3.3 National-level energy estimation and assessment

3.3.1 R&D Goals

Hydrogen energy is expected to play a significant role in a future energy system when many technologies related to hydrogen energy are combined effectively to constitute "hydrogen economy." This suggests that system analysis from an energy system point of view is indispensable to get plausible perspectives on the commercialization of the technologies being developed under the WE-NET project. The goal of this study is to draw country-level perspectives on production, transformation, and consumption of hydrogen energy. To achieve the goal, simulation studies on future energy systems are to be executed to assess their potential economic and environmental impacts.

The target of the research in FY 1998 is to gain perspectives of hydrogen economy that take into account recent changes in energy circumstances such as the Kyoto Protocol signed at the COP3. The effects of external factors such as energy price, environmental constraints and performance of hydrogen utilization technologies on potential market penetration of hydrogen are examined through simulation studies with the MARKAL as well as a role of transitional secondary energy like methanol.

3.3.2 Results in Fiscal Year 1998

(1) Results of the Preceding Years

The study depends on the MARKAL (MARKet ALlocation) model, which has been developed by the Brookhaven National Laboratory in the USA and the other organizations under an international research project. The model optimizes energy flow of a country taking into account competition among various energy sources and various energy technologies; its input data are energy demand, available primary energy, and performance and expected life of energy technologies, etc. The modifications have been made on the model to accommodate to the study on WE-NET: e.g., extension the planning horizon, incorporation of hydrogen related technologies.

Simulation studies were conducted on the input data obtained by extending the data in IEA/ETSAP (Energy Technology Systems Analysis Programme) over the 21st century. Sensitivity analyses were also carried out on the parameters as hydrogen price, price of fossil fuel, nuclear power capacity, and reduction measures for carbon dioxide emission (including carbon tax).

The study revealed that cut-down of hydrogen cost was inevitable to promote wide use of imported hydrogen. The study also showed that measures for reducing carbon dioxide emission gave an influence on the market penetration of hydrogen although the influence was less significant than the influence of hydrogen price.

(2) Results In FY 1998

  1. Major assumptions for the study

    Assumptions for the simulation study is revised as described in the following considering the Kyoto Protocol signed at the Third Conference of Parties of Framework Convention for Climate Change (COP3) and subsequent changes in energy circumstances:

  • Upper limit of carbon dioxide emission is incorporated into the model based on the Kyoto Protocol: emission of carbon dioxide from 2010 is basically assumed not to exceed 94% of the emission level in 1990.

  • Data on available primary energy (petroleum, etc.), etc. is modified based on the Long- Term Energy Supply and Demand Outlook of the Advisory Committee for Energy.

  • Hydrogen through WE-NET is assumed to be available in 2020 considering the R&D schedule of the WE-NET project.

  • Availability of technology options is revised. Namely, hydrogen fuel cell is included and high temperature gaseous reactor is excluded in the model. The latter is excluded because of great uncertainty in its development.
Flow of hydrogen in the model is depicted in Fig. 3-3-1. The reference price of hydraulic and solar hydrogen is $29.6/GJ (14yen/103kcal) and $56.5/GJ (27yen/103kcal), respectively, as in the previous years.

Various future scenarios in addition to the reference scenario are examined because much uncertainty is inevitable in this sort of a long-term study. The scenarios assume variations in external factors such as fossil fuel price, nuclear power capacity and reduction measure of carbon dioxide as shown in table 3-3-1. Price of hydrogen is varied as a parameter in all the scenarios.

  1. Results of scenario analyses

    As a sample result, primary energy mix and supply-and-demand of hydrogen are exhibited in Figure 3-3-2 and relationship of hydrogen price and imported quantity of hydrogen is depicted in Fig. 3-3-3 both for the reference scenario.

    The scenario analyses reveal:

  • The results for the reference scenario indicate that reduction of hydrogen price below the price obtained by conceptual design is indispensable for hydrogen to be widely used. Even if constraints on carbon dioxide emission is imposed, the situation is similar as far as carbon-free energy sources like nuclear can be expanded.

  • The results for the carbon externality scenario show that market penetration of hydrogen can be large if the externality amounts to $300/t-C. The simulation results for the externality of about $150/t-C bears a fair resemblance to the results for the reference scenario with CO2 emission constraint below 94% of the emission in 1990.

  • The results for the high fossil fuel price scenario show that fossil fuel price (in particular, price of hydro carbon) highly affects market penetration of hydrogen. In addition, when coal becomes more economical than the other fossil fuel due to high appreciation of hydro carbon, possibility of market penetration of synthesized fuel gets larger. Hydrogen fuel may be one of the synthetic fuels. This is partly due to constraints on carbon dioxide emission.

  • The results for the low nuclear capacity scenario suggests that competitiveness of hydrogen considerably gets improved if energy demand continues to increase and expansion of nuclear faces difficulties. This is because supply-demand-balance gets fairly tight and CO2 constraints become difficult to suffice.

  • All the scenarios implicate that hydrogen is introduced not only due to economic viability but due to compatibility to CO2 constraints.
Figure 3-3-4 depicts break-even cost of hydrogen obtained by examining the above studies. The figure suggests that reduction of hydrogen price less than its conceptual design values is indispensable in all the scenarios in order for hydrogen to be widely used. If the price becomes less than about $10/GJ, market penetration of hydrogen can be large because of CO2 constraints. In the case that large externality for CO2 emission, high fossil fuel price, or severe constraint on nuclear expansion will be expected, hydrogen could be introduced with its price of about $20/GJ.

  1. Demand mix of hydrogen

    Effects of performance of hydrogen utilization technologies like hydrogen turbine and hydrogen vehicles on demand mix of hydrogen are examined as well as expected roles of transitional energy sources like methanol. The results reveal:

  • Hydrogen energy is mostly directed to power generation, surface transportation and hythane (mixture to town gas) when hydrogen use becomes viable (see Fig. 3-3-2).

  • Capital cost of hydrogen utilization technologies have to be lower than its break-even-capital-cost; the break-even-cost is determined by the performance of competitive technologies and the value is mostly similar to the capital cost of competitive technologies (see Fig.3-3-5). However, break-even-capital-cost of hythane is not clear since fuel cost is dominant in determining its economic viability.

  • Methanol may be used as an optional energy source in transition from the conventional energy system to hydrogen economy (see Fig. 3-3-6). The figure shows that, because of the assumptions on performance of hydrogen and methanol utilization technologies, hydrogen is mainly used for electric power generation while methanol is mostly used for surface transportation

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