# Presentation: 718614

## Regional Variation in Hydrogen Costs to 2050

- Presentation by
- Margaret Singh
- Argonne National Laboratory
- Center for Transportation Research
-  to
- NREL Energy Analysis Seminar Series
- July 8, 2004

## Presentation Based on Regional H2 Model Developed for PBA

- Analysis conducted for:
- Phil Patterson, PBA (Planning, Budget and Analysis)/EERE/DOE
- Analysis conducted by:
- Margaret Singh, ANL/CTR
- Jim Moore, TA Engineering, Inc.
- Bill Shadis, TA Engineering, Inc.

## Project Purpose

- Estimate regional variation in H2 costs for use by EIA
- EIA currently uses a single H2 price for all U.S. Census Divisions (“regions”) in NEMS
- EIA staff indicated they would use regional price estimates in NEMS if they could be developed
- Variation in H2 costs (production *and* distribution) assumed to be a substitute for variation in prices
- Identify the major analytical issues associated with developing regional H2 cost estimates

## Methodology

- For a scenario of significant H2 demand by fuel cell vehicles (FCVs) in use in the U.S., estimate regional demand
- 9 regions, with the 9th disaggregated into Contiguous Pacific, Alaska and Hawaii
- Estimate H2 production by region/production and distribution pathway/resource fuel
- Estimate H2 cost by region/production and distribution pathway/resource fuel
- Integrate into Regional H2 Model (Excel spreadsheet)

## U.S. Census Divisions (“Regions” in This Analysis)

- MA and  WSC

- SA and Pacific

- D.C.

- WNC

- ESC

- NE and Mountain

- ENC

**U.S. Census Divisions (“Regions” in This Analysis)**

## Methodology: Regional Demand Estimates

- Use VISION model to estimate H2 demand for a scenario (GYOW) with following assumptions:
- FCVs start in 2015
- FCVs are 50% of light vehicle sales by 2035 where they plateau
- GYOW is one of scenarios used in DOE/NRCan’s 2050 Transportation Study
- H2 demand for scenario is ~6 Quads (42 million metric tons, 45 billion GGE) by 2050
- H2 allocated regionally according to current gasoline sales

## Methodology: Regional Demand Estimates (cont’d)

- For each region, estimate urban vs. rural FCV H2 demand
- Use U.S. DOT estimates of VMT by urban and rural area and by road type to estimate H2 demand
- Assume all FCV urban travel requirements (VMT) are met by 2020
- Phase in FCV use so that eventually FCVs are used throughout rural areas
- 2020, rural interstates only (8% of LVs total travel today)
- 2030, 24% of all FCV travel
- 2040, 40% of all FCV travel (like today’s LVs)

## There Is Substantial Regional Variation in Rural Travel

## Methodology: Regional Production Estimates

- Key assumptions:
- Each region produces sufficient H2 to meet region’s demand
- Both centralized and distributed production will be in use to 2050
- H2 for urban travel is served by centralized production (includes market-based production)
-  H2 for rural travel is provided predominantly by distributed production
- Our Base Case assumes that 50% of all rural travel will be served by distributed production

## Methodology: Regional Production Estimates (cont’d)

- Key assumptions (cont’d):
- Energy resources used to produce H2 depend on region-specific resource availability
- Natural gas use phased out by 2050 (DOE program goal) in Base Case
- Regional resource characterization derived from a number of sources: EIA, NREL, ORNL

## Examples of Regional Resource Characterization in Regional H2 Model 

- Resource availability relative to other regions
- 	Blue: High
- 	Green: Good
- 	Red: OK
- 	Yellow : Low

## Assumptions Used to Allocate Resources Regionally

- For centralized production
- Natural gas phased out by 2050, but longer use in more highly rated regions
- Up to 5% of current electricity sales can be used to produce H2
- Nuclear not used until 2030 and limited to a maximum of 25% of centralized production in a region
- Coal and renewables split the remainder, but weighted according to relative strengths in a region
- Renewables split into biomass, wood and solar per AEO’s 2025 projection for each region
- For distributed production
- Natural gas phased out by 2050
- Remainder is electrolysis

## Final Shares of H2 Production for GYOW Scenario for U.S.: 50% Case

## Final U.S. H2 Production Volume for GYOW Scenario: 50% Case

## Methodology: Regional Cost Estimates

- Used methodology developed by SFA Pacific, Inc. to develop regional cost estimates for:
- Centralized production, delivery and dispensing of H2 from SMR, coal, biomass and electrolysis
- Distributed production technologies (SMR and electrolysis)
- Replicated original estimates and then modified
- Technological improvement assumed over time
- Evolution of delivery infrastructure assumed
- Wind, solar and nuclear costs estimated based on assumptions about the relationship of their costs to the costs of other technologies

## Methodology: Regional Cost Estimates (cont’d)

- Key assumptions for centralized production and delivery
- Same plant size for all technologies (150K kg/day)
- Process efficiencies improve over time towards H2 Program goals
- Initial distribution by truck, then by pipeline generally
- Key assumptions for distributed production
- Number of H2 refueling facilities eventually will be similar to number of current gasoline stations in rural areas to meet significant H2 demand
-  We estimated 44,200 stations in rural areas now
- Variation in station size contributes to differences in regional costs

## Regional Variation in Size and Costs Estimated for Rural H2 Stations:(Cost = Cost of Distributed H2 Production from Natural Gas, 2050)

## Example of Centralized Production Costs 

## Results: Delivered H2 Costs Decline Over Time for Almost All Production Technologies and Delivery Methods (50% Case, U.S.)

## Results: Average H2 Costs Vary Between Regions and Over Time: 50% Case

## Sensitivity Analyses Produced a Range of H2 Costs 

- Greater levels of distributed production may be required in rural areas than the assumed 50% of our Base Case
- Ran a case assuming all (100%) rural VMT is served by distributed production
- Goal of getting off natural gas may be unrealistic
- Ran sensitivity cases assuming continued significant use of natural gas for distributed production

## Final Delivered H2 Cost Estimates for GYOW: U.S. 

- 0.7 quads natural gas

- 1.5 quads natural gas

## Summary of Key Analysis Issues Identified in This Study

- How much H2 will need to be provided in rural areas and how much of this H2 will have to be provided by distributed production?
- Need better understanding of today’s rural fuel market:
- Proportion of gasoline purchased in rural areas
- Is VMT a good surrogate for fuel sales?
- Number of rural gasoline refueling facilities by volume dispensed by density or land area
- Number of rural interstate refueling facilities and distance between them
- Distances now traveled for fuel
- Recent survey says 1.4 miles or 70% further than in urban areas

## Summary of Key Analysis Issues (cont’d)

- How much H2 will need to be provided in rural areas (cont’d)
- Should the DOE program assumption of “no natural gas use” by 2050 be reevaluated in the context of distributed production?
- Distributed production via electrolysis appears expensive
- What other options are there for distributing H2 to rural areas that might reduce costs?
- Might distributed production be a significant contributor for a long time to urban FCV H2 demand?

## Summary of Key Analysis Issues (cont’d)

- How realistic is it to use regional resource fuel availability as a substitute for regional supply curves to estimate regional resources used to produce H2?
- The analysis assumes each region is self sufficient.  What interregional trading might take place?
- H2A is developing costs estimates which can be used to update the cost estimates here.  But H2A costs are not regional.  Are the regional variations developed here reasonable to apply?

## Summary of Key Analysis Issues (cont’d)

- FCVs will likely be phased in in different regions.  What is the likely sequence? We suggest:
- Contiguous Pacific and Hawaii
- New England and Middle Atlantic
- East North Central
- South Atlantic
- West South Central
- East South Central
- Mountain, West North Central and Alaska
- What will be the effects of a regionally diverse expansion of extraction and harnessing of natural resources to produce H2?
- Air, water, land use

## Next Steps

- Have given EIA regional H2 cost estimates that assume 50% of rural H2 demand is provided by distributed production and natural gas use is phased out
- EIA will use these costs in NEMS modeling
- Are revising regional delivery costs to better account for regional differences in shipment distances and pipeline construction costs (See next slide)
- Will incorporate H2A cost estimates
- Are examining fuel sales in rural areas to determine if they match VMT
- May modify model to allow use of distributed production in urban areas to meet significant demand

## Potential revisions to regional delivery and dispensing costs: range of regional variation illustrated