Our electric futures: understanding the role of hydrogen in providing dispatchable demand to the New Zealand grid : A thesis submitted in partial fulfilment of the requirements for the Degree of Master of Applied Science at Lincoln University

Abstract

As the electricity sector globally turns toward renewables, renewable sources of dispatchable electricity generation and demand (also known as interruptible load) become increasingly important. Without dispatchable generation and/or demand, balancing of electricity supply and demand across a range of time scales cannot take place, undermining grid reliability, particularly with ever increasing demand for electricity through both population growth and electrification for decarbonisation. Hydrogen production by electrolysis from renewable energy has been proposed as a renewable source of dispatchable energy across all time scales. This thesis considers the use of large-scale hydrogen production for grid balancing in New Zealand as a case study. The proposed departure of Rio Tinto from New Zealand (and subsequent closure of the Tiwai aluminium smelter) would make available the smelter demand capacity (630 MW) to the grid. This thesis takes a what-if approach to determining the value of replacing the smelter with variable hydrogen production for grid balancing and downstream decarbonization. The historical electricity demand profile of the Tiwai smelter between 2010 and 2019 (which represents near complete utilisation of Manapouri output) is modelled to produce hydrogen under a range of optimisation scenarios (volume (base case), cost, renewability, load shifting). In each case, the hydrogen production volumes, cost of hydrogen production and grid renewability was evaluated. Optimising for volume, cost and load shifting provided 150-260 t/d of hydrogen production, enough to meet several potential sources of hydrogen demand in New Zealand, including transport, industrial process heat, and chemical production. However, the cost and load shifting scenarios experienced significant production volatility, limiting their usefulness for industrial demand. Optimising for electricity renewability produced negligible amounts of hydrogen (5.7 t/d). The cost of hydrogen produced under two scenarios (volume – 8.23 NZD/kg; cost – 7.97 NZD/kg) is on par with previous reports of hydrogen use for grid balancing in New Zealand. Load shifting is slightly more expensive (11.16 NZD/kg) while the renewability scenario was found to be prohibitive cost wise (90 NZD/kg). None of the scenarios could achieve 100% renewable energy at any point across a daily (hourly average) or annual profile (daily average). The renewability and load shifting scenarios achieved an average of 90 and 82% renewables. Cost and volumes scenarios did not significantly change the average renewability share from the historic average of 78% over the period studied. Given the trade-offs between these scenarios, the load shifting scenario appears to be optimal for the grid, providing improved renewability and critical dispatchable energy at a moderately competitive price.