Distributed Hydrogen Generation: The Ultimate Sustainable Energy Paradigm

Honda FCX Clarity at Hydrogen Fuel Station

For decades, energy experts have been advocating a “Distributed Generation” (DG) model to address our future energy needs. Today, the distributed generation of hydrogen is an attractive and realistic proposition, opening up a free market for transportation fuel. Our legacy petroleum industry mandates centralized control. It’s simply not possible for every gas station or neighborhood to have an on-site, on-demand refinery—and thank goodness for that. Pollution and safety would be even more of a problem than it is today and far harder to regulate. Indeed, we have been struggling with this problem since the beginning of the industrial revolution.

In the United States, the transportation sector accounts for 71 percent of petroleum consumption and 33 percent of our nation’s carbon emissions. With light-duty vehicles (LDVs) soaking up more than half of all transportation energy, an attractive opportunity for DG exists.

The current round of zero emission policies being drafted by forward-thinking governments, including the State of California, are making it possible, for the first time, to envisage a model whereby fuel is made on-site, safely, and without pollution. Welcome to the new paradigm of renewable and sustainable hydrogen by distributed generation. Not only is this goal viable, it can be achieved in under two decades for relatively low cost. The “mythical” hydrogen infrastructure isn’t as far from reality as skeptics would preach. Some energy pundits like to write, bemoaning the cost of new pipelines made with exotic and expensive technology to contain the dangerous and scary hydrogen. A distributed model uses no pipelines. The pipes already exist, and so do the locations. The locations are the 120,000 gas stations and the pipes are water and electricity.

Creating hydrogen on-site from renewable electricity requires only electrolysis equipment and water. At present, hydrogen generation plant represents a significant investment due to the lack of mass-production facilities. This will change as fuel cell electric vehicles (FCEV) become commonplace and the need for hydrogen production rises. Cars need to refuel and the market will meet that demand with investment capital for electrolysis equipment. The more installations, the lower the capital cost of equipment. On-site hydrogen generation eliminates huge polluting refineries, large fleets of fuel-delivery tankers, pipelines, oil spills, and all carbon emissions.

With capital markets supplying the funding, led by consumer demand, it becomes less relevant to calculate the cost of hydrogen infrastructure. What’s needed now is a minor fiscal stimulus to establish a statewide network of one hundred on-site hydrogen generating stations thereby kick-starting FCEV sales. Customers will decide whether these vehicles succeed—and given the excitement surrounding the soon-to-be-released offerings from Mercedes, Honda, Toyota and Hyundai, the future looks promising. Other auto manufacturers such as GM, Nissan and Ford are expected to enter the market in 2017.

Renewable energy can be derived from multiple sources including solar, wind, wave and geo-thermal. Power generators expend capital and build new renewable facilities based on guaranteed future energy purchases. This model ties in perfectly with the expansion of hydrogen refueling stations and the proliferation of FCEVs. It comes back to the same economic argument; cars need fuel—it’s not a discretionary expenditure. Selling more FCEVs drives the demand for renewables, expanding the ratio of clean vs. polluting fuels. The beauty of this system is all the more because it’s market driven. The energy sector is ripe for skyrocketing private investment—both in renewable power generation and on-site hydrogen production. Market driven and pollution free—does it get any better?

Arguments against hydrogen and renewables will continue even as this new paradigm become reality but the following driving factors can’t be ignored:

  • Economics: Renewable hydrogen prices at the pump will start out comparable with gasoline and quickly reduce with economies of scale. Capital will invest in electrolyzers to profit from FCEV refueling.
  • Environment: Fossil fuel pollution and unsustainability are undisputable. FCEVs are three times more efficient than internal combustion engines. Come on folks, we are smarter than this!
  • Impact on society: Silent vehicles with zero emissions bring health benefits, a better quality of life and guilt-free driving.

Logic suggests a resounding thumbs-up for clean, affordable and sustainable hydrogen via distributed generation. In the end, we will have no choice; polluting fuels are finite.