(Bloomberg) -- On a small island off the southern coast of Singapore, a French energy company is experimenting with what it hopes will be the future of renewable power storage.
Engie SA is helping build a small, self-contained power grid on Semakau Island to demonstrate the usefulness of hydrogen gas in converting intermittent power from solar panels and wind turbines into stored fuel that can generate electricity days or even months later, when the need is higher.
Plummeting costs for solar and wind are helping renewable energy steal an ever-greater slice of the power generation pie from fossil fuels such as oil and coal. That makes it more and more vital to figure out how to spread out the brief but intense bursts of energy harnessed from the sun and wind to the more diffused needs of consumers. While battery storage has received most of the attention so far, hydrogen has “massive long-term potential,” said Didier Holleaux, executive vice president at Engie.
“Batteries are fine for intraday, or a few hours,” Holleaux said in an interview in Singapore. “But if you produce energy in summer and need it in winter, or need it to last during a few cloudy days, then hydrogen would be the obvious solution.”
To be a solution, though, hydrogen storage costs would have to come down dramatically. A hydrogen-based energy storage system costs about 10 times more than a diesel back-up generator with similar power output, according to a Toshiba Corp. presentation at the World Smart Energy Week in Tokyo in March.
Hydrogen storage is basically a three-step process: electricity powers a chemical process know as electrolysis that splits water into hydrogen and oxygen. The hydrogen is then stored until it’s needed, and is then pumped through fuel cells to generate electricity.
The biggest hurdle to commercial viability is the electrolysis process, Holleaux said. Manufacturers are trying to make the water-splitting equipment cheaper and more efficient, but are probably 10 to 15 years away, Holleaux said.
“Electricity costs are a major component of the total expense for hydrogen production,” said I-Chun Hsiao, an analyst with Bloomberg New Energy Finance. “Access to cheap electricity and improvements in electrolyzer efficiencies are essential to improving the economic attractiveness of hydrogen, regardless of scale.”
The Semakau Island project, which Engie is taking part in along with Singapore’s Nanyang Technological University and France’s Schneider Electric SE, aims to build demonstration micro-grids that integrate wind, solar, tidal and diesel power along with storage to provide electricity to small island communities not connected to traditional power plants. The micro-grid is expected to be operating by October, with hydrogen storage capabilities added next year, Holleaux said.
Engie sees big opportunities for such micro-grids in Southeast Asia, especially in the Indonesian archipelago, where nearly 1,000 islands have populations that don’t have access to traditional power plants.
“It’s a region that’s open to innovation,” Holleaux said. “Many countries are ready to leapfrog directly from no power at all to a completely decentralized type of power, rather than going through the traditional centralized, interconnected network.”