Much of the clean hydrogen industry's focus is on production costs, but transport and preparation for final consumption are key as they can triple or even quadruple final costs, Singaporean gas firm City Energy said.
As an end-user, it is "very important" to look at the specific use case of hydrogen, then study the cost structure and cost drivers, which would determine the final hydrogen cost, City Energy's head of strategic planning Desmond Tay said at the S&P Global Commodity Insights Appec conference in Singapore this week. City Energy is Singapore's sole producer and provider of piped town gas, which already contains around 50pc hydrogen today, although it did not disclose further details about how the hydrogen was produced.
Depending on the production location and the final destination, midstream processes could double or triple costs, Tay said. These processes could include turning gaseous hydrogen into ammonia or liquefying it for seaborne transport, the transport itself, and the conversion back into gaseous hydrogen.
Depending on the end use, further treatment may be needed for last-mile delivery, which together with the transport and conversion processes could ultimately result in a tripling or quadrupling of initial production costs, according to Tay.
Hydrogen can be used across a variety of applications including direct combustion for industrial purposes, co-firing for power generation, and in fuel cells to make electricity or to power vehicles, and some of these uses require additional considerations and costs. For example, hydrogen use in fuel cells requires a very high purity of hydrogen at 99.97pc, Tay said. This means "we need an additional filtration or purification stage, and that itself would increase the cost by 20-30pc," he said.
Ammonia in pole position
Singapore is planning to use clean hydrogen across several of the abovementioned applications and will probably depend heavily on seaborne imports, for instance from Australia, with ammonia set to become the carrier of choice.
"Singapore has taken the view that under the hydrogen strategy... ammonia is going to be the vector, at least for now," said domestic firm Keppel Infrastructure Holdings' managing director of new energy Chua Yong Hwee. This means that the "immediate thing that Singapore needs to develop is an ammonia tank", he added.
Ammonia deliveries present advantages over other vectors, such as liquefied hydrogen or liquid organic hydrogen carriers (LOHCs), as the supply could also be used directly, for instance in shipping and co-firing for power. Singapore is the world's biggest bunkering hub and ammonia is the "most likely bunker fuel" for decarbonising the maritime sector for now, Chua said.
But where ammonia is used as a carrier for hydrogen, additional costs need to be factored in. Singapore would likely receive seaborne ammonia deliveries at Jurong island, according to Tay. If this supply is to be used as hydrogen in mainland Singapore, it would add $1-2/kg of hydrogen for cracking it back and onwards distribution, especially as City Energy's production sites for town gas are located far away from Jurong island, Tay said. Hydrogen use for distributed power generation or in road transport would require delivering it to decentralised locations, he added, noting that City Energy is looking at repurposing existing infrastructure as a mode of last-mile delivery for hydrogen, rather than building a new network which would be more expensive.
Safety first
Ammonia deliveries can also breed safety concerns, Chua noted. "Like it or not, [accidents happening are] just a matter of time," he said. "The biggest concern I have is… do we have the right containment strategy? Do we know how to contain a massive leak of ammonia?"
"If there is a big incident of ammonia, it's going to kill this industry. It's going to put this whole thing back multiple, multiple years."
And while ammonia might be in pole position, some firms are mulling alternatives, with Keppel's data centre subsidiary looking to receive liquefied hydrogen imports from Australia's Woodside Energy, for example.
Singapore still requires extensive development of import infrastructure from committed investors. "Infrastructure development has a long runway, we're looking at an investment of between 15-20 years at a minimum… and that is only the landed point of a specific hydrogen carrier," Tay said.
Pipeline imports could be another alternative, with early stage plans in place for potential piped exports to Singapore from Indonesia and from Malaysia. This could present a cost advantage over expensive seaborne deliveries, especially as it would cut out much of the additional costs for conversion and the associated energy losses. "If a pipeline can work, and the price is right, I think that's the best infrastructure to have," Chua said.
