Japan’s plan to power homes with hydrogen faces hurdles

Tokyo's Basic Energy Plan says 'for electricity and heating, hydrogen is expected to play a central role'.

Tokyo // Besides promoting hydrogen fuel-cell vehicles, Japan is also pushing the introduction of home fuel cells capable of producing electricity and hot water.

The 2014 Japanese cabinet’s “Basic Energy Plan” (BEP) states: “For electricity and heating, hydrogen is expected to play a central role in the second-generation energy of the future.”

A ministry of economy, technology and industry (Meti) report, published in 2014 and revised in March this year, plans to raise the number of such units from the current 150,000 to 5.3 million by 2030.

The report states the price of a “polymer electrolyte fuel cell” should be reduced from the current subsidised ¥1.42 million (Dh48,697) to ¥800,000 by 2019, and of a solid fuel cell from ¥1.77m to ¥1m by 2021.

Putting the BEP into practice, Meti’s “Strategic Road Map for Hydrogen and Fuel Cells” will be in three phases. Phase 1 plans the exponential expansion of hydrogen use such as household fuel cells (called “Ene-Farm”), fuel-cell vehicles and hydrogen filling stations. Phase 2 plans the construction of large-scale hydrogen-consuming systems such as industrial-scale power stations. Phase 3 will bring about hydrogen production from CO2-free renewable energy such as solar. Currently the dominant technology for direct production is steam from hydrocarbons.

Masashi Hoshino, the hydrogen and fuel cell promotion office deputy director at Meti’s agency for natural resources and energy, says the development and use of Ene-Farm and hydrogen fuel-cell cars and buses will bring about more opportunities for using hydrogen on a daily basis. “Along with this, energy conservation, a stable supply of energy and reduction of the environmental impact of energy use is all expected to result from the promotion of hydrogen use.”

To achieve these goals, Meti says Tokyo is prepared to spend at least ¥9.5 billion on Ene-Farm introduction grants and ¥62bn for hydrogen station deployment subsidies. “Support will also be given to demonstration and R&D,” Mr Hoshino says.

Ali Izadi-Najafabadi, the head of Bloomberg New Energy Finance Japan, says Phase 2 will prove technologically challenging. While various power-plant manufacturers have experimented with hydrogen fuelled turbines, no commercial models have so far been launched. Currently, only Kawasaki Heavy Industries and Mitsubishi Hitachi Power Systems are actively pursuing the technology, Mr Izadi says.

“It remains to be seen whether a commercially viable turbine, competitive with existing natural gas fuelled turbines, can be produced,” he says.

The alternative route of relying on large-scale fuel cells is potentially more viable as manufacturers such as Connecticut’s FuelCell Energy have already shown. Combining fuel-cell system and combined-cycle systems to form a trigeneration system has shown higher energy conversion efficiency on a lab-scale, Mr Izadi says. According to Haron Robson, an Australian electrical engineering and design consultancy, tri-generation is the production of electricity, heat and cooling in the one process.Typically this means a natural gas fired generator producing electricity and heat with the exhaust heat going to an absorption chiller which produces chilled water and hot water. Replacing natural gas with hydrogen would reduce harmful emissions.

“The question here again is whether the technology can be commercialised cost-competitively,” Mr Isadi says.

Phase 3 raises the question of the environmental cost of producing hydrogen. Currently, the cheapest way is either via steam reformation or as by-product of oil refining, neither of which are emission-free methods, Mr Izadi says. However, he points out that using renewable energy to electrolyse water and thus produce emission-free hydrogen is one technologically viable route. “The question, though, is whether the costs of such electrolysis units will come down fast enough to compete with other approaches to renewable energy integration,” he adds.

This approach, dubbed “power to gas”, is heavily supported by Germany already, which has several demonstration projects commissioned. Toshiba also is pursuing this route. In 2014 it launched its H2One hydrogen-based autonomous energy supply system. In March this year, the firm announced it had installed the system, which integrates renewable energy generation and uses hydrogen as a fuel for power generation, in the Phase-2 building of the Henn na Hotel, at the Huis Ten Bosch theme park in the city of Sasebo, in Nagasaki Prefecture.

H2One integrates a photovoltaic power generation system with batteries for storing output power, a hydrogen-producing water electrolysis unit, hydrogen storage alloy tank and a hydrogen fuel cell unit. “In the Resort Model version of H2One installed at Henn na Hotel, this configuration delivers a CO2-free, environmentally friendly solution for hotels and other resort facilities,” the company says.

However, the Japanese government has provided only tepid support, so far only announcing backing for a demonstration project in Fukushima Prefecture, Mr Izadi says.

“To realise Phase 3, the government would actually need to start acting now, and consider regulatory barriers that hinder uptake of such technology,” he says.

Germany’ has set clear targets as part of its long-term energy mix (under the concept of “combined heat and power”), and its s electricity regulator already has targets and supports installations of such power to gas units, Mr Izadi says.

“Japan currently does not have any similar clear targets for contribution of hydrogen to its long-term energy mix, and its electricity market regulation isn’t supportive,” he points out.Christopher Richter, the deputy head of research for CLSA Securities Japan, a Hong Kong brokerage agency, voices one concern about building up a hydrogen infrastructure short-term, mid-term, long-term. To get to the short-term and the mid-term, before achieving hydrogen production primarily from CO2 free renewable energy, from where will the hydrogen be sourced?

“Well, they’re probably going to get it from natural gas,” he says.

The problem with taking the “natural gas as an interim solution” approach is it requires building a vested interest in continuing to supply hydrogen by natural gas, which will necessitate significant corporate cash backing.

“Then, let’s say, you come along to phase 3 – and some people are not going to be happy.”

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