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Meridian and Contact investigating use of renewable energy in Southland to produce green hydrogen 'at scale' once the aluminium smelter contract finishes at the end of 2024

Meridian and Contact investigating use of renewable energy in Southland to produce green hydrogen 'at scale' once the aluminium smelter contract finishes at the end of 2024

Contact Energy and Meridian Energy are seeking registrations of interest to develop what they say will be the world’s largest green hydrogen plant.

In joint releases to the NZX on Thursday the two power companies said the green hydrogen plant has the potential to earn hundreds of millions in export revenue and help decarbonise economies both here and overseas, according to a new McKinsey & Co report.

Contact and Meridian say green hydrogen is regarded as the most promising energy source to decarbonise sectors such as heavy transportation and industrial processes that currently rely on fossil fuels. It is produced by using renewable electricity to split water into hydrogen and oxygen.

The McKinsey & Co report was commissioned by Meridian and Contact, who are investigating the use of renewable energy in Southland to produce green hydrogen at scale, once the supply agreement with New Zealand Aluminium Smelters finishes at the end of 2024.

The statement from the two companies says more than NZ$200 billion has already been committed by governments and the private sector around the world to support the development of hydrogen economies. The report estimates global demand could increase more than sevenfold to 553 million tonnes by 2050. Southland has the potential to be at the forefront of this growth opportunity.

Meridian Energy Chief Executive Neal Barclay said: “Developing a hydrogen economy based on large-scale production in Southland could deliver significant decarbonisation, economic and energy independence benefits for New Zealand.

“Our renewable energy gives us a valuable head start and competitive edge as markets for green hydrogen develop. Early, large-scale production will allow us to build a domestic hydrogen supply chain and kickstart demand around the country.”

Economic benefits outlined in the report for a 600 megawatt green hydrogen export facility include a one-off addition of up to $800 million to New Zealand’s GDP and the creation of thousands of jobs in construction, as well as up to $450 million and hundreds of additional jobs on an ongoing basis.

Contact Energy CEO Mike Fuge said green hydrogen production will also support New Zealand’s transition to a 100% renewable electricity generation system.

“This can be achieved by reducing hydrogen production when the country’s hydro lakes are running low, allowing electricity to flow back into the national grid to support local homes and businesses.

“In this mode of operation, green hydrogen could solve up to 40% of New Zealand’s ‘dry year’ problem. This flexibility would see hydro generation replace coal and gas-fired generation and reduce carbon emissions.

“Given the low lake levels over the past six months, if this plant had been available this year it could have been used to avoid up to one million tonnes of carbon emissions.”

The statement said the Southern Green Hydrogen feasibility study is ongoing, with two further reports being produced later in 2021.

It said the registration of interest process will run for two months through to October. This invites potential large consumers of green hydrogen, producers of green hydrogen and associated service providers to register their interest via southerngreenhydrogen.co.nz.

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

37 Comments

YES! Let's hope the government is forward thinking enough to really promote this. Hydrogen will be an important fuel in the future for heavy industry and electricity suppliers around the world, it will a viable alternative to oil/coal. It is a fantastic way for us to export renewable energy AND decarbonise our heavy transport systems AND decarbonise much of our electricity systems.

Massive windfarms (offshore and onshore) and solar/geothermal up in the Taranaki area should also be looked at as well as the Wairarapa.

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Southland hydrogen + onslow would be the bold move. Can't say I expect to see it happen, but I guess you never know.

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As I understand it it takes more energy to make hydrogen than is provided when it is burnt.

Isn't it a dubious attempt to continue business as usual, instead of making the fundamental changes we need to make to address the climate crisis.

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We have to ask ourselves why we want to produce all this Hydrogen in the first place. If the answer is to continue BAU then the answer will be that it will not work. Hydrogen production has a net negative EROI. Firstly we have to create the electricity then transport it to the electrolysis plant where more energy is lost breaking the covalent bond between water molecules than is gained from the Hydrogen produced. A better use of Manapouri would be to electrify some industrial process to enable NZ to be more self reliant.

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Boiler electrification is ongoing. What industrial processes do you have in mind?

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Yeah, but this is the argument for keeping gas and coal going because they are incredibly dense forms of energy. The problem is that EROI only forms part of the picture, if you include pollution in the fuels total life cycle, then it paints a rather different picture.

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EROI is great until you turn on the TV to watch the Bathurst, or you're woken up late at night to hoons hitting the rev limiter down the street, or you hit the motorway each morning with 10k other commuters each in their own vehicle on the way to a job they can realistically do from home.

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Absolutely. The discussion feels very heavily weighted to trying to maintain our current way of living. Which in itself is so different to life before all weekend shopping etc.
How about some more discussion about changing our way of living where we can?
The brief flicker of hope during lockdown where so many people were trying work from home for the first time. And enjoying just going for a simple stroll around the neighbourhood instead of racing between shopping malls all weekend long. Feels like a lifetime ago now.

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Have we really such a surplus of hydro that we can export? Sure it might be a way of spreading the load.... but export?
What else are the guys up to...are they getting ready to flood more river systems or is this to displace Bluff?

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Once the smelter shuts we'll have a surplus in the South, this is largely a method to soak that up so Meridian and Contact don't have to spill a whole load of water because no-one wants the power. The added bonus is if the plant can be ramped up and down it can run slower in dry years to preserve hydro storage and faster in wet years. Not sure what happens to the plant workers when there's a really dry summer though...time off until the rain arrives?

Perhaps if it goes well enough it could allow some more generation in the South e.g. windfarms in Southland? All the interest at the moment is in building generation in the North Island closer to the main users.

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Net negative EROI sure. But that might be the unfortunate cost of deriving a fuel source that can be transported and provide practical long haul transportation.
Even if we manage to build electric trucks with a 400km range, how long does it take to recharge the batteries?
When we can achieve 400km on hydrogen fuel, and it takes 15 minutes to refill a truck?

Just need to make sure we have a surplus of renewable energy sources, and then tap into that to surplus for Hydrogen generation.

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Have read just for starters, Japan, China, Russia, USA, Germany are investing $ billions into producing hydrogen that ultimately can be used in internal combustion engines etc. All of these nations have extremely clever and qualified scientists at their disposal. Hard to imagine, given such august consensus, that they all pursuing a false trail. In other words they are nothing better than a bunch of alchemists, though to be fair, the quests are not unlike in terms of rich rewards for success.

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It's prudent to invest in a range of options, but there's far more investment happening in the battery electric space. Heck Tesla alone has 20 billion sitting in the bank from stock they sold to investors

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What you and others are ignoring is the environmental impact of batteries. While a number here are talking about EROI, batteries fall quite short, before factoring in the environmental impact of end of life disposal. True - their life is being extended after they are no longer useful in vehicles, but eventually even that life is used up and then what? $billions is being spent on making them and putting them into all sorts of applications, with any development in the end of life problem. Hydrogen makes that issue quite simple.

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Can you give an example of an energy source with a positive EROI?
Wouldn't that mean creating energy?

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... nuclear power has a EROI rating of 75 .... double that of the next best source of energy , on 35 .... coal !

Who's gunna give the Greens the good news ?

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Nzdano,

There are several including nuclear, hydro, both offshore and onshore wind(renewables) plus coal, oil and gas(non-renewables) The Eroi of all non-renewables is decreasing. Hydropower has a very high EROI and one of the lowest total lifecycle greenhouse gas emissions(gCO2/kWh). Source: International Energy Agency.
The only figure I have seen for Hydrogen suggests a negative EROI of around 1:4.

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I'm skipping the electric car craze, hydrogen is the future.
Most of the world burns fossil fuels to charge electric cars it's crazy !

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Most of the world burns fossil fuels to generate hydrogen, too. Either way we need significantly more renewable generation.

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Hydrogen fueling for consumers seems waaaay to dangerous, from my perspective. Far too many things that could go wrong (high pressure, highly volatile fuel). Plus batteries are far more efficient, especially smaller scale. But for larger scales where longer ranges are needed (trucks/busses/cargo ships/trains), H2 makes a log of sense. Refueling stations will then be few and far between and in much more controlled environments.

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Big oil is pushing hydrogen to delay the conversion to battery electric cars and keep themselves in business, but for cars and light trucks battery electric is more efficient and 10+ years ahead of hydrogen vehicles. Hydrogen may find its niches such as transcontinental flights and long haul trucking, we'll see.

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If the power's too expensive for an aluminium smelter, it's hard to see a green hydrogen plant being economic

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Hydrogen is pie in the sky right now. Far too expensive to make and transport. Maybe another few years but will require massive subsidies or taxes and huge capital expenditure. Plenty of arm chair proponents I see.
Leave research and novel hydrogen manufacture to the big boys overseas. Storage and transport still a big problem though.

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Who will be buying all that hydrogen to make it a viable business?

Are we going to trade hydrogen like Bitcoin- trading for the sake of trading with little inherent use?

We can call it Hydrocoin- first seen in NZ.

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Proof of work etc

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It is complete BS to think that hydrogen will ever be an efficient means of powering electrical vehicles due to basic scientific limitations of the processes involved or even efficient energy storage for that matter. There are numerous publications saying the same as this.
https://techxplore.com/news/2020-06-hydrogen-cars-wont-electric-vehicle…
https://phys.org/news/2006-12-hydrogen-economy-doesnt.html
The head of Toyota also says that Hydrogen will not be a viable option until at least 2050. They should know they have been building Hydrogen cars longer than anybody. So there you have Toyota and VW, the two largest car manufacturing companies saying that it is not viable.
As for burning it in conventional IC motors, you must be joking. incur all the inefficiencies to generate the hydrogen in the first place then burn it in an IC motor at the very poor efficiency of an IC motor.
Battery cars are proven technology. The solutions are here now and demonstrated for a number of years now. We are on the cusp of solid state lithium batteries hitting the market. Toyota have been saying that they will unveil this at the Olympics, but I suppose that given what is going on there it may be at some other venue. Toyota's investment company and Panasonic have been investing strongly in sources and processing facilities of lithium so that is where they see the immediate future. I would have far more faith in them than our power companies who have absolutely no expertise in this area.
It may be useful if we can find a way of using it in aircraft because of it's low weight and the fact that fuel can make up half the weight of the gross weight of a fully loaded plane and the payload only 25% (figures are a bit old admittedly and modern planes do better) . Clearly if you halve the weight of the fuel and associated gear then you can double the payload. A whole different set of considerations apply to cars.
The best use of our power when the smelter closes is to close all our fossil fuel generation and direct the energy into the shift to electric cars that the government is pushing.
I wonder if the power companies are playing some sort game with the government? Or maybe these companies do not want to be tied into the proposed Lake Onslow storage scheme. I suspect that Trust Power have ambitions of building this scheme and this may not suit the competitors. The fractionated competitive power generation and distribution has turned out to be such a cock up for our small country. It should be unwound.

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convert electricity into hydrogen, put it in a tanker, ship it to Auckland, put it in a car, convert hydrogen into electricity, drive.
How about send the electricity to Auckland, charge your car, job done?

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Time to charge car: 12 hours
Range of car: 270km

Time to fill car with hydrogen: 10 minutes
Range of car: 450km.

Who's to say in the future we cannot convert hydrogen on small scale closer to sources, e.g. at the fueling stations? The only concern is the safety around handling hydrogen.

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Expect that concept or something similar is what all the boffins around the world are working on, spending great quantities of money whilst at it. It is hardly a new project; by now they would have established whether or not it was viable, if only in budgetary constraints. That they carry on must mean something in the positive sense then.

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A collection of 'paid' specialists doing what they're 'paid' for, is no proof of the viability of anything. And it is certainly no proof that there is a viable alternative to the carbon Blip (via Clugston - read the book) we have recently been using.

All use of energy involves reducing the quality of energy (it can't be destroyed) to extract work; the trend is from low entropy to high entropy, eventually too high to be of use. You can do it if you wish (charging/discharging a battery is an energy loss which we tolerate) but there are two qualifications:
1 - Economic BAU won't work above a certain level of EROEI, and at the moment the bad EROEI options are dependent on better ones: mainly fossil fuels. Currently we are accumulating more debt that GDP, which suggest we have already crossed the economic threshold. In a way, you can see that as BAU not working above a certain level of entropy.

2. As we descent the EROEI options, energy is going the be more and more precious. Think gold, and beyond. Makes sense; without energy there is nothing. No economy, no underwrite, nothing. We have tolerated losses like battery-charging, only because we had high-EROEI energy from another source, to piggy-back on. So the question is: what is the best use of that 'more-than-gold' underwrite? And the answer has to be: not 'making money' (we've just proved energy is more valuable) and via that, not exporting.

That leaves whether we should use hydrogen as a storage mechanism for Manapouri, if/when it becomes available. Essentially, the more moves you make, the less useful energy - in other words, the more direct, the better (vegetarians are on the right track, though few could explain the energy reason). So we have to ask what our biggest needs will be, ex-fossil fuels. Maybe it will be powering the existing tractor fleet. Maybe it will be powering Auckland (ex-fossil energy, cities are in big trouble). I think Susan Krumdieck is on the right track (intended). Not surprising; she worked in hydrogen for years....

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You can't really use a home charging time to compare with a station charging time and call it fair. A new tesla supercharger will give you 240km range in 10 min, and 500km fully charged. So pretty much nil advantage either way, except that you *can* charge the EV at home (more slowly).

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Except that supercharging potentially shortens the life of your battery

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Aren't you ignoring fast chargers and electric cars which have a great range.

aka cherry picking?

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How many people commute 270 k.m daily ? in fact Electric car manufacturers are considering offering smaller batteries, say 100 k.m range , which would cover 95 % of daily use. Thus lowering the price and weight of battery packs.
Abit like the battery pack on a battery drill, you buy the 5ah grunter , till you realize its more weight , and the 2 ah will handle most jobs .

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Why don't EV car manufacturers get together to come up with a standard swappable battery system? That way you could just drive in to a "battery station" swap an empty one for a fully charged one and off you go. Range anxiety and waiting for charging ended. This sort of thing happens in other areas (eg USB ports)

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Your dealing with a battery of several hundred volts, the Safety provisions would probably not make it viable. Would make the ev race's interesting though.

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Would those safety concerns be bigger than for hydrogen though? Letting Joe public fill up a hydrogen tank seems pretty risky to me.

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