Navigant Research Blog

The Hydrogen City Is a Thing Again—and Thanks to China, it Might Actually Work This Time

— February 8, 2018

The hydrogen city concept has been around almost as long as the hydrogen energy economy, but neither have really materialized as envisioned. Hydrogen cities (like the unrealized utopias of the 1980s and 2000s) face a familiar chicken-and-egg problem, with demand for hydrogen held back by a lack of hydrogen infrastructure, and vice versa. Now, with a number of recent market developments, the hydrogen city has returned. With global enthusiasm for hydrogen fuel building, this time it could be different.

China Propels the Market Forward

With its city air pollution issues, diverse energy appetite, and top-down interest in developing hydrogen and fuel cell technologies, China has a small but rapidly growing hydrogen scene. Notably, Wuhan in central China’s Hubei province is set to become a hydrogen city thanks to an announced $1.8 billion investment from a tech company. An auto manufacturing hub, the city could have 3,000 hydrogen powered vehicles in 2020 and 100 hydrogen fueling stations in 2025. Other recent developments from China include the world’s largest proton exchange membrane electrolysis order (to fuel buses in Guangdong province) and a number of partnerships with western companies that manufacture and share technology in the country.

Hydrogen Overcoming Hurdles at the Local Level

The hydrogen energy economy has been held back in part thanks to rapidly improving battery technologies, which have seen dramatically higher adoption in both transport and grid-tied storage applications. Underscoring this challenge, outgoing Governor Brown of California announced the raw numbers from last week’s clean vehicle plan—calling for 200 hydrogen fueling stations and 250,000 charging stations. That there were 1,250 times more charging stations points to the infrastructure and complexity challenges of hydrogen, and the strong incumbency of electric infrastructure.

But there is reason for optimism, with many decision makers seeing longer-term hydrogen potential along with a surge in actual deal activity. Though light duty vehicle sales have been slow, more fueling stations are quickly coming online, with one 2017 tally finding that 30% of global hydrogen refueling stations had been built in the past year alone. In the shorter term, captive fleets like buses are showing significant growth with at least 300 units expected in Europe in the coming years, and hundreds more in China and elsewhere. Indeed, a hydrogen city could deploy a fleet of fuel cell vehicles in a mobility as a service configuration, as covered in a recent Navigant Research report. And the potential of power-to-gas for renewables integration, as outlined in another recent Navigant Research report, is being realized with (for example) a massive 100 MW project recently announced in France.

Each of these use cases has a place in the hydrogen city. Aggressive local hydrogen plans in Japan and in the UK city of Leeds all point to the value hydrogen can provide especially when focused on a local level—overcoming infrastructure hurdles, enhancing economies of scale, and boosting local adoption. Whether the larger hydrogen energy economy will materialize remains an open question. But if it does, it just may happen one hydrogen city at a time.


Fuel Cell Vehicles Join the Carsharing World

— May 19, 2016

CarsharingGerman hydrogen company Linde is experimenting with a solution to the infrastructure problem for fuel cell cars. This summer, the company will launch an all-fuel cell vehicle (FCV) carsharing service in Munich. For this trial program, Linde is partnering with Hyundai to provide the fleet of FCVs. The service, called BeeZero, will have 50 fuel cell-powered ix35 crossover SUVs (known as the Tucson in North America), Hyundai’s current entry into the fuel cell market and one of only two FCVs commercially available today.

Linde is in good company in offering a carsharing service with zero tailpipe emissions, as a number of carshare programs around the world specialize in battery electric vehicle (BEV) fleets. In its 2015 Carsharing Programs report, Navigant Research estimated that around 20% of all carsharing vehicles in use globally were plug-in electric vehicles (PEVs)—mostly pure BEVs. Most of these EVs are in a handful of programs where the EV is a part of the service’s brand identity. The most famous is probably Autolib’ in Paris, run by Bollore. The Kandi carshare service in China also uses a fleet of micro EVs. Both Daimler and BMW’s carsharing services have deployed the automakers’ EVs, but not exclusively. Daimler recently switched out all EVs for gas cars in its San Diego carsharing service; the reason given was a lack of charging stations. (It will be interesting to see if the cars are reinstated once utility San Diego Gas & Electric launches its EV charging pilot program.)

The Challenge of Charging

Charging is one of the challenges for battery-powered carsharing vehicles, and likely explains at least in part why few carsharing companies integrate BEVs into their larger fleet of gas cars. Even if chargers are available, there can be problems with ensuring they are properly plugged in and that the charge stays full.

FCVs operating in fixed areas have the advantage of requiring a relatively small number of strategically located refueling stations in a city while offering longer ranges than EVs. Navigant Research predicted the introduction of fuel cell carsharing services for this reason in our recent white paper on the future of transportation. This makes an easier pathway to market for FCVs than having to build a network of refueling stations to service private car ownership.

Longer Ranges

Linde is also promoting the advantages of the longer driving ranges offered by FCVs. The Hyundai ix35 has a range of over 350 miles on a tank of hydrogen. While this is indeed a key benefit of fuel cell cars, it will be useful to see how much of a benefit this is for a carshare user. Carsharing services have a few typical use cases: short inner-city trips (the kind being served by one-way carsharing operations); planned trips with slightly longer range needs; and long-distance trips, typically on weekends. The BeeZero service would presumably be used for the latter two cases, but long-distance travel might require use of a hydrogen fueling station at the destination.

Linde has said it will use BeeZero to gather information on “day-to-day fleet operations” of fuel cells and hydrogen that can be fed back into its hydrogen development efforts. BeeZero presumably also offers Hyundai not only with an avenue to deploy more of its fleet of fuel cell ix35s, which have seen limited uptake to date, but also a chance to take lessons learned into its FCV development efforts. In the long-term, it is possible to envision FCVs being deployed in carshare services sponsored by automakers and infrastructure providers in cities where only low carbon or even zero emission vehicles are permitted.


A New Business Model for Fuel Cell Vehicles

— May 11, 2016

CarsharingWith the first carshare program served exclusively by fuel cell vehicles (FCVs) set to open in Munich, Germany later this year, it is time to examine how FCVs might be able to transition from early commercialization to large-scale deployment. For close to a decade, FCVs have been inching forward along the path to broader commercialization. However, they are still vehicles that automakers only make available in limited production runs and are typically only for lease for limited periods of time.

Toyota is one car company that is making the leap to selling its fuel cell car outright. With a suggested retail price of $57,500, Toyota’s Mirai has been priced at a level that (when combined with incentives) could allow it to compete against luxury plug-in electric vehicles (PEVs) in terms of price. However, the Mirai is being sold in an environment where battery electric vehicles (BEVs) are able to offer longer ranges and much lower prices than other long-range PEVs currently available.

Mixed Results

Toyota has said that it aims to have 3,000 Mirai models in operation in the United States by the end of 2017. As of the end of 2015, the automaker had around 2,000 orders in the United States alone, and Consumer Reports gave the Mirai a favorable write-up. However, Toyota is still closely managing sales to ensure that customers who may lease it have driving habits that match the limited availability of hydrogen refueling. Indeed, the company has been delayed in delivering some cars to its customers, citing the lack of fueling stations needed to serve their customers as the reason.

The mixed results of the Mirai rollout thus far—real interest followed by delayed delivery—highlights the problem OEMs will face in commercializing fuel cell technology. Although BEVs also faced limited public charging availability when they were introduced, early adopters were those that could charge up at home, an option not available for FCV customers. This hurdle is one reason why Navigant Research’s 2015 Fuel Cell Vehicles report forecast modest FCV sales over the next 5 years. Nevertheless, Toyota is forging ahead with its commitment to fuel cell technology. The company recently said it would introduce a new, lower-cost FCV ahead of the 2020 Olympics in Tokyo.

Are there other ways to get around the infrastructure barrier? U.K. company Riversimple is looking to solve the problem by embracing the trend toward on-demand mobility, as is the previously mentioned Munich fuel cell carshare pilot. Riversimple wants to use the small city car segment as the entry point for FCVs in the commercial market. Instead of building a car for customer ownership, the company is developing a two-seater runabout (called the Rasa) that would operate within a region and fill local driving needs.

Riversimple’s business model is to place a fleet of cars into service in a locality and offer the use of the vehicles as a paid service, rather than selling or leasing the cars. This strategy helps bypass the need for an extensive network of refueling stations; instead, a few stations—perhaps even just one—could serve a single fleet of FCVs. Riversimple unveiled its rather unusual looking car earlier this year and has also launched a crowdfunding campaign.

Mobility as a service is a growing trend; it will be interesting to see if this can be successfully combined with FCVs to help push the technology past the infrastructure barrier.


In Energy Storage, Power-to-Gas Seeks a Market

— August 22, 2013

There are no clear technology winners when it comes to energy storage for wind and solar (ESWS) integration.  This is partly because the energy storage sector hasn’t seen the mass-manufacturing, low cost, and commoditization to be expected from a leading technology.  That could change with the expansion of materials-based storage, specifically systems that rely on gas instead of electrochemistry (electrolysis is an electrochemical reaction, but the product, gaseous hydrogen, is the energy carrier).

Gaseous storage – specifically compressed air and hydrogen – accounts for a little more than one-fifth of the total energy storage market, with 4,616 megawatts (MW) forecast to come online in the next 10 years.  This assumes a business-as-usual scenario; if the demonstration projects in Germany and other parts of Europe prove successful, we could see much more accelerated market growth for these technologies.

New Installed Capacity of Energy Storage for Wind and Solar Integration by Technology, Base Scenario, World Markets: 2013-2023


(Source: Navigant Research)

With power-to-gas technology (wherein the hydrogen generated is pumped directly into the natural gas grid, or is methanized into syngas and then pumped directly into the gas grid), hydrogen has an advantage over other technologies because the cost of actually storing the energy is at, or close to, zero.  Most of the hydrogen market will be composed of the power-to-gas variety; however, passive electrolyzers paired with small wind and solar PV will also take an increasing share of the ESWS market toward the end of the forecast period.

On the other hand, because the benefits of hydrogen storage are absorbed by the entire gas system, building a business case for power-to-gas systems may be more challenging.  Under the base scenario in Navigant Research’s report, Energy Storage for Wind and Solar Integration, hydrogen will account for 9% of ESWS installed capacity in 2023 and 6% of market revenue ($574.84 million) in the same year.  The market will be led by Europe and parts of North America, which are already funding power-to-gas projects.

The compressed air energy storage (CAES) market, meanwhile, will be led by a handful of promising startups with modular or cavern-based technologies, including SustainX and General Compression, that require little to no natural gas.  Although CAES will take 13% of the market in terms of installed capacity by 2023, the technology’s low marginal cost of energy means its market share in terms of revenue will be about half that of installed capacity – coming in at 5% of the market ($549.05 million) in 2023.

That said, gaseous storage has a low marginal cost of storage, is comprised mostly of inexpensive components (particularly in the case of modular CAES), and offers the benefit of bulk storage without an unwieldy footprint.  If these companies can devise financing and business models for the ESWS market, gaseous storage could overtake advanced batteries.


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