Clean Energy Archives - Adaptive Capability

4 June 2021 By David McEwen

Getting Off Gas – Commercial Buildings

In the last post we looked at the many reasons Australia needs to kick its methane gas habit, including health, climate, cost and jobs concerns. In this one we drill into de-gassing commercial buildings. The latest version of the Green Building Council of Australia’s GreenStar rating tool denies its highest ratings to commercial office buildings that cannot demonstrate that they are “fossil fuel free.” That is, that they do not consume gas or other fossil fuels on premises, except for backup power generation.

Photo by **Logan Kirschner** from **Pexels**

Major institutional property investors have already changed projects mid-construction to design-out gas and are reviewing their portfolios to determine the most cost effective pathways to replace gas plant in existing buildings.

Heating, hot water and cooking are the three main uses of gas in commercial buildings.

Cooking Without Gas

Electrifying cooking is pretty straightforward once chefs are convinced of the benefits of induction cooking, with its instant heat, fine control, easy to clean surfaces, and efficiency. There are even commercial grade induction units suitable for wok cooking, with large concave elements to provide even heat. The spatial footprint for induction appliances is identical; it’s just a case of getting the power there (more on that in a moment).

Heating and Hot Water

Replacing boilers and other heating and hot water plant may be more difficult. Their electric equivalents, heat pumps, use the same principles as a reverse cycle air conditioning unit, and typically require outdoor and indoor units, potentially creating spatial and even structural challenges in terms of where they can be situated. Council authority approvals are often required if adding external plant due to visual and acoustic impacts to neighbours, unless it can be sited within an existing recessed external plant area. Some buildings use instantaneous gas units for water heating, which have a very small form factor; heat pump systems may require additional bulky and heavy tanks. Pipework may require re-routing.

Power Impacts

Then there’s electricity. A commercial building’s power bill has three main parts to it:

Consumption, charged on a per-kWh basis, often with time of day and/or aggregate consumption charges;
Maximum demand, charged based on the highest electricity demand in kW during the year; and
Fixed network and statutory charges.

When building plant is electrified, both consumption and maximum demand patterns will change. While the gas bill will fall, it’s critical to model the impact on electricity over the course of the year. If maximum demand increases, this will both increase those costs, but could also result in the building requiring a larger feed from the electricity distributor (if one is readily available given local network constraints – we’ve seen examples where the distributor has offered an upgrade providing the customer provides the capex to run new cabling from substations up to tens of kilometres away). Meanwhile, daily and seasonal consumption patterns and aggregate electricity supply will increase.

And it’s not just the supply to the building that might need to be upgraded. The capacity of the main switchboard, sub-mains cabling running to each floor, distribution boards serving the relevant plant rooms and kitchen areas all need to be reviewed and may require modification.

Fortunately, due to seasonal variability between major building energy uses, building electrification may be possible without increasing maximum demand, and can be cost effective in conjunction with normal plant replacement cycles. However, it requires careful modelling and effective design to ensure costs don’t go through the roof.

One Size Doesn’t Fit All

Whereas most vehicle designs are mass-manufactured and it is often possible to design an electrification retrofit kit that can be rolled out at scale, every commercial building is unique given the original architects’ and engineers’ proclivities, plus differing block sizes and planning constraints. The arrangements and sizing of plant rooms, pipe and cable risers, and of course the various building systems (electrical, mechanical and plumbing) varies considerably from building to building.

Unfortunately, there’s no “one size fits all” solution for removing methane gas uses, and it’s critical to use experienced engineers to ensure electrification upgrades are efficient, cost effective and reliable. And when you’re playing with critical building systems, capable project management is also a must.

4 June 2021 By David McEwen

Getting Off Gas

Australia has a gas problem. Not the type that comes from eating too many beans, but the stuff that’s pumped out of the ground, into our homes and factories, and onto ships for export. I’m talking about fossil methane, known better by its marketing name, “natural gas”.

Little Good About Gas

There is little good to say about fossil methane.

Exposure to it is bad for our health. Gas stoves and other un-flued gas appliances in homes are a leading cause of childhood asthma, amongst other conditions. When gas is vented or leaks from pipes or appliances into the atmosphere (which modern measurement techniques are showing happens far more extensively than had been assumed) it acts as a potent greenhouse gas, heating the planet planet at 86 times (or more) the rate of carbon dioxide (which itself is emitted when methane is combusted).

Extracting methane is increasingly expensive and environmentally harmful. The days of cheap gas from sticking a well into Bass Strait are over, with those supplies dwindling over the next decade. As such, gas exploration companies have turned to unconventional methods such as Coal Seam and Shale Gas, with or without so-called fracking (in which a dangerous cocktail of chemicals is pumped deep into the ground to fracture the reservoirs). These processes are relatively expensive; involve drilling a patchwork of hundreds of wells interconnected with access roads (which destroy bushland, animal habitat and encroach on farmland); produce salt and other waste streams; can irrevocably compromise artesian water supplies and may contaminate streams and rivers.

Another factor that has pushed up domestic gas prices was the granting of rights to extract, liquefy and export fossil methane as LNG. Traditionally Australians paid less than international markets for our gas. Not anymore. That has reduced the competitiveness of Australian manufacturers (many of which have traditionally relied on cheap gas for process and high heat applications or as a feedstock) and pushed up energy prices for householders. The gas industry itself is far from critical to Australia’s economy. Being capital intensive, it sustains fewer jobs than just one of the major banks, even allowing for the LNG export market, and has been very effective at claiming substantial subsidies while minimising its taxes and royalties.

Electricity generated using gas is now significantly more expensive than renewable power, even allowing for the costs of batteries or other forms of storage (that provide continuity for variable solar and wind generation sources). Renewables and storage projects (including longer form storage such as pumped hydro) have pushed down wholesale electricity costs over the last few years are now being deployed at significant scale: more than what is necessary to accommodate forthcoming coal plant closures.

And with the International Energy Agency – once a bastion of the fossil fuel industry – now advising that in order to limit warming to no more than 1.5^oC and meet the objective of the Paris Climate Accord, no new coal, oil or gas developments can be made. No mines or wells. No new power plants. No new industrial uses. Many of Australia’s major trading partners are starting to take climate action very seriously so it is likely that, as has already happened with coal, the market for our LNG will rapidly peak and decline.

De-Gassing is Already Underway

As such, it’s high time Australia commenced a transition away from gas. How can this be done?

Of the gas extracted in Australia, nearly three quarters is exported. Domestically, gas is used in four main areas [1]:

30% (and declining) is used for electricity production
28% in manufacturing and non-LNG mining
27% in conjunction with the production of export LNG.
15% in residential and commercial buildings.

The good news is that domestic gas use is in decline. The Australian Competition and Consumer Commission (ACCC) noted in 2021 that the Australian Energy Market Operator (AEMO) “has lowered its demand forecast by 77 PJ per year on average,” – about 6.7% of ex-LNG domestic demand [2]. Why? Because gas has become relatively expensive as producers have pegged prices to international markets and cheap conventional supplies have depleted. As a result it is being used less in electricity production as it is supplanted by cheaper renewables (which are increasingly firmed with grid scale batteries or other forms of dispatchable storage).

High gas prices have also forced some manufacturing offshore, and there are opportunities to electrify process heating uses of methane. Green hydrogen (renewably produced, zero emissions) may in future provide an alternative to methane for high heat and some feedstock uses, but it is likely to remain uncompetitive in the medium term unless a carbon price was to be reintroduced.

In buildings, it is already more cost effective to fully-electrify new builds, and is often economical to switch plant or appliances to electric alternatives at their end of life. We’ll look at this in more detail in a future post.

[1] Derived from https://www.energy.gov.au/sites/default/files/Australian%20Energy%20Statistics%202020%20Energy%20Update%20Report_0.pdf , Figure 2.3

[2] https://www.accc.gov.au/system/files/Gas%20Inquiry%20-%20January%202021%20interim%20report_1.pdf, p29

15 October 2020 By David McEwen

Is hydrogen in buildings the right approach?

83 years after the Hindenburg disaster highlighted the dangers of this highly flammable and explosive gas, hydrogen is now being touted as an energy saviour that will help humanity reduce its greenhouse emissions to avert catastrophic climate change. There’s a lot of talk and a growing investment pot, but not all of it is realistic or beneficial in helping countries achieve net zero decarbonisation targets.

Hydrogen is the lightest gas; colourless, odourless, and an excellent energy carrier: around three times more so than natural gas (methane, a fossil fuel) on a weight for weight basis. When burnt, its only emission is water, with no greenhouse gases or other toxins released.

On the other hand, in terms of energy density (per litre) it is considerably less efficient than natural gas and oil, and it involves a number of technical challenges to handle, store and transport safely and efficiently for different applications. Nevertheless it’s already used at reasonable scale in industry, mainly for applications like fertiliser production and refining petroleum products. Perhaps surprisingly, on many measures hydrogen is considered safer than methane or petrol. [1]

Where Does Hydrogen Come From?

Due to its tendency to bond with other elements, pure hydrogen (H2) is typically not found in abundant quantities either in the atmosphere or underground – it has to be made, using chemical processes that consume energy and, depending on the method, may involve significant greenhouse emissions themselves. And, it’s currently relatively expensive.

Those seeking action on climate change have their hopes pinned on hydrogen produced by splitting water molecules into their component H2 and O parts using electrolysis. Kids can do this at home using two conductors placed in a cup of water and connected to a battery. Bubbles of hydrogen form at the negatively charged cathode, while oxygen collects at the positive anode. Commercial electrolysers are improving rapidly in cost and performance.

If the electricity for the electrolyser is sourced exclusively from a renewable source (such as a wind or solar farm) then the hydrogen is known as “green”: it involves no operational emissions in its production or use. Electrolysers at large scale could provide a valuable demand response solution for the grid, by skimming excess renewable generation, or bespoke wind/solar farms could be established near production sites (see https://asianrehub.com/ for one such example).

(Of course, if processes involved in its transportation and storage create emissions, then it may not be a truly emissions free source. It also consumes a lot of fresh water, but so does the extraction and processing of fossil fuels and their use in electricity production.)

On the other hand, most of the hydrogen produced today comes from a process called steam methane reformation (SMR) using fossil gas; another method involves coal gasification. Both of these approaches produce significant greenhouse emissions.

Some (including the Australian Government in its recently released Technology Roadmap [2]) argue that SMR with carbon capture and storage (CCS) – i.e. trapping and burying the greenhouse emissions deep underground) can produce low emissions hydrogen, referred to as “blue”.

However:

CCS technologies are relatively unproven and in any case do not trap 100% of emissions;
CCS consumes additional energy, which would itself need to be renewably produced; and
the extraction and transportation of the fossil methane to the hydrogen production facility involves significant “fugitive” emissions of methane, a greenhouse gas 86 times more potent than carbon dioxide.

Perhaps they call it “blue” because its emissions reduction outcomes are pretty sad compared to green hydrogen.

What should hydrogen be used for?

Currently, fossil methane (marketed as natural gas) has a wide range of applications including electricity production; vehicle fuels; many industrial processes, including where high heat is required; plus cooking, space and water heating in homes and commercial buildings. Theoretically, green hydrogen could be used for most of these (apart from industrial processes that rely on the specific chemical composition of methane or other hydrocarbons).

Hydrogen in Electricity Production
Does hydrogen have a place in electricity production? Renewable electricity generation supported by batteries and other storage systems can replace most use of gas (and coal) in the grid (much more cost effectively than hydrogen). There is likely to still be a need for dispatchable generation for odd times when wind and solar under-produce for multi-day periods depleting battery and pumped hydro storage capacity. A well designed renewable grid will limit but probably not eliminate those occurrences, and as we’ll see the grid is expected to grow significantly over the next few decades due to electrification. For a fully decarbonised grid, we will likely need green hydrogen turbines (as production costs become competitive) to fully phase out coal and fossil gas generation. For the foreseeable future however, hydrogen is likely to be relatively uncompetitive against fossil methane for such peaking requirements.

Hydrogen in Transport
Transport falls into two camps. The vast majority of personal transport needs will soon be able to be cost effectively met by battery electric vehicles, with hydrogen fuel cells remaining uncompetitive. Given the enormous advances in technology and manufacturing scale, BEVs are expected to be available before mid-decade for the same or lower cost of an equivalently featured internal combustion engine (ICE, i.e. petrol or diesel) car. They will have battery ranges more than equivalent to similarly sized ICE vehicles.

At that point (and assuming fast charging infrastructure matches uptake), only enthusiasts and those in remote parts of the country would buy an ICE vehicle given the much lower running costs of BEVs (charging costs a fraction of filling a tank, and with far fewer moving parts the outlook is bleak for motor mechanics). Charging a national fleet of BEVs is expected to increase grid demand in the order of 20%. [3]

Hydrogen fuel cell personal vehicles could gain a small foothold in remote communities given their ability to carry additional fuel, particularly if sales of ICE vehicles are banned and hydrogen refuelling infrastructure is established.

Conversely, for heavy transport, including buses, trucks, un-electrified trains, and shipping (but perhaps not aircraft), green hydrogen is emerging as a sensible way to go, cost effective given the emergence of a network of refuelling depots and once its cost drops a little more, as it already has with growing scale and experience. The Australian government has set a target of A$2 per kilogram, at which point it is expected to become competitive with liquid transport fuels. According to UNSW research it’s currently in the $4-8 range [4]).

In the case of shipping, green hydrogen converted to ammonia (another fuel that is emissions free when burnt) may be a good substitute for the heavy (and highly polluting) fuel oil that is currently used. Ammonia produced in this way is more energy efficient than current processes and can also be used in other applications such as fertiliser production (currently a major source of emissions associated with agriculture). [5]
Suitable replacements for aviation fuel are more problematic. Battery powered planes may work for short haul commuter flights in the future, but hydrogen’s density issue may prevent it from replacing avgas. Synthetic carbon neutral fuels — which green hydrogen might play a part in manufacture of — may be the solution here.

Hydrogen in Industry
In industry, replacing natural gas and coking coal with hydrogen for a range of high heat applications including major emitters steel and cement offers great potential if the cost of hydrogen falls or carbon pricing is applied to traditional processes.

Why Hydrogen Doesn’t Make Sense In Buildings

For both residential and commercial buildings, replacing fossil methane with renewable hydrogen does not make sense for three key reasons:

1. To be competitive with gas for in-building applications, hydrogen would need to be significantly cheaper than is predicted for the foreseeable future. And that’s with domestic gas prices having climbed in Australia since the emergence of the LNG export market. Even if hydrogen prices reach US$1 per kg, it remains relatively uncompetitive with fossil gas, particularly in the absence of a carbon price. [6]

2. Electric substitutes, generally with superior energy efficiency, can replace gas appliances in both homes and larger buildings. There is no economic case for expensive hydrogen to be used in buildings when electricity is available. As the emissions intensity of electricity generation continues to decrease with greater renewables penetration, neither fossil methane nor hydrogen can compete.

3. Above about 10% concentration, hydrogen in the existing fossil methane transmission network (made of high tensile steel) will make the pipes brittle. While the local distribution network has mostly been replaced with HDPE pipes, which are acceptable for hydrogen use, many appliances in buildings will need to be adapted or replaced to cope with for high concentrations of hydrogen.

The ACT government has already introduced mandates for new subdivisions, resulting in the first intentionally gas-network free suburbs. A number of recent commercial building projects have announced net zero targets, requiring all energy consumed to be fossil free. In such cases, fossil gas has been designed out in favour of all electric building systems and power contracted from renewable generators. This trend is expected to grow rapidly as more companies announce plans to achieve carbon neutrality.

What Future for the Gas Network?

If hydrogen in buildings doesn’t make sense, what is the future for the fossil gas network?

Proponents argue that there is merit in starting to inject “clean” hydrogen into the existing gas network. The NSW Government has set a target of 10% green hydrogen in the network by 2030. Australia’s Chief Scientist, Professor Alan Finkel, believes this early use of hydrogen will allow production to scale up over the decade before “pure” hydrogen applications can be rolled out at scale, providing much needed learning opportunities.[7]

We note, that unless there is a clear signal regarding the future of the gas network (i.e. its path to net zero emissions), blending hydrogen with fossil gas will slow down the uptake of electrification in buildings and lead to investment in gas-based plant that could become stranded assets as policies shift to achieve decarbonisation targets. Since going much beyond 10% concentration of hydrogen will require costly upgrades to transmission and building plant (as well as a material impact on energy prices), it is essential that government policy is resolved to provide investment certainty.

Hydrogen is clearly in our future as a vital part of measures to achieve net zero emissions. A pure hydrogen gas network will be required, but it can be much smaller and more distributed than the current fossil gas grid. Rather than serving millions of buildings, it will only need to connect local hydrogen supply points (of which there will be many given the distribution of renewable energy generation), with connections to industrial and generation users, heavy transport vehicle fuelling stations and export terminals, collectively numbering in the hundreds or thousands.

[1] For example, https://blog.ballard.com/hydrogen-safety-myths
[2]https://www.industry.gov.au/sites/default/files/September%202020/document/first-low-emissions-technology-statement-2020.pdf
[3] https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Electric_Vehicles/ElectricVehicles/Report/c03
[4] https://newsroom.unsw.edu.au/news/science-tech/how-green-hydrogen-can-become-cheap-enough-compete-fossil-fuels
[5] https://arena.gov.au/projects/hydrogen-to-ammonia/
[6] https://reneweconomy.com.au/renewable-hydrogen-to-undercut-gas-on-price-but-not-the-answer-for-transport-99853/
[7] Alan Finkel answering the author’s question at the Australian National University’s Energy Change Institute webinar “Digging deeper into the Technology Investment Roadmap”, 8 October 2020

9 November 2016 By David McEwen

Ratified Paris, Now What?

Now that major economies have begun to ratify the Paris Climate Accord, countries need to deliver on their pledges. But how? And what will this mean for businesses?

In part one of this article we identified that businesses would inevitably bear the brunt of country-level reductions to greenhouse gas emissions. In this blog we drill into what businesses should do to prepare.

While governments are initially targeting the low hanging fruit of the few dozen or hundred companies that produce the bulk of their counties’ emissions (think coal fired power stations and steel makers, for example), even this may affect many organisations’ cost bases as input prices for power and other affected items rise, unless you’ve already insulated your company by purchasing renewable energy.

Regulated efficiency initiatives to reduce energy consumption and emissions are also gaining pace, benefitting firms whose buildings, manufacturing processes and products are already highly efficient. Innovation in energy and emissions efficiency will become a key point of difference for makers of a wide range of products and services.

Emerging categories such as electric cars (charged from renewable sources) and autonomous vehicles (which eventually could reduce the total number of vehicles and radically reduce congestion inefficiencies, as well as being programmed to drive as efficiently as possible) take efficiency initiatives into the realm of disruptive technologies. Companies will need to think years and sometimes decades ahead when designing product innovations to ensure they are not left behind by technological upstarts.

Eventually, regulations will extend to a broader range of GHG-producing compounds, including the fluorinated gases used in TV screens and the HFCs that have replaced CFCs as a refrigerant and propellent in spray cans. This will spark innovation in the design of products or processes that currently rely on such compounds, as well as services or products to ensure that their use is tightly controlled and doesn’t lead to them escaping into the atmosphere, either during or following the product’s lifecycle.

While the Australian government is currently clinging to its Direct Action, “pay the polluter to pollute less” policy, inevitably that will need to give way to a “polluter pays” mechanism.

Meanwhile, governments will push the burden of achieving GHG targets onto future administrations, which will compound the level of rapid transformation that businesses will be forced to deliver as the Paris commitment deadline approaches. And there is a clear expectation from the United Nations that many countries’ commitments will need to be strengthened in coming years in order to limit warming to the agreed target of 1.5 to 2 degrees Celsius.

Companies that take the lead today will be well positioned when this crunch comes.

Call Adaptive Capability today to develop the strategy for your business.

Image Credit: blindholm / BigStock

10 July 2014 By David McEwen

Grim times ahead for Australia’s largest industry

Business has been booming in the mining sector – until now. Here’s why investing in all the wrong places is setting Australia on the economic back foot.

Australia’s economy has effectively ridden through the last six years of economic uncertainty on the back of the mining boom. But as the world moves towards cleaner energy sources, remaining ‘open for business’ as the world’s quarry is putting Australia on an unsustainable path at odds with the evolving demands of many developed and developing economies.

The fast facts

Mining is Australia’s largest industry by revenue – combining direct mining activities and the associated mining services industry, the sector accounts for nearly 20 per cent of Australia’s $1.5 trillion GDP.
Australia’s growth is too dependent on mining – the Australian Bureau of Statistics notes that 80 per cent of GDP growth in the March 2014 quarter was contributed by an 8.6 per cent surge in mining output, though this was in part due to a relatively benign storm season.
The sector is almost half dirty energy – Fossil fuel extraction accounts for around 45 per cent of the mining industry’s output, the remainder being comprised of iron ore, other metals and minerals. The majority of coal, oil and gas output is shipped abroad, accounting for about 20 per cent of Australia’s exports.
Mining creates fewer jobs than you think – while it’s one of the nation’s most lucrative industries, the fossil fuel mining sector only employs about 80,000 people, well under 1 per cent of the Australian labour force. Which perhaps is just as well.

Yes, there will continue to be a market for fossil fuels decades to come. But despite massive expansion of coal-based power generation in China and India, there are signs that the growth spurt is coming to an end and demand may quickly waver.

Busting some renewable energy misconceptions

Historically renewable energy sources have been significantly more costly to operate – but there have been a number of game changing developments in clean energy sources around the world that Australia will move too late to cash in on when demand for fossil fuels dries up.

Building a new wind farm recently reached life cycle cost parity with a coal fired power plant of equivalent output, and large-scale solar technology is expected to become just as cost effective in the next couple of years.

There is huge investment in battery storage technologies, meaning it will be increasingly feasible for wind and solar plants to continue supplying the grid when winds are light or the sun isn’t shining.

And growth in renewable energy investment continues to accelerate even as the world’s appetite for coal is waning, driven by the early warning signs of climate change.

A recent report from the Association for Sustainable and Responsible Investment in Asia predicts that Chinese thermal coal demand could peak by 2020 and then start to decline. Despite building hundreds of new coal fired power plants in the last decade, China is one of the world’s biggest investors in renewable energy and its people, who currently suffer from chronic air pollution, are clamoring for a move towards cleaner energy and industry.

Australia is set for a hard landing

Meanwhile, Australia is still investing massively in the very things its largest trading partner is actively seeking to rid itself of: fossil fuel extraction and the associated infrastructure, including the controversial expansion of the Abbot Point coal terminal in the middle of the world heritage-listed Great Barrier Reef. These are investments with a multi-decade economic life.

Australia’s government seems intent on ignoring the warning signs – both economic, social and climatic – and continuing to support a toxic and archaic industry. The recent Federal Budget affirmed that it is simultaneously hell bent on destroying Australia’s renewables sector, right at a time when investment and incentives should be switched out of fossil fuels and into clean energy.

Loss of the fossil fuel mining sector would be a drop in the ocean in terms of job losses though more significant in terms of company tax receipts. But rather than plan proactively for this inevitable and essential transition, Australia seems intent on setting itself up for a very hard landing.

Whether directly, indirectly or passively through misdirected government action, all sectors face a level of risk from climate change and other global environmental issues.

Talk to Adaptive Capability today about safe guarding your business’ future.