Cyprus is blessed with abundant sunlight, yet the shift to renewable energy is painfully slow. Two recent developments highlight some of the issues.
The first was a statement by EAC’s new president that the new turbine (no.6) at its Vasilikos power plant can work only with natural gas, but with some modifications it can also be converted to work with hydrogen.
The second was a letter by ETEK to CERA making the case for accelerating implementation of ‘Energy Communities’.
In Cyprus development of renewables lost direction during the past ten-years. The handing-out of licenses, often to entities that had to spend time securing the required finances and technology, not only was restrictive and introduced delays, but it has led to the current situation where renewable electricity is expensive and does not contribute to the reduction of Cyprus very high energy prices. Instead of doing this through open competitive bidding, as other countries do very successfully, including Greece, Cyprus chose a direction with inevitable and serious shortcomings.
It is imperative to introduce competitive bidding in awarding future projects. It is also imperative to introduce the concept of ‘Energy Communities’, enabling individuals, small companies and communities to share investment in setting-up solar energy parks to produce electricity for their own use. This is similar to the recently-introduced ‘photovoltaics-for-all’, but instead of catering for individual households, it licenses groups.
It is a concept that has widespread use in Europe, especially in north-western Europe, and can open-up the solar power sector in a big way, bringing the cost of electricity substantially down.
A role for green hydrogen?
Green hydrogen is produced from water by electrolysis and it is capital-intensive. To be classified as green, all electricity used for its production must come from renewable sources, solar and wind.
Where such energy sources are in abundance, for example in the Middle East and North Africa (MENA), it should be possible to eventually produce large quantities of green hydrogen at competitive prices and export it to Europe. But that is not yet the case.
Green hydrogen has the potential to replace fossil fuels in hard-to-abate industries, such as steel, cement, chemicals, fertilizers, but also in aviation, transport and shipping.
Given that production of green hydrogen requires large amounts of renewable energy, it is not energy-efficient to use it to generate electricity. Between 50%-80% of the energy value of clean electricity is lost in the process of making hydrogen and then burning it to generate electricity.
Once it becomes available cheaply, it can help accelerate energy transition. But this will take time.
The biggest challenge is that it needs vast quantities of solar and wind energy to produce it. It takes something like 20GW-30GW renewable power generation to produce one million tonnes of green hydrogen -equivalent to about 3billion cubic meters (bcm) of natural gas.
EU’s REPowerEU plan requires production of 10 million tonnes and import of another 10 million tonnes by 2030 in order to deliver Europe’s Fit-for-55 climate targets. This would require the availability of 200GW-300GW renewable power generation in Europe and as much in MENA.
Given that it requires an average of 20sq-km to install 1GW solar power capacity, producing 10 million tonnes green hydrogen would require 4000-6000sq-km land. That is equivalent to about half of Cyprus!
Right now, EU’s total solar power installed capacity is 140GW. Even though this is growing fast, the challenge is obvious.
Another challenge is that even though this is a proven technology, it still requires further development for the safe storage and transportation of hydrogen. Until these limitations are overcome, hydrogen needs to be used close to where it is produced.
So far, green hydrogen project implementation is very slow. The International Energy Agency (IEA) is warning that only 7% of the proposed capacity is expected to come online by 2030. This must be accelerated substantially if the levels needed to achieve decarbonisation targets are to achieved.
As a result, any plans to accelerate phasing-out consumption of natural gas on the assumption that it will be replaced by green hydrogen by 2030 are premature.
However, earlier this year, the US Geological Survey (USGS) announced that hydrogen is generated naturally within the earth, and estimates that as much as 5trillion tonnes of hydrogen exists in underground reservoirs worldwide. This has become known as geologic or ‘gold’ hydrogen.
USGS said that even if a few per cent of this is recovered, it would still supply all projected global demand, estimated to reach 500 million tonnes/year, for hundreds of years. Extracting natural hydrogen would be cleaner and cheaper than green hydrogen. It is estimated that this may start within a couple of years.
Is it realistic for Cyprus to develop hydrogen production for its own use, but also for export?
With abundant solar energy potential, this should be possible. But as I explained earlier, green hydrogen production requires large amounts of renewable energy and a large land area. Ultimately, the potential for green hydrogen production in Cyprus will be a function of land availability.
In order to replace 1bcm natural gas Cyprus will need about one-third of a million tonnes of hydrogen, that in-turn will need about 7GW-10GW solar energy to produce.
Given that so far the total installed solar power capacity of Cyprus is less than 0,5GW, there is a long-way to go before reasonable quantities of green hydrogen can be produced commercially.
The priority right now is for Cyprus to increase renewable power generation to levels similar to other countries in Europe. The EU is targeting that renewables should provide 42,5% of its total primary energy use by 2030, and over 60% of electricity production.
Until that is achieved, it is premature to talk about green hydrogen production in Cyprus. However, it should become possible in the longer term, likely during the next decade.
But first, Cyprus must prepare a long-term hydrogen production plan. This should identify potential use of hydrogen on the island as well as export options.
Based on the identified quantities, the plan should then quantify the required renewable energy capacity and land availability and put forward a road-map to guide hydrogen production in Cyprus.
But first, Cyprus must prioritize projects that will bring its very high electricity prices down. The first is switch of power generation from diesel/HFO to natural gas by completing the Vasilikos LNG import project as soon as possible. With the positive news that the contractor is about to restart work, this may happen next year. The second is acceleration of renewables projects, including implementation of ‘Energy Communities’.
Cyprus may then have the opportunity to really benefit from its abundant sunlight.
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