Written by It is being claimed that the addition of 30% of hydrogen (by volume) would decrease CO2 emissions by approximately 11%; whilst increasing the volume to 50% would bring about an additional 12% decrease. It comes as no surprise then that many power generation companies are eager to adopt this new technology, but it does not come without challenges.
Gas turbine manufacturers have seen an urgent need to accelerate the decarbonization of the power generation industry and are designing new models which will transition from fossil fuel to 100% hydrogen. This would in theory reduce their direct carbon dioxide emissions to zero.
New turbines with 100% hydrogen-ready capability will be commercially available around the year 2030. But what about the thousands of power plants already in existence across the world? One proposed solution is to co-fire or add a certain admixture of hydrogen into natural gas in order to decrease the overall carbon footprint. It is being claimed that the addition of 30% of hydrogen (by volume) would decrease CO2 emissions by approximately 11%; whilst increasing the volume to 50% would bring about an additional 12% decrease. It comes as no surprise then that many power generation companies are eager to adopt this new technology, but it does not come without challenges.
Understanding the differences between hydrogen and natural gas
Questions about this new technology centre around the significantly different physicochemical properties of hydrogen compared to natural gas. Firstly, hydrogen has very small particles which makes it very reactive, causing embrittlement of stainless steel. Whilst systematic testing of hydrogen-fired engines started in the early 2010s, many engineers still contend it is too early to judge the long-term impact hydrogen will have on steel structures when it is in continuous contact with them. Furthermore, hydrogen ignites and burns faster than natural gas, because it requires much less energy to ignite it and it has a significantly wider flammable range, increasing the risk of explosion or flashback. There is also an issue of lower energy content by a unit of volume, which means that larger volumes of gas will have to be handled by the plant.
All this requires modifications to a plant’s critical systems, such as burner, combustion chamber, combustion monitoring system, fuel supply, and control and protection systems, as well as operation and maintenance procedures and manuals. Also balance of plant facilities will have to be modified, for example, hydrogen storage. The uncertainty about its viability and operational safety stem from the fact that only a limited number of tests in a commercial environment have been performed, and so far only a handful of plants have been running with a high hydrogen admixture level.
Unsurprisingly, these concerns have also been shared by the insurance community. As a principle, any test of operations involving adding hydrogen admixture into fuel would not be covered under the existing property coverage because that would bring about a material change in risk. The operator would have to arrange specific coverage for hydrogen blending tests and although this insurance is available in the commercial market, its terms and conditions would be significantly more restrictive than the existing programme. It is also uncertain to what extent any future losses (after the conclusion of the tests) could be claimed to have been proximately caused by the contact of the plant with hydrogen, meaning that the submissions for following renewals of the insured’s property programme would have to include the information about testing, and this might bring about rate increases due to the perceived heightened level of risk.
Some of the terms and conditions of specific insurance cover might include:
Due to a very limited risk appetite currently available for this type of coverage, brokers and clients need to allow for a longer placement process and should expect more markets in the insurance (or reinsurance) panel and individual line sizes to be smaller than in traditional property programmes.
Pawel Kowalewski
Group Practice Leader Energy, Power and Mining
T +48 507 085 066
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