptability to operators that is crucial for reliable power supply. The competitor here is our old friend the battery, especially in applications where the fuel cell is working as a backup power supply. There are specific projects where the fuel cells might operate as a base load if the generation capacity of the fuel cells is large enough, but this requires a huge hydrogen facility as well as established hydrogen supply that may or may not exist or be affordable. Batteries offer much of the same specific generation characteristics, and the balance between cost and implementation of batteries and hydrogen will mean life or death for hydrogen fuel cells in most power plant use cases.

Power plant retrofitting and fuel injection

Some arguments for maintaining a reliable and realistic energy transition propose that natural gas will and should remain a key energy player. The main reasons for this are its ability to provide crucial peaker plant abilities and its lower emissions than coal power. Policy arguments and opinions about the extent of natural gas’s role in the energy market in the coming decades vary drastically, but hydrogen plays a role here.

Reducing the need for natural gas can mean getting rid of it entirely (which should undoubtedly be the end goal), but that can also mean reducing its role today in stages to slowly start reducing the carbon intensity of energy for a specific grid or region. Research into blending hydrogen into natural gas pipelines has a goal of reducing overall natural gas demand in the near future while simultaneously admitting that realistically, fossil fuels will play a role in the energy market for years or even decades to come.

Hydrogen itself can be combusted, a property that is useful as it can then be used in the current designs of internal combustion engines as a fuel by itself or blended into other fuels. Increasing the amount of hydrogen content in a gas mixture can decrease downstream emissions for natural gas applications that are hard to electrify, like heating for homes and industry. Depending on the specific blend ratio, the hydrogen can be injected into natural gas supply and used seamlessly within the existing natural gas infrastructure.

Reducing carbon intensity of various industries immediately is certainly an attractive prospect, but the main argument against hydrogen blending is that it is kicking the can down the road. If blending strategies become widespread, it becomes an easier argument to keep natural gas infrastructure and power generation around for longer. This argument about how long the energy transition will need to rely on natural gas is a complex one and beyond the scope of this article. Hydrogen blending can reduce certain emissions now but may delay progress for full decarbonization later.

How hydrogen will infiltrate the generation market

The key limiter for hydrogen in power generation will be its cost and whether it can compete on a dollar-per-kilowatt basis against other generation sources. The argument for diverse power is a good one only if it makes economic sense: a rich portfolio of power that can reduce risk in 100 percent renewable power sources is a fairytale if that portfolio is expensive to its investors and customers.

Included somewhat in the assumed cost for hydrogen power generation is also the low round-trip efficiency inherent to hydrogen as an energy carrier. You lose most of your energy in the process of splitting, storing, and using the hydrogen. Compare this to a battery, which can retain 80 percent (on the low end) of energy by storing and using power from any generation source. There are many arguments against hydrogen in power generation, and the only way it beats these is through cost reductions. Money is the name of the game, and without a long-term solution that viably creates cheap, clean hydrogen, batteries will continue to win in this use case.

Energy storage

Addressing intermittency issues with wind and solar has been one of the biggest emerging markets in the renewable energy industry over the last few decades. Affordable, reliable storage options are the stopgap that is needed to push clean energy penetration closer and closer to 100 percent of generation.

Since hydrogen is an energy carrier, it offers the benefit of storing energy for long periods of time and can be used for energy generation whenever desired. Competing mainly with batteries for the energy storage role of the future, hydrogen offers a few advantages that can make it a compelling energy storage asset for future projects.

The name of the game in energy storage is the duration of reserve power the storage device can provide. This varies with different applications of storage, but mostly storage devices are rated on their ability to supply full power for a certain amount of time. Storage time can be on the order of seconds, minutes, hours, or even weeks. Each scenario needs to be evaluated differently based on cost of implementation and power demand characteristics.

Currently, batteries have exploded into this space and occupy most of the conversation about energy reserves, but as you need longer duration storage, the market becomes unclear. Battery storage that starts to creep over the 12-hour mark needs larger installed capacity, which comes with huge costs. For long duration energy storage (LDES), other cheaper technologies are needed. Hydrogen can be stored for long periods of time in tanks or underground without being affected greatly. Because it can be stored until it needs to be run through a fuel cell for energy when renewable generation is not available for long periods, hydrogen can fill the hole required by energy operators.

Cost will again be the biggest driver for this implementation. Other LDES methods like pumped hydro or future technology like flow batteries may be cheaper in some areas or more practical. If hydrogen can become cost competitive, it can fill various LDES needs that are only conducive to hydrogen.

Furthermore, infrastructure for storing hydrogen is energy intensive and expensive. Compressing and liquefying hydrogen both require unique engineering solutions that further reduce roundtrip efficiency or are expensive. Storage is becoming one of the biggest industries in the renewable energy market, and batteries have a huge advantage from technological bumps in design and manufacturing. Hydrogen can offer a competitive ROI in long-duration implementations where there might be weeks or longer with energy reserve needed, but only if costs are reduced in key areas.

Industrial manufacturing: A hole only hydrogen can fill

Hydrogen has significant potential to decarbonize energy-intensive industrial processes. Recent innovations in energy have seen the push for full electrification of the world, as this creates a scenario where combustion engines running on fossil fuels can be eradicated and almost everything can be powered by some mix of renewable energy and storage. However, there are multiple industries that either cannot be electrified easily or electrified at all. This poses a challenge for any plan to arrive at zero emissions, as the solution is not as simple as hooking up a solar farm or installing battery storage systems.

Many of the use cases for hydrogen involve competition with other technologies and an argument for hydrogen that stands on relatively weak legs, relying on promises for future investment and infrastructure. This leads to critics jumping to show how hydrogen can never be viable and an outlook that argues for the investment in other decarbonization strategies.

All this may or may not be true, but that is not the point. There are certain use cases where hydrogen is used in large quantities and cannot be substituted with another substance. Only green hydrogen can decarbonize these heavily polluting areas, and therefore the pillars of a green hydrogen market can be built upon manufacturing and industrial use cases.

Steel production

Hydrogen has emerged as a promising alternative in steel production, offering a potential pathway to reduce the industry’s carbon footprint. In traditional steelmaking, coal-derived coke is used to remove oxygen from iron ore, producing significant carbon dioxide emissions. However, hydrogen can serve as a reducing agent in place of coke, reacting with iron oxide to form pure iron and water vapor instead of carbon dioxide. This process, known as direct iron reduction (DIR or just DR), can be powered by renewable electricity and green hydrogen, making it a key technology for decarbonizing the steel sector.

While challenges remain in scaling up hydrogen-based steelmaking—including the need for substantial clean hydrogen production and infrastructure development—it represents an important avenue for the industry to align with global climate goals and meet increasing demand for low-carbon steel products. This process also creates a hydrogen offtake sector that could increase investment and incentives that would drive healthy hydrogen production.

Cement manufacturing

In conventional cement production, fossil fuels are typically used to generate the high temperatures required for calcination and clinker formation. Decarbonization of the heating sector has long loomed over the energy transition, with electrification of this process difficult. Hydrogen can be substituted in kilns to produce heat for cement manufacturing which could potentially reduce CO2 production from this process.

At a lower level, hydrogen blending could also reduce emissions in the near term by replacing some amount of fossil fuels in the cement industry. Hydrogen combustion characteristics are different from common heating fuels, however, so changes in plant design that could be costly are necessary. This process of burning hydrogen also produces nitrous oxide emissions, which have potential health concerns.

Chemical production (e.g., ammonia, methanol)

Hydrogen plays a crucial role in various chemical manufacturing processes, serving as both a reactant and a reducing agent. In the production of ammonia, a key component in fertilizers, hydrogen reacts with nitrogen in the Haber-Bosch process. This reaction is fundamental to modern agriculture and food production.

Hydrogen is also essential in petroleum refining, where it’s used to remove sulfur from fuels, a process known as hydrodesulfurization. Additionally, hydrogen is employed in the synthesis of methanol, a versatile chemical used to produce plastics, paints, and other materials. Its ability to react with carbon-containing compounds makes it valuable in hydrogenation processes, such as converting liquid oils to solid fats in food production.

Hydrogen can decarbonize industry and manufacturing

Without getting too technical regarding the chemistry of these manufacturing processes, hydrogen consumption in this sector is already established. In addition, these processes use hydrogen and only hydrogen: there is no competition. As has been established with many of these use cases, cost competition and technological tradeoffs have kept hydrogen skeptics alive and well.

With industrial applications that have established supply chains and solid hydrogen demand, heavy industry and chemical manufacturing will be the cornerstone for initial hydrogen economy development. If growth in this area can lead to cost reductions in other cases, hydrogen can meet the promises that many have made for decades.

Challenges and barriers

A classic “chicken or the egg” problem exists for hydrogen, a simple but crippling dilemma that has dampened any widespread breakthroughs in hydrogen demand despite many predictions about growth. The lack of widespread production and distribution infrastructure is a significant hurdle that can breathe life into hydrogen or condemn it to obscurity.

Currently hydrogen is not cost-competitive with fossil fuels or batteries for many of its use cases, which has led to stagnation in many hydrogen projects. Regulatory and policy frameworks need to be developed or updated to support hydrogen adoption in a way that can drive cheaper production but not provide an un-ending crutch.

Opportunity costs for electricity demand will also likely hurt hydrogen for years to come. Even for the applications where hydrogen might be the only clean solution, like ammonia manufacturing, to build a hydrogen generation plant that can produce cheap hydrogen reliably, the demand for that supply of electricity is very high. Investment security for selling that power to a data center or other high-need load area might be much higher than the potential investment for hydrogen offtake. The fight over electrons will only increase in the coming years and decades, and it’s a worthwhile question.

Where does hydrogen go from here?

From powering heavy-duty transportation and enabling decarbonization of energy-intensive industrial processes to serving as a versatile energy storage and distribution medium, hydrogen offers a multitude of use cases that can contribute to a more sustainable future. In an energy transition, the necessity of diversification is unarguably necessary. The question is simply to what extent different sources should be used and implemented, which needs further discussion.

While challenges related to infrastructure development, cost competitiveness, and regulatory frameworks remain, the ongoing advancements in hydrogen technologies hold promise for the widespread adoption of hydrogen-based solutions. By continuing to invest in research, development, and deployment of hydrogen technologies, and by fostering the creation of offtake agreements and leveraging the financial incentives provided by section 45V of the Inflation Reduction Act, the global community can unlock the full potential of this clean energy carrier and accelerate the transition towards a more sustainable and resilient energy ecosystem.