A Look Inside the Underground Energy Storage Industry
Dr. Leonhard Ganzer is head of the Institute of Subsurface Energy Systems at Clausthal University of Technology in Germany focusing on underground hydrogen storage, CO2 injection, carbon capture and storage (CCS) or usage (CCU). He holds the chair of reservoir technologies and is experienced in leading roles of R&D projects and technology development for underground storage of hydrogen or CO2. He also acts as expert for the Austrian mining authority for underground gas storage projects.
As a centre of excellence, UEST is a strategic partnership of the HOT Energy Group, RED Drilling & Services, the ILF Group, and Chemieanlagenbau Chemnitz (CAC). The consortium fuses the individual partners’ decades of specialised know-how and expertise in underground storage technologies. UEST delivers high-end and cutting-edge solutions for natural gas (UGS) storage, carbon dioxide and hydrogen storage technologies.
We caught up with Leonhard to discuss current trends the underground energy storage industry and hear about the work UEST is doing.
Can you tell us about your experience leading R&D projects and technology development in the area of underground hydrogen and CO2 storage, and how you plan to apply this expertise in your role as Managing Director of UEST?
My role within UEST puts me in a position allowing me to transfer technologies developed during past and ongoing R&D projects at academia into the industry. Our industry is in need of solutions and technologies for the energy transition. Most of the R&D projects that I dealt with in academia aimed at solving complex challenges and solutions were typically developed at lab-scale or at most for pilot-scale. This applies to underground storage of hydrogen and carbon-dioxide alike.
R&D projects are often characterised by the presence of unexpected challenges, outcomes and hurdles. This requires flexible project teams and agile project management. The energy transition business areas UEST is active in often require similar flexibility and robust management skills. Our clients benefit from the expertise of all UEST partners with strong technical background and plenty of experience in challenging projects.
The unique know-how of partners within UEST will position us in the market as independent and single-source provider for exciting, cross-disciplinary and complex projects from pilot-scale to full field-scale in these areas.
Can you discuss the current state of the underground energy storage industry, and what you see as the key challenges and trends in the field?
Natural gas storage in the geological subsurface is an established technology since many decades. With the beginning of the energy transition and especially since the start of the war in Ukraine, gas storage was put into the spotlight of public interest in Europe. It is fair to state that underground energy storage and its relevance for energy supply, security and resilience nowadays is vital for most of Europe.
However, the above is valid for natural gas storage where business case, legal frameworks and a mature market exists. With respect to hydrogen storage in the underground, we are still in an early market phase, where significant challenges exist. The situation looks very much like the challenge to cross the gap or “chasm” known from many technology adoption lifecycles between the early adopters and the mainstream. A hydrogen market will need to develop and policies across Europe stimulate market ramp-up. This is of course accompanied with significant challenges.
One key challenge, for example, will be to convert existing natural gas storage assets to become H2-ready. This comprises numerous technical but also legal challenges. It will require to scale-up technologies very rapidly and adapt legal frameworks for hydrogen infrastructure and for storage in the geological underground.
Another key challenge is the total storage volume required for a future hydrogen economy given the relatively low volumetric energy density of H2. Since the energy content per volume of hydrogen is only about one third that of natural gas, it becomes obvious that we will need more underground storage volume in Europe to prevent any unintended energy supply disruptions in a future where hydrogen replaces natural gas. Currently, there are numerous projects related to screening and developing hydrogen storage in salt caverns and porous reservoirs. With each successful pilot more knowledge will be shared and hence paving way for subsequent projects.
How do you plan to integrate UEST’s energy storage solutions with wider efforts to reduce greenhouse gas emissions and promote sustainable energy usage, such as carbon capture and storage (CCS) or usage (CCU)?
In UEST we are permanently looking for technologies that will contribute to the UN Sustainable Goals. As such we are technology open-ended and have no bias towards one specific technology. For example, we not only work on projects on green hydrogen and as such, we also are interested to bring in our expertise in CO2 capture, injection, storage and usage projects.
We have the capabilities to support projects in multiple areas. The HOT Energy group is having experience in underground storage and the partners – ILF and CAC are able to provide innovative solutions in CO2 transportation and energy infrastructure for Carbon Capture.
However, currently there is a lack of CCS enabling legal frameworks in a large part of EU countries. It will be interesting to follow the situation across Europe when CO2 permit prices per tonne exceed 100€ like in the month of February this year in Europe. One would expect some reaction and pressure on markets to develop local CCS projects any time soon. One thing to consider is that there appears to be a significant imbalance between CO2 emitting sites and potential CO2 storage sites. In other words, Europe’s largest industrial nations which unsurprisingly emit large volumes of CO2 do not possess equally large storage capacities to store their emitted CO2within their geographical boundaries. Hence, some significant investment into CO2 infrastructure (transportation and storage) will be required, if CCS shall become a successful technology for reducing greenhouse gas emissions – on top of the above mentioned adoption of legal frameworks.
UEST partners have already contributed in many CCS/CCU industrial projects internationally and are active in joint-industry projects to support development of safe storage and usage solutions for carbon-dioxide.
Can you share your thoughts on the future of underground hydrogen storage, and how you plan to ensure that UEST remains at the forefront of this rapidly evolving technology?
Underground hydrogen storage will be possible in some of the existing natural gas storage sites. Of course, these existing sites will need to be screened for suitability and upgraded for specific hydrogen requirements. Existing storage sites are located in depleted hydrocarbon fields, in aquifers or in salt caverns. All underground storage sites have a total gas content to be split into a working gas volume and a cushion gas volume, where the former is the gas volume that will be injected and produced during the operations and the latter one is needed to maintain sufficient pressure in the storage and enable economic production rates from the storage site.
All storage types mentioned above have advantages and disadvantages. Typically, caverns are smaller in total volume, but can deliver high rates, whereas depleted gas fields may enable very large gas volumes to be stored and provide existing infrastructure from previous production operations. One thing to be considered for hydrogen storage is that caverns filled with hydrogen will allow for pure hydrogen production, whereas depleted gas fields, where the cushion gas consists of natural gas will produce some mixture of natural gas and hydrogen – at least for several storage cycles. Pros and cons will need to be assessed for each individual project.
At this moment, many research projects are ongoing and the technology evolves rapidly. Europe is in a good position to be at the forefront of this development due to a long history track of safe operations in the gas storage. UEST with its partners are involved in many of the technology development projects, the technical conferences and exhibitions on hydrogen storage topics around the globe. At UEST, we will continue to share our expertise with our clients as we are already doing it today.
Can you discuss your plans for expanding UEST’s business both domestically and internationally, and how will you maintain the high standards of safety and performance that the consortium is known for?
While we will keep supporting domestic operators with their UGS and hydrogen storage operations and challenges, the focus of our expansion is clearly the international market. CCS will become a key pillar on the global path to net zero, and we want to contribute to accelerating the pace of CCS implementation. As in all industrial operations, safety is of paramount importance. Our growth will always need to be balanced and constrained by a zero-tolerance policy.
Finally, what do you see as the biggest opportunities and threats facing the underground energy storage industry in the years to come, and how will you position UEST to take advantage of these trends?
There must be a clear vision/business model for hydrogen storage with legal frameworks that are accepted by all stakeholders (including the public).
Storage of natural gas will be a bridging technology for the near future and at least if hydrogen is not available in sufficient volumes.
Scenario A: there is enough (green) hydrogen in the market: then, we will need far more underground storage volumes (and sites = opportunities) to prevent any unintended energy supply disruptions due to the low energy density of hydrogen compared to natural gas.
Scenario B: there is not enough green hydrogen on the market or hydrogen prices is not competitive: the CCS market will grow substantially and a potential competition about the use of subsurface volumes will arise (storing energy or sequestering CO2).
For both scenarios, UEST will provide the expertise and technologies for the underground energy storage industry.