Hydrogen-focused businesses positioning to compete for a share of mining’s massive future non-diesel energy pie don’t see green hydrogen pricing holding them back for long in their efforts to bring commercial mobility and other products onto the market, the 2023 Energy and Mines Australia Summit heard.
While conceding suitable input pricing to enable green hydrogen to be competitive in more applications will take longer in markets such as Australia due to scaling speed, they believe questions about mining’s best future energy course are far from settled.
For green hydrogen, in particular, to play a bigger part in the decarbonisation plans of miners in major markets such as Western Australia, infrastructure and equipment companies would need to be imaginative, brave and resilient, the conference heard.
“You need an OEM provider to come and say, I’m willing to probably take a little bit of a hit on the first project … and probably other companies to take a longer-term view and absorb some of the costs,” ATCO Australia hydrogen and future fuels general manager, Russell James said.
“There are other markets moving faster [on] things like vehicles, fuel cells, turbines … because of carbon taxing, or carbon pricing, and clean fuel standards. So OEMs are looking their first.
“That’s why we’re probably a little bit of a laggard just at this point in time in the formal adoption.
“But we are seeing some green shoots.”
ATCO, part of Canada’s ATCO industrial group, last year inaugurated WA’s first green hydrogen refuelling station at its Clean Energy Innovation Hub near Perth. The venture is backed by iron ore major Fortescue Metals Group. The hub itself was opened in 2019 and received funding from the Australian Government-backed Australian Renewable Energy Agency (ARENA).
Described by politicians as a local “showcase for hydrogen mobility” and underpinned by solar-powered electrolysis, the refuelling facility is said to have provided green hydrogen for ATCO, Fortescue and state agency vehicles, on a small scale.
Private off-grid power company, Blue Diamond Machinery, has “just started to get some traction on the ground” in WA for its EODev (Toyota) hydrogen fuel cell and lithium-ion battery generators, introduced in the market about 18 months ago, co-founder Julian Pitts said at the Energy and Mines Australia Summit (EMAS).
“We’ve got six units here,” he said.
“We started our journey 11 years ago using diesel and over the last two-to-three years we’ve worked hard on our clean energy offer and that’s led by [the] hydrogen fuel cell generator.
“Obviously a fuel cell generator is a lot more expensive than a diesel generator. That’s fine, as long we can demonstrate a saving on operating cost [which is] very easy for us to do with battery systems or hybrid systems, but right now it’s quite difficult with hydrogen.
“Even just doing demonstrations in Perth at the moment we have to bring in hydrogen from Sydney, which is something I’d like to change obviously. The availability and pricing is what we need to see change.”
Ewan Norton-Smith, APAC head of business development for Electric Hydrogen, a US-based manufacturer of hydrogen electrolysers, believes the change is not far away.
“One of the points I think is really important to raise here is that this supply issue in Australia is going to go away over the coming years,” he said.
“We have, thanks to the A$2 billion [Australian Government] Hydrogen Headstart program, large-scale electrolysers [that will be] deployed in the 2025 to 2026 timeline in Australia. So this constraint is a transitory constraint.
“Right now everyone in the industry is really focused around scaling up.
“For the first time there’s … industrial-scale electrolysers, which have a revenue line tied to them, which have a funding model, which are going to get built. So the supply issue that we’ve been facing around the 95% of hydrogen being grey hydrogen is one that will be temporary and will be replaced by green hydrogen.
“Typically in Australia green hydrogen projects have been at the kind of 10MW scale. And those are only just being deployed. What we’re [Electric Hydrogen] doing is going really big – so 100MW units that drive the cost down and make projects more capital efficient; reducing the dollars per kilowatt.
“Outside of scale and capital cost, electrons are critical. We need lots of them.
“They can be variable … but we need them to be really, really cheap.
“Looking at the cost of the electrons over time, we think the solar industry is going to continue to drive efficiencies, for example. The wind industry is going to continue to lower its cost. If there’s a hyper-abundance of variable electrons that’s going to make a good use case for renewable, or green, hydrogen.
“When you look at it fundamentally, if you think that we’re moving into a world where variable electrons are going to be very, very cheap, and firmed electrons are going to be very expensive … and if you believe that those variable electrons don’t necessarily have use cases 100% of the time, and if there’s some curtailment on the grid, and you think that the cost of those electrons can get down to a certain level, then you can do the maths on what the kilogram of hydrogen costs.
“And then a lot of these applications – not all of them – start to make economic sense.
“In the mining industry there are opportunities to use curtailed energy. A lot of sites already have large amounts of installed renewable energy capacity, and there’s a lot of curtailed energy.
“That’s a perfect use case.
“There’s a debate to be had about whether that’s more efficient or whether having hubs within a specific region – hydrogen hubs selling to multiple mines – is ultimately going to the best way to drive cheap green hydrogen.
“In any event, super critical for green hydrogen costs is the cost of the electrons being fed into the electrolysers.
“[In terms of] electrolyser economics, roughly speaking, in Australian dollars, each $10 a megawatt hour change in electricity price has about a 50c per kilogram impact on the green hydrogen cost. So if your electricity cost is $20 a megawatt hour more expensive that’s going to have a dollar impact on your green hydrogen cost.”
US-based hybrid (hydrogen fuel cell/battery) mine truck power-train developer First Mode will pursue the hydrogen hub model, according to CEO Julian Soles. The company has major financial backing and orders for circa-400 deployments of its nuGen systems over 15 years from Anglo American Corp, starting in the second half of this decade. It is building out a North American supply chain, but has a large engineering workshop in Perth.
“In terms of predicting when there is going to be cost parity with diesel, there are so many factors and it’s going to be different from country to country,” Soles told EMAS.
“Some of it will be driven by government, some of it by existing renewable infrastructure.
“It’s really hard to say exactly when, but I do know that, for example, projects that have already priced in and ordered equipment in the US, for example, will be delivering liquid hydrogen at US$7 [per kilogram] … in 2025. So you’d think that there is a really good chance by 2030 we’re going to be much lower and that’s when you to really start to see much more mass adoption and ability to then drive the hydrogen market I believe.”
As well as supplying “zero-emission” haul trucks, First Mode wants to be providing site refuelling, energy management IT and other infrastructure options.
“The whole purpose of pushing the hydrogen solution is [mines] don’t have to change too much,” Soles said.
“When you talk to the other solutions … trolley systems and so on, you do have to make a change to infrastructure. We went in to try and not do that.
“We don’t really want to do hydrogen production on a mine site.
“Our initial target is to go in with a hub model so then we can build to a sufficient scale that makes sense and serve multiple mines with smaller amounts and as they get used to the technology and grow you can then scale up much more easily.
“I think that’s a much better model … rather than say to a mining company, you need to invest a couple of hundred million dollars in an electrolyser because you really should do this scale to make it worth it. And they’re like, the technology is not proven yet … and they end up saying, no, I’ll wait.
“And then no-one is going to start.
“Every time we delay we can’t get going to bring down the cost.”
ARENA investment director Zoe von Batenburg said the agency was optimistic rapid development of large-scale renewable hydrogen production in Australia could narrow the commercial gap with alternatives sooner than the mid-2030s timeline being projected.
“The key to accelerating the point at which that crossover happens is around getting to scale,” she said.
“The objective of that [Hydrogen Headstart] program will be to try to fast track large-scale deployment projects to help see that cost parity happen sooner rather than later and build a competitive hydrogen industry.
“In terms of proving up [broader] use cases, we really need to be doing the work now on the engineering, the technical feasibility, the pilots and the trials. We need to get them out deployed so we’ve got real world data … and share that information with the supply chain, the OEMs, the facilities managers.
“It is critical to be able to get to that point where we’ve got deployments happening … to be able to reach the decarbonisation targets that we’re all aiming for.”
The conference heard that despite more current investment and effort from miners, and incumbent equipment manufacturers, flowing into battery-based replacements for diesel vehicle power trains, and “dynamic energy transfer” systems, hydrogen-based options remain on the table.
“Hydrogen underground is going to be an interesting thing,” said Rob Derries, head of gold major Gold Fields’ Australian innovation and technology unit.
“It’s certainly something that we’re looking at.
“We’re looking at all of our zero-emission material movement options, so certainly not ruling out hydrogen.”
Rio Tinto’s John Mulcahy said “hydrogen at the moment isn’t our preference” for surface haul-truck applications. “But that doesn’t mean that it’s dead by any means.”
“What we’re looking at primarily is the efficiency of the cycle,” the major’s surface mining and technology principal advisor said.
“To go from charging, discharging a battery at a powering station, versus powering an electrolyser, creating hydrogen, liquifying or compressing it and then converting back into a fuel cell … the hydrogen cycle is about a third as efficient.
“So our initial view is, let’s run with batteries because of the higher efficiency, the lesser impact on our infrastructure and distribution systems.
“And ultimately there might be a scenario where hydrogen is being piped past the mine gate, in which case it might become a much more attractive option.”