Hydrogen Hype In Real Estate: A Load Of Hot Gas?

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Hydrogen Hype In Real Estate: A Load Of Hot Gas?

There is a huge amount of hype around hydrogen and its use as a clean fuel. The lightest element is around three times as energy dense as gasoline by mass and only emits water as a waste product. Energy is harvested through combustion or redox reaction in a fuel cell.

Real estate is under consideration as a potential candidate for hydrogen fuel deployment due to its significant contribution to global carbon emissions. Verdantix has analysed two hydrogen-based technologies for use in commercial buildings as part of its tech roadmap for energy management technologies: hydrogen boilers, which directly burn the gas for heating, and fuel cells, which generate onsite electricity.

While the idea is intuitively appealing, the analysis identifies several fundamental challenges with the use of hydrogen in the built environment: cost, fuel access, distribution and storage. Currently most hydrogen (>95%) is produced from fossil fuels, which releases 830 million tonnes of CO2 annually, according to the IEA. The electrolysis of water using renewable energy offers an emissions-free method to obtain hydrogen gas, although this approach is currently more costly than fossil-fuel-based methods and requires a huge amount of electricity.

The IEA calculates the 2019 levelized cost of clean hydrogen production to be between $3.20 and $7.70 per kg, compared to $0.70 and $1.60 for natural gas. Although the Rocky Mountain Institute predicts clean hydrogen gas prices will fall below $2 per kg by 2026, supplies will remain limited as production capacity develops over the next decade.

Multiple studies have determined that hydrogen for heating will be around two to four times more costly than electrification. A hydrogen boiler will require five to six times more electricity than a heat pump for the same power output, due to the energy requirements for clean hydrogen electrolysis.

The distribution and storage of hydrogen for heating is another major challenge. There are only 1,600 miles of hydrogen pipelines in the US, compared to 3 million miles for natural gas. It is very unlikely that transport networks will develop at the scale required to deliver hydrogen to buildings nationwide. Additionally, the high pressures and low temperatures required for storage add significantly to the expense, alongside safety concerns due to the explosivity of the fuel.

The tech roadmap analysis concludes that the use of hydrogen appliances in real estate will be hugely limited, and that the most likely decarbonization route will be through electrification. The research identifies multiple viable low carbon options for heating and powering buildings, such as heat pumps, solar PV and battery energy storage systems.

Clean hydrogen costs will fall, production will ramp up and the accompanying infrastructure will develop, but hydrogen will remain better suited to more energy intensive industries with few low carbon alternatives. Likely targets are shipping, aviation, heavy goods road transport and high heat manufacturing.

Look out for the Verdantix Tech Roadmap: Energy Management Technologies for an overview of the existing and upcoming solutions that will support real estate decarbonization and cost optimization.

Ben Hext

Industry Analyst

Ben is an Industry Analyst in the Verdantix Smart Buildings practice. His current agenda covers hardware and software solutions for energy management, on-site power generation, and COVID-19 mitigation management. He holds an M.Eng in Mechanical Engineering from Durham University,