Thursday, July 22, 2021

Hydrogen in Southland?

New Zealand wants to move to more renewable electricity. But there's a barrier: the Tiwai Point aluminium smelter. It sucks up 13% of our total electricity supply, but its continued threats to shut down create ongoing uncertainty about demand, which puts people off building the additional renewables we need. But it seems that Tiwai's suppliers, Meridian and Contact, have a solution: just build something else:

New Zealand could become the world's first large-scale producer of green hydrogen if Contact Energy and Meridian Energy's plans pan out.

The two big power companies are looking to develop the world's largest green hydrogen plant in Southland, once the supply agreement with Aluminium Smelters for Tiwai Point comes to an end in late 2024.

"New Zealand has a key competitive advantage, as the renewable electricity available from 1 January 2025 could produce green hydrogen at an internationally competitive price point," a report by global consultancy McKinsey & Co said.

Hydrogen is not a very good fuel, but it may have some uses in our future energy system depending on which ways heavy vehicles go. It is a useful chemical feedstock, and that's where its value actually lies: rebuilding a chemical industry that isn't dependent on gas. But it can be made anywhere there is power and water, which suggests that there isn't actually a lot of "competitive advantage" to be had. But ultimately, that's all a problem for Meridian and Contact and whoever goes into business with them.

Obviously, the plan lives or dies on whether Tiwai actually shuts down (something which looks unlikely this month). But by talking about it, Meridian and Contact have signalled that they are committed to ensuring that electricity demand stays high, which should in turn help encourage that investment in renewables that we need.