Economically sustainable: market synergies in hydrogen systems

As interest in the use of hydrogen as an energy carrier grows, it is important to understand the advantages and disadvantages of a market-based approach to its introduction. While there will always be niche markets in which it makes sense to employ what is currently a comparatively expensive form of energy storage and delivery, this will not enable the sort of large-scale penetration that will allow for economies of mass-manufacture to bring the cost of hydrogen down. In addition, energy markets are becoming increasingly liberalised, and because of this it is important to understand the sort of market pressures that are arising where none have existed before. These pressures may actually lead to opportunities for hydrogen in energy storage and for use in power generation and transport fuel modes, and allow market penetration to occur more rapidly than might be the case in a centralised energy structure. In the liberalised energy market within the UK, for example, there are two areas of potentially major growth in hydrogen production and consumption: energy storage for renewable generators; and backup systems at weak electricity grid links. The first of these is due, in part, to potential changes in regulation governing the way that electricity is sold into the market, while the second is dependent more on an increasingly congested electricity grid and the high costs of building supplementary infrastructure. In both cases there is potential for the early use of hydrogen energy systems in an economically competitive environment. (author)