This man has the world’s cleanest fuel

Exponential Investor is a big fan of renewable energy technologies. Solar is getting ever-cheaper – roughly halving in cost every seven years. This means it will soon become the world’s most cost-effective energy source – and will therefore become dominant.

Everybody likes cheap energy. Why pay more, if solar is cheapest?

There’s a catch: you can’t use solar energy directly, when the sun isn’t shining. This means there’s a huge industry set to grow around storing solar energy. You’ll probably be familiar with Tesla’s Powerwall batteries. They are an important piece of the jigsaw – and they’re great for storing daytime solar energy, to be used in the evenings.

But batteries have a big problem

If we build the right amount of solar generation for summer, we’ll end up with too little for the winter. If we build the right amount for the winter, we’ll end up with a huge surplus in summer. Obviously, the best way forward is to build the right amount of solar for an average day – and find some way of storing surplus summer energy for winter use.

Batteries are far too expensive to bridge this seasonal gap – and we need a completely different solution. The company were talking to today is a potentially vital piece of that renewable energy jigsaw. ITM Power’s power-to-fuels technology is well placed to help us to time-shift energy from periods of abundant supply in summer, to periods of abundant demand in winter.

In the short term, however, the firm is more focused on providing hydrogen for transport fuels. That’s great news for investors – and we’ve been pushing diesel as our Big Short. All around the world, municipalities are rolling back diesel freedoms, pursuing better air quality instead. Diesel’s a particularly dirty fuel – and it will soon have its last gasp in urban areas.

The way is clear for hydrogen vehicles

Already a familiar sight in London, hydrogen-fuelled vehicles have practical advantages over batteries. They are quicker to refuel, and have superior range. If you’re a sales rep or a long-distance lorry driver, you’re probably not in the market for today’s generation of electric vehicles. That’s why hydrogen fuel could allow you to finally ditch a dirty diesel engine.

I’ll now hand you over to Graham Cooley – who will tell you more about how the AIM-listed ITM Power will fit into the transport revolution of tomorrow, and the electricity revolution of the next decade.

AL: Why should the world adopt hydrogen vehicles?

GC: The world’s dependence on fossil fuels is hugely expensive, creates vast emissions and is unsustainable – yet demand only set to increase as countries develop, and population increases. Hydrogen fuel is the cleanest fuel available. It can be generated using surplus renewable electricity and water using an ITM Power electrolyser. This offers a renewable clean fuel, which can be made on-site at the point of use, eliminating the need for transported fuel deliveries. To reduce emissions, hydrogen for fuel cell electric vehicles (FCEVs) is now rising up the agenda of several countries, with significant government projects enabling the early roll-out of hydrogen infrastructure.

AL: Where are the hydrogen refuelling stations in the UK?

GC: ITM Power currently has four hydrogen refuelling stations (HRS) operating in the UK and a further three will be opened by the end of 2017. Currently we have one in Sheffield on the Advanced Manufacturing Park, another at Teddington’s National Physical laboratory, one in Cobham (Shell forecourt just off the M25), and our latest at the Centre for Engineering and Manufacturing Excellence, Essex. The next three stations will be located in Birmingham, Swindon and Beaconsfield services.

AL: Is Hydrogen safe?
GC: Hydrogen is the safest fuel. If a leak occurs the hydrogen is gone in seconds because it is much lighter than air. The safety record of hydrogen as a fuel or compared with batteries is a very positive attribute to drive adoption.

AL: How do you refuel?

GC: Very much the same as we do now with petrol or diesel. Drive up to the station, pop the nozzle into the vehicle, press the screen to fill, the station will run safety checks and then refuelling will commence. From empty, the refuelling process will take 3-5 minutes – unlike battery electric vehicles, which can take up to 30 minutes even on a supercharge setting.

AL: How much does it cost to fill a car with hydrogen?

GC: ITM Power has hydrogen fuel contracts in place to supply hydrogen at £10 per kg, so around £50 per full tank.

AL: How many miles will the car go?

GC: Depending on the vehicle, a full tank of hydrogen should take you 300-400 miles. FCEVs are long range vehicles. Unlike with battery electric vehicles, consumers experience no range anxiety.

AL: How do FCEVs work?

GC: The FCEV is an electric vehicle with a downsized battery, a hydrogen tank and a fuel cell. Oxygen is taken in through air vents at the front of the vehicle which meets the hydrogen to generate electricity, which in turn powers the battery. The by-product of this process is just water vapour.

AL: How does a fuel cell stack differ from a battery?

GC: Once all of the electrolytes within a battery have been converted, the battery will either have to be recharged or replaced. By contrast, a fuel cell can continually be provided with fuel from external sources – producing power indefinitely.

AL: What are the infrastructure advantages of hydrogen?

GC: There are now many thousands of battery electric vehicles on our roads, but providing an electricity infrastructure that is capable of supporting a large number of these cars without causing excessive peak power demands is a major challenge. The electrolysers at ITM Power’s HRS can be operated at off-peak times. Surplus renewable electricity can be used to produce hydrogen, which is stored and dispensed to FCEV whenever their drivers decide to refuel. This decoupling of hydrogen production from consumer demand is extremely helpful to the electricity industry. The process is known as grid balancing.

AL: What about longer term hydrogen power-to-gas (P2G) energy storage

GC: Power-to-gas is the process of converting surplus renewable electricity into hydrogen – and its injection at low concentrations into gas distribution networks. Power-to-gas offers two distinct value propositions. ITM Power’s electrolysers provide the fastest (sub-second) response to electricity grid operators for balancing purposes and a “green” gas stream to gas grid operators. The gas grid has an inherently large energy capacity and is well established. Gas grid utilisation by the power-to-gas approach provides flexible services to the electricity grid. This makes good use of existing assets and is preferable to deploying battery storage. ITM Power has supplied its HGas electrolyser units in several power-to gas projects.

I think hydrogen is the future of power storage. Do you agree?

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Andrew Lockley
Exponential Investor

Category: Energy

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