The Hydrogen Energy Paradigm: From Fossil Fuels to the Future
Official Transcript – Recorded June 7th, 2018
Well, thank you everyone. My name is Rinaldo Brutoco. I’m very happy to be with you today. This talk is called “From Fossil Fuels to the Future”. Why that’s so important is because the hydrogen paradigm, which you’ve heard touched on briefly a couple times today, is something I’m going to go into, but I want to do it as a way of showing up path the progression of thinking that leads to the hydrogen future, which will take it out of the category of the, “Gee, I didn’t know it was right here at this time. I thought that was 20 years away,” to “What’s happening today?” I was delighted to hear about the hydrogen back up in Ontario.
What this is about is a commitment we made, I guess it was five years ago now, to the state of California, the Public Utilities Commission. We said, “We believe we can create an energy moonshot in California.” If you heard earlier that we have been the trendsetter, that is true, but what we’re about to uncork is going to revolutionize the world of energy globally and it will start here in California, it looks like. We made the following comment five years ago: “We believe that we can design a system that will be 100% renewably based within 10 years or less at no additional cost to the ratepayer.”
Now, that was such a bold statement only made it five years ago, it was met, and initially, with some humor, some skepticism, but over time as one part of that equation kept dropping into the bucket one after the other, after the other, what’s become what was five years ago looked at as a hope for an idealistic outcome is now seen as a practical trajectory towards the state going green rapidly. Now, no more Peaker Plants are on file anywhere in California. We have done what Pizarro did, we burned our ships, and now we must keep marching.
The good news is there is an enormous amount of money to be made in this march. I’m the founding president and CEO for 30 years of a nonprofit called the World Business Academy, but I’m also a merchant banker. That’s my day job. What I’ve been doing is analyzing the trillions of dollars of profits that will be generated as California leads this conversion. Let me walk you through the conversion. I want to start with the Hindenburg. Why? Because everybody gets hydrogen wrong. Everybody thinks that the Hindenburg blew up because of hydrogen, which of course is not true, because if it were true every rocket that went to the moon would’ve burned up on the launchpad.
Hydrogen is, in fact, the safest fuel known to humans. What’s interesting about this is most of you do not know why we were taught to believe that hydrogen is dangerous. This is a great story of World War II. Franklin Delano Roosevelt was aware that as the Hindenburg was coming over, now remember the Graf Zeppelin was a far less to modern ship that had circumnavigated the globe several times including the first time paid by William Randolph Hearst for the privilege of putting a reporter on board. It operated at speeds of around 85 miles an hour and had 1.5 million miles successfully with no incident. It was far less safe than Hindenburg.
The War Department knew that so when Hitler sent, in 1936, the Hindenburg over, instead of going directly to Lakehurst New Jersey, he diverted the ship, which was 1,000 feet long, so think of a floating cloud, and that ship was 1,000 feet long passed over Manhattan at 1,000 feet up in the air. If you’d have put it on and the Hindenburg was literally over your head like an umbrella. On it were these massive swastikas on all the tail structures. The message Hitler was sending is, “Don’t get into World War II, we’re the master race. Look what we can do from the sky.” It was an attempt to intimidate the US government, who was, at that time, about to pass the Lend-Lease Act.
Well, it gets to Lakehurst New Jersey, it’s now quite clear an explosion occurred in the tail where one of the swastikas was. Rapidly, as you can see here, the explosion was in the tail, the fire starts to go completely up the envelope of the Hindenburg. Now, watch this online if you like tonight. You’ll see that the speed with which the fire goes up the surface of the skin of the Hindenburg is remarkable. So much so that the thing opens like a ripe cantaloupe. Volumes of hydrogen start pouring out. Even with that amount of destruction, every single person on the Hindenburg who stayed on board walked off safely.
Including a couple that were 82 years old from Germany who sat on their bunks thinking they were going to die and were able to walk off at the end. 36 people died who jumped off the Hindenburg. One person died who was unlucky enough to be standing exactly where it came down. That’s all 37 deaths. No deaths from anybody aboard the Hindenburg. So, why did the US government generate a massive amount of publicity over how insane it was to try and make flying ships out of hydrogen? Roosevelt knew that 100% of the world’s helium supply was controlled exclusively by the United States of America. 100%.
He knew if he could convince Hitler this was a stupid technology, then Hitler would go, “Gee, I better take the one that’s the sister ship I’m building, take it apart and turn it into measurements.” Why did the Hindenburg catch fire? As probably most of you know, the Pentagon commissioned NASA to find that answer and the researcher, Addison, at the end of his report said, “The moral of the story is don’t paint your dirigible with rocket fuel.” You see, what happened was when the built the Hindenburg they decided they wanted something very stiff and very light. They fused a form of aluminum powdered hydroxide.
Powdered aluminum hydroxide is exactly what you make a solid booster rocket out of. If you were Morton Thiokol and you were building the boosters for the shuttle, that’s what you used. They didn’t know that in Germany. They thought because it was aluminum it wouldn’t catch fire. The truth is powdered aluminum hydroxide, once it ignites, which it did because of the explosion, is absolutely like rocket fuel and it just spreads like pouring gasoline on. That’s the true story of the Hindenburg.
Now, just to touch on a brief, and before I go to the next one, people often say to me, “But wasn’t that a hydrogen explosion at Fukushima?” The answer is yes it was and it was a hydrogen explosion in Nagasaki and Hiroshima. Yes, hydrogen can be turned into rocket fuel to take a ship to the moon. In fact, there is no other way to get to the moon but using hydrogen, interestingly. Number two, the bonds that we fear, whether it’s because of a blowup of a plant or because it’s manufactured to blowup, occur in conditions which are so extreme that we call them hydrogen explosions, but in that particular case was a nuclear explosion, which generated a tremendous amount of hydrogen accidentally in a confined space which was already on fire.
If you study any of them, Fukushima, you study Nagasaki, Hiroshima; yes, it’s true, hydrogen can be a very, very deadly weapon. However, it’s also the safest fuel known to man. Here’s an example. You can see how it comes down. This is an actual fuel simulation. If you look at the two vehicles, one has hydrogen on the left; the one on the right, gasoline. By the way, this test is identical whether you use natural gas, if you use propane, if you use diesel. The test results of the same. Within about three seconds you’ll see right there a large blue … Oops, let me go backwards. Sorry.
You’ll see this large flame right there shooting up into the air. It’s not working well. To the right, you’ll see, and three seconds, the beginning of an explosion. At one minute, flame still going up. Car now exploding on the right. In 30 seconds it’s completely toast. Just so you’ll know, at the end of this demonstration which was done with the same caliber rifle, the identical bullet fired at both, the internal heat of the compartment of the car with the hydrogen only went up two degrees Fahrenheit. In the entire experiment. That’s how safe hydrogen is. You can’t do that with any other fuel. Whatever car you drove in here today, it doesn’t work that way.
Let’s go to the story, and it’s a great story. We want to make a plan for, we call it the California Moonshot. We want to make it zero carbon because you’re never going to get to a green future if you get there by using fossil fuels. We are committed to using electrolysis to create hydrogen from existing curtailed renewable energy. I’ll show you some slides on that, which is more than enough to power this green revolution in combination with other available technologies that are economic.
We want to make it local. We believe that the grid is the enemy. You’ll see a slide on this in a moment. Microgrids of the future. I live, actually, on an island and microgrid at my home. I’m 100% independent of the grid. I could make a microgrid as small as my home, I can make it for an office complex, or I can make it as large as the one we designed for the County of Santa Barbara for 100,000 people, which stretches from Ventura up to Goleta.
Why one substation at a time? Because what we don’t want to do is face the day where we say, “Okay, turn the grid off, and throw this big switch and all of a sudden microgrids go on.” To the contrary. We have such an aging infrastructure that our opportunity is to continue to replace every single day all that infrastructure instead of investing in things will throw away sooner. With the new technologies the microgrid provides. It also gives you one substation, means you can literally go through an entire load pocket efficiently. We also want to maximize all the distributed energy, obviously. And we want to leverage the existing infrastructure. Community is ready for a change.
For example, many of the communities in California are already, because of law, required to have 16 kV transmission, local distribution lines, many of our cities still have old 4kV lines. The new 16kV lines will automatically accommodate everything I’m describing today in the microgrid world. In cities like Santa Barbara, they have a combination of both. They’re in the process of replacing the 4kV lines. The cities, like Goleta which are fairly new, it’s all 16kV now.
Make it efficient. Distributing green energy saves money compared to reinvesting in decaying, obsolete centralized energy production and transmission. You can see the economies of scale, the distributed growth, the reduced energy costs for residents, businesses and government. You get no additional rate paying cost for going green, which is one of the great myths we’re penetrating here. People think it’s going to cost us to go green, the exact opposite is true. We see a new gold rush for investors. An in-state renewable technologies both for manufacturers, installers, obviously, service. All the companies that are in the periphery of the conversations that we’re having yesterday and today, all stand to benefit enormously because they’re sitting there at the threshold of what we perceive as, really, the next gold rush. Our goals. 100% renewable energy, 0 carbon emissions, no willingness whatsoever to take a single molecule of fossil fuel ever again. Even if we wanted to, it would be insane given what we know about climate change. We don’t want to, because anything you put into fossil fuel today, you’re going to rip out before it’s useful life has come and gone. Transportation sector electrification. Here’s where hydrogen really helps. You see, 37% of all of our emissions, according to the California Air Resources Board, are from the transportation section.
I’ll have a show of hands, how many of you drive hydrogen vehicles? Okay, so I do. I guess, I’m the only expert. I drive a hydrogen vehicle. I drive a Toyota Mirai and it’s a phenomenal technology. One of the things you should know, if you haven’t looked at it yet, show of hands, all of you know how server farms work, right? Where there’s a bunch of, in fact, PCs all linked together by the hundreds. Everybody knows what a server farm is? Okay. The reason you can do that is because there’s no loss of efficiency when you link two PCs, together, or three, or five, or 50 or 100. Hence, we’ve replaced all the “big iron” with PCs and we are much more flexible now because we can scale it up and down as much as we want. We can add to it, we can take it away.
It turns out the exact same factor is true with fuel cells. The fuel cell in my vehicle can be daisy chained with 100 other fuel cells and there’s no loss of efficiency when you do that. Or it can be just one fuel cell. It can be 1,000 fuel cells. What I’m describing to you is mobile power plants. Start thinking of the implications to the transportation section when, instead of taking your car home at night to charge, you take your hydrogen car home at night to run your house. Both Honda and Toyota have an attachment that fits in your bumper that will let you plug your house into your car.
Now, think of what that does to reduce the burden on the grid as we go through this transition. It’s enormous because, as some speakers have already observed, more and more EVs coming online pushes even more responsibility onto the grid and creates more challenges. What we see hydrogen doing is the reverse, because hydrogen is both a transportation sector and it can be used for energy production by daisy chaining fuel cells. Then you get the dual benefit of a simultaneous improvement in both transportation and energy sector for the same price, which means you’ve now lowered the cost and the barrier to entry in both.
If you didn’t see it, by the way, three days ago Toyota made a major announcement. When I first bought my first Prius when they first came out, we didn’t know if they’d want to make enough of them that it would stick around. It turned out that bet paid off. The Prius became a revolutionary technology. Two days ago, Toyota announced that they were going to mass scale production fuel sales, mass scale a production of fuel tanks. That’s huge because it means they’re going to do with the Mirai what they did with the Prius. I think you’ll see it happening by 2020 in large.
We want to leverage existing local distribution infrastructure in the communities, but how do we get the energy there? Why don’t we look at the barriers first? Intermittency. What do you do when the wind don’t blow and the sun don’t shine? That’s one of the barriers, right? One of the things that we have to deal with when we’re going through renewables. What about California’s decaying obsolete centralized grid structure, which was so easy to jerk around that when Enron did it to us, we couldn’t even stop them when we found out what they were doing?
What about the risk of a single guy with a single stick of dynamite in the middle of the state blowing up a couple of towers and leaving the entire grid impaired? Choke point. What about hacking? The grid is extraordinarily vulnerable. Every government agency that studied it said there’s at least six countries that could bring our grid to the knees if they wanted to and the only reason they don’t is because they know we could do it to theirs.
We’ve got to end our fossil fuel addiction. We’ve got to be willing to take the needle out. It’s like heroin. You’ve got to get off of it. There’s no way you’re going to do it if you say, “I’ll just cut my heroin dose a little.” You’ve got to say, “It’s over.” Fossil fuel has ended. Whether it was a good thing or not doesn’t matter, it’s history. What we’re looking at is the future. As a merchant banker, I’m looking at where to put my money for tomorrow, not what I made on yesterday.
This is an example. California’s decaying obsolete centralized energy infrastructure, these are plants. When you see the slides afterwards, you’ll get a set if you want them, all these plants are, in many cases, immediately need to be replaced. Some of them have a few years to go, some have as much as a decade or so to go. Basically, all that’s got to be replaced. Now, if you replace all that fossil fuel crap with more fossil fuel crap, what’ll happen to your bills as a rate payer? They’ll go through the moon because you’ll end up like Toronto did, overpaying for stuff that you don’t want and now 80% of your bill is for stuff that’s been decommissioned, basically.
Well, as you heard from the prior speaker, David, if only you were paying was 20% of your bill, you’d be a happy camper and that’s why we don’t want to replace this with fossil fuel. We’ve got to integrate large renewable energy resources and do it as fast as we need to take this system down. By the way, I’m sure you all know, renewable resources are the quickest to come online. It’s much quicker to put up a solar array than it is to build a power plant.
That number just shows you that 19% of our greenhouse gases are from the electricity system and the state says it will achieve the target of 33% by 2020, but whereas many thought 100% is impossible, we now know that the former Lead PhD, whose paper by the way, is attached to these slides. Lorenzo Kristov just retired in February, an associate of ours. His job as the Lead PhD at CISO was to see 10 years into the future and predict where the grid could go. Kristov and I are 100% in alignment where it’s going. It’s microgrids, you’ve been hearing about microgrids.
There’s a paper that you’ll see that he wrote with Professor Paul De Martini from Caltech and that we, the Academy, I wrote, a companion paper to which plugged the one hole that he and Paul came up with, which was porting power between discontinuous microgrids. If you hold that question in your mind and if somebody wants me to explain it more, I will, but the question they came up with is how do you get power between two microgrids that might be 16 miles apart and there’s no wire between them? If you’re going to microgrid the whole state. We came up with the solution which basically uses hydrogen with a fuel cell at each site. Paul accepted that as the answer and Lorenzo accepted it. Now, we published the two papers together, and you’ll get copies of them.
As well, by the way, as a paper which we just discovered recently by Jay Keller who was the Lead Research Scientist at Sandia Labs until he retired a couple months ago. The scientific community’s coming along very fast now. The California Energy Commission has stated that they believe in the future of storage combined with renewables. We’re now moving into a world where it’s going to happen and the only question is how fast, by whom, and with what resources?
This is, by the way, the grid that we’ve got now. As you can see, because it’s so long, it goes down the middle of the state, it’s extraordinarily vulnerable to terrorism and to, as it was, fires. You know the Thomas fire was started by a grid accident. Okay. Integrating large renewable energy resources. You know the Thomas fire was, right? The largest fire in the history of the state of California. That’s the one that took out Montecito eventually because of the mudslides. Integrating large renewable energy resources is costly and slow. Electricity, again, 19% of the greenhouses gases. Those are the targets. What are the barriers?
So those are the targets. So what are the barriers? Well, we’ve talked about them. And before we invest the five trillion dollars to rebuild all that stuff, pardon my French, all that crap, tied to an aging electrical grid, that the conceptual framework for was created in 1880 in Manhattan. How many things in science standstill from 1880 to 2018? Here’s an interesting analogy. When Alexander Graham Bell called Watson, he used a copper wire. Interesting idea. It worked. But the problem was, as long as we stayed with the copper wire, only 23% of the world’s population had a phone. That didn’t work. Here’s what’s happened. Martin Cooper, if you don’t know, that’s the guy who had the cellphone, a lot of people don’t know what he looks like. So Martin Cooper invents the cellphone and by 2010, 600 million people, today the number is 95% of the population of the planet has phone service. Why? Because we saw that the wire which was the way we started it was what was holding us back. When we got past the wire, the wire became, at first it was our boon, then it became our enemy. This particular woman, that’s an actual shot by the way of a woman in Africa using her cellphone to connect with a local market, as an example. So here’s our decaying nineteenth century system. Same limitation. We’ve got long wires. So if you’re in India or Africa and you’re waiting for the wire to come, guess what? It ain’t never coming. So that’s why Modi if India has now built six, and he’s building a bunch more, micro-grids in India, at the village level, and he’s spoken really brilliantly about the fact that that’s the only way that we can electrify India. Oh and by the way we can do it and not use coal in the process, which is all six of those micro-grids are operating without coal in a country that uses coal. Okay, we’ve got centralized power systems that are decaying and vulnerable. You can see how vulnerable they are. Look at Puerto Rico, still hasn’t been rebuilt. Grid disasters can plunge entire regions into darkness. You remember the great Northeastern grid collapse that occurred because of one squirrel who ate the nut at the wrong time. Terrorism, of course, and cyber attacking. So let’s get rid of the wire. The wire’s the enemy. It did us a good thing when we needed it. Nikola Tesla who is responsible for those wires when he disputed with Thomas Edison the way to optimize the energy system. Tesla won that battle. It turns out, Edison was right. He was just ahead of his time.
So now we have solar panels and windmills that produce tremendous amounts of electricity to the point where we’re curtailing them. As you just said a moment ago David, you can’t turn your nukes off, so what do you do? You turn off the windmill and you turn off the solar panel. Our philosophy, our theory is the exact reverse, and by the way the academy was responsible for, took a leading role, in closing the nuclear power plant at San Onofre, and we’ve taken the leading role also at closing the one in Diablo Canyon. For those of you interested, my first book on nuclear power was 19-20 years ago, published by Simon and Schuster’s. A college textbook, it’s still very good and in print. The point being, nuclear is not the answer and if anybody here thinks that nuclear is a green technology, please, I beg of you, let me send you the white paper that’s the definitive examination of that question. So if anybody thinks that, please, please, do ask me for that white paper. It’s heavily documented, it’s heavily footnoted, and it’s bulletproof. You’ll be delighted to see what it says. So this is curtailment.
This particular slide came out of a CAISO, which are the California Independent System Operators, analysis of what curtailment would be out into the future. As you can see that’s all wasted energy. This is the actual curtailment happening right now. And what it’s doing is it’s taking and putting a huge economic burden on people who want to buy windmills or build solar arrays. Because they have to build into it enormous inefficiencies of how often they’re going to get curtailed. So we have a simple solution. How do we most effectively utilize this excess electricity? What can you do with it? Well, we believe a solution is something symbiotic. Structural transition to community micro-grids so we don’t need those centralized power sources in the first place. Use network community micro-grids to support each other. I’ll show you a slide on that in a minute. By the way, that’s all from Kristof’s work at CAISO. Storing curtailed and excess energy as hydrogen. David’s presentation also mentioned they have an electrolyzer up in the arctic circle where that plan exists, mine. And what they do is they electrolyze using electricity, excess electricity, the hydrogen, store the hydrogen, and then they use it as a fuel cell when they need it.
Fuel cells, if you haven’t driven a car like mine, I urge you to do so. A fuel cell is as instantaneous as stepping on the accelerator of the gasoline car you drive. In fact, if you don’t lose the low setting on your car, you’ll patch rubber. Because an electric motor is that much more efficient than an internal combustion engine. Tiered stored HydroKey, and I want to come back to that. There is no one storage solution for everything all places, all times, all circumstances. Doesn’t exist and shouldn’t exist. Storage is a hierarchy question. There’s certain things that batteries do exceptionally well and there’s certain things that fuel cells do exceptionally well. There are certain things that flow batteries do at a megawatt scale very well, and there are things that bump and store or kinetic, or anyone of many others which I’ll show you in a moment, all of these fit together really seamlessly if you start by asking yourself the question, “What’s the optimum system for the least amount of cost?” It doesn’t usually get asked that way, but that’s always the right question. So this is whether it’s utility scale, localized scale, both of them are part of what we have now become to call the hydrogen economy.
So twenty-first century to replace the nineteenth century. You got centralized energy production on the left. Expensive, dangerous, terrorist prone, long deployment time, takes ten years to build them, and by the way nobody’s going to put more wires up like that. Not in California. We’re the people who invented “not in my backyard”. It’s not going to happen here. So if you wait for those wires to come, you’re going to wait as long as the villages in India. On the other hand, we are already building distributed wholly [inaudible 00:26:46] micro-grid systems. And those distributed wholly integrated migrated systems, all we had to do was figure out, this comes from the Demartini and Kristof paper, all we had to do was figure out, see that little blue line connecting the two circles? All we had to do was figure out what to do to connect what’s that blue line. So what’s the advanced technology? What resilient islands or electricity as small as a building like my house, or as large as a city, 100,000 one we designed for Santa Barbara, withstands cyber terrorism. You can’t hack them because there’s too many of them, there’s no centralized source. Violent storms aren’t going to affect them because even if it knocks one of them, it’s not going to knock the one up next door.
Interesting story. San Diego had a fire. There’s a micro-grid operating at UC San Diego and saves them 18 million dollars a year in energy costs. When the fire hit San Diego a couple of years ago, they were about to lose their grid because they couldn’t keep it stable. They called the University of California, they said “Hey, can you port us some power quick? We need it.” And they said all we got is about seven megawatts we can give you. They said that might do it. They pumped seven megawatts across the line and San Diego never went dark. Not one blip on their grid. So, it can be done, it has been done. And accumulate H2 storage allows for the transportation sector to cross-feed with electrical sector. Sunny generation close to use creates energy independence and security. And local energy development creates jobs, markets for electric vehicles, energy efficiency, demand response, solar, et cetera. So this is how they look when you start networking micro-grids. Notice they’re different sizes. And notice how there’s a green arrow between each one indicating that continuous micro- grids can be easily be ported one to the other and act as a backup like San Diego did. University of San Diego, to University of California San Diego to San Diego Gas and Electric.
Each one supports a neighboring micro-grid if need be. They’re modular. And if you build them around one substation, it turns out it works optimal because that’s a great place to put your storage. And you’ve already got the land and you’ve got all the distribution. So you’ve got local distribution, you got storage and you’ve got the ability to continue to leave the grid attached like umbilical cord still on the baby that’s been born. Before you cut it off, take your time, make sure the baby’s doing fine and then cut the cord. Hydrogen storage is the only economic system we discovered, and by the way I didn’t start out as the hydrogen guy. My first assignment when I wrote the book 20 years ago on renewable energy was to look at peak oil. The Hubble curve. And if you go down that line and you keep asking good questions, sooner or later you get to renewables. And sooner or later you get to hydrogen. And that’s the only one we found. Nothing else seems to work that we can discover. So, California’s tomorrow, it looks like this: micro-grid. No long stringy grid down the middle of the state.
Community micro-bids for anywhere from we think from ten to 50 thousand residents would be optimized. And again would fit nicely with local substations. All energy locally generated, plug and play integration because all this stuff can be mass produced and plugged in, literally. Modular incremental implementation means little to no risk in transition. Renewable green systems go zero GHC emissions immediately. And 100% or more of the energy used in California can come from these renewables. How do you get to the hydrogen? Well this shows you very quickly. Excess electricity currently being curtailed and wasted. Waste water. So we’ve done a theoretical calculation. Pretty sure its correct. I’ve had Hydrogenics, by the way, verify this. We work with them. I can use, in a state like California where water is a problem, I can use the output of any California waste water treatment plant for my water. In other words, I can take sewer water and turn it into gold. Think about that. We didn’t know that the water we were pushing through our plants could be used to create our energy. So we electrolyze it. It comes out as H2 gas. That happens to be an actual tanker. That’s the Titan tank, which holds, gosh, about ten thousand, I think holds about ten thousand kilograms of hydrogen at a ten thousand PSA pressure.
And the reason for ten thousand PSA is that all the car companies have now agreed ten thousand is the standard. So all car tanks, all truck tanks, bus tanks, all going ten thousand PSI. So here’s the potential. To function as a [inaudible 00:31:26] source, batteries must be able to store adequate energy and be dispatched on demand. Good that they do that. But what happen if the sun doesn’t shine for a week as has happened? Energy storage potential increases with increasing PV penetration, but again, you got to be able to hang onto it for a long time. Hydrogen can be stored virtually indefinitely and used in any amount that you want with instant spin up and spin down characteristics because the fuel cell. What we’re talking about here is once we go past taking the curtailed photovoltaic and wind resource, we believe, and I think the comment was made earlier today, we believe that the future model is sometime where the storage and the source are co-located. So we’re looking at a wind farm that wants to be constructed and what we’re doing is offering to buy all of the excess electricity that will be curtailed from the utility at a deep, deep discount because at that point it’s free to us, it’s free to them. And by locating the hydrogen facility there, we actually create the hydrogen that can be used anywhere in the system.
This just shows you the capacity credit storage. So the ability of a resource to provide energy during peak periods and if we go through this, and I’m not going to go too far into it. What the blue line is, what do you get for two hours? What do you get for four? You get six for eight. You have to, when you blend storage, you’ve got to look at the amount of time you can hold that storage. That’s the key. And so what we’ve come up here is something like, of course that’s the hydrogen line, right? This is the grid I wanted to show you. If you look at all the various storage, and it might be hard to read, but again, we’ll pass out the slides. Every storage technique is on there. And what we’re doing with that is we’re showing duration, response times, and what we will be happy to do is to break that down and I’m being assisted in putting these slides together and today with Bob Perry, our director of research back there, who’s doing double duty on the AV. Bob and I would be happy to break this down for you to any single technology you want to know more about. So and this by the way is the CAISO Curve that shows local conditions. Everything about that redline should have been electrolyzed, period, end of statement. It’s wasted otherwise.
Now we’re looking at the feedstock. Curtailed energy, long term energy reserved for the system, reliability and resiliency all comes from hydrogen. Fuel linking slash stationary and transportation sectors again, fixing a problem in transportation simultaneously with fixing a problem in electricity. Why? Because as you’re creating more and more hydrogen in the years ahead you’ve got a completely wide open market in the transportation section. Meaning, we’re selling Mirai cars and Honda cars everyday. The Clarity is a hydrogen vehicle, Hyundai sells one. And there’s a big announcement, we will show you here in a second, so you get to sell the excess hydrogen you don’t need for your electrical system if you get too much of it, straight into transportation where it sells for a premium right now. Conversely as you keep making more and more of it, you will not only have more cars on the highway, but you’ll have more and more fuel cells operating in conjunction with micro-grids. And again, what we love about is the modularity. We love the modularity. It leads to optimizing the deployment and scaling over time. So this is, take a look at this when you get a chance to look at the slides. It’s too hard to read from where you are.
What this does is shows all the integration elements from where we are today, with a grid in the red, and where it’s going in H2 in the future and how these integrated alias are interrelated. So here’s an interesting one. So upper left hand corner, that’s my car, the blue one. The Mirai, the red one above it is the Honda Clarity. The bus below that is the hydrogen fuel cell bus that’s been operating, there’s a fleet of them, in Emeryville, California for years now. The medium duty truck was on the market some time ago. And the real surprise is in the lower right hand corner. So that blue semi truck was just released by Toyota. It uses two Mirai fuel cells. It’s on the road. It’s the answer that the Port of Long Beach and Los Angeles thinks to their pollution problem. So there’s a contract now for 50 of those trucks. This thing can pull whatever I say my trailer can pull, but it does it with two very small fuel cells. And it’s here today. This just shows you the comparison, and it’s a very bad comparison. Battery electric buses in Los Angeles have been in a very unfortunate detour. And this slide, if you look at it carefully, will show how much better they’ve done with Emeryville fuel cell buses. It’s not even a close call.
If you look at stall, stops, breakdowns, useful life, it all falls apart. And this just shows you, Ballard is the source of this, that we now have all of these. So we have a tremendous number of forklifts that operate on hydrogen. Show of hands, does anybody know why they use forklifts? Do you know why? Okay. Forklifts are the number one use for hydrogen because you don’t have to plug them in overnight, so you don’t need to have one set of forklifts and one set in the daytime. You just switch out the tank. So with half the forklifts you would need in any commercial application, they have caught on very widespread now. Forklifts are a big application. Obviously cars, we have three or four thousand right now in California growing every day. You know about the buses, and you know about the trucks, and what you see on the far right is some innovative technologies within probably two years or three years you’ll see in local transit. Okay, going to end with this. Going to show you Santa Barbara, California. Beautiful place, everybody likes to come visit. And here’s what happened. It’s in need of distributive energy desperately. It’s been designated, and I’ve had a meeting with the, just recently, past President of the PUC on this subject, it’s the most at risk community in California for a spontaneous cutoff of complete electrical power, which would drop us, well not complete, which would drop us from 250-300 megawatts down to about 66 megawatts because there is one little feeder line on the bottom. This shows you a very, I hope I can get this pointer to work, this shows you this long line right here, comes out of Ventura, by the way that’s where the Thomas fire started, right there. All of this is an inaccessible terrain. Southern California Edison, in a filing which we discovered in 2012 and again in 2014, basically told the state of California these wires are coming down, we cannot even maintain them. We can’t tell you when they’re going to to come down, but we’re going to tell you that a fires going to take them out or erosions going to take them out with water. So we’re just putting you on notice. It’s not our responsibility, we warned you, do something. And then they made a proposal and they said they would be willing to solve the problem if the state of California would allow them to put high power transmission lines along the beaches to reach Santa Barbara. You can imagine how far that idea went. And it was laughable because Edison knows, Edison knows they cannot, not only can they not maintain that, this is a … By the way, that injection point is Glen Annie Substation up in Goleta. They know they can’t maintain that and they haven’t got a solution, which is why we got into micro-gridding. So constraints, one of them is we have two utilities in Santa Barbara where the county, where PG&E is in the north part of the county and Edison’s to the south. And where we inject at Glen Annie is the furthest on the lines, the end of the extension cord from Edison but it’s 16 miles south of where PG&E starts. That’s the problem. No secondary transmissions really available for North County. Linking the two is not practical, and they tell me politically impossible. There’s no backup substation lines other than the 66 KW, which Edison says they could goose a little bit but we’re going to be 100-150 megawatts short when those lines come down, which would be catastrophic to a town like Santa Barbara with the whole world watching.
And the primary backup lines run co-terminously so for 15 miles, if that’s where the break is, they both go down, the backup and the primary. And they were, I had a conversation with Edison about all that. Now I want to show you something else. Okay? This is the Thomas Fire. Everything in red has been designated non-buildable in the future. In blue, is buildable if you can solve the electrical problem, meaning the city and the county cannot guarantee services. Why? Well to give you some idea, in that fire, the pumps, first initially for the fire hoses, became inoperable because you couldn’t get electricity. Number two, that same location where the firehouse is, is where the electricity is to drive the sluice gates, which should have shut the reservoir saving 900000 gallons of water from hitting Montecito, together with the amount of rain.
This is why there’s two billion dollars worth of class action litigation, today, against Edison, by the way. Now, what do you do with that, the largest wildfire in California history, but we say that not only could have been avoided, should have been avoided. And how are we going to do it? ‘Cause California’s climate future dictates it. So, our partners, Clean Coalition, Craig, and the academy, have developed, and donated to the City of Montecito, an outline of how to create micro grids, that would keep Montecito running, even in the event of power cutoff, and per Edison’s request, and for some of the residents there, the first of the two is actually at the fire station. So the upper village, it’s called, is where the first of the two would go, the bottom one is the Coast Village Road properties.
So, what are the economic opportunities? Obviously, I called it a gold rush, you know what that means. Local energy production will lead innovation, entrepreneurship, job growth, and one more thing that’s going lead to we desperately need. We have got to get the … You know what Moore’s Law is, right? Every 18 months to two years, technology doubles, it’s been going on for thirty years. One of the things that we haven’t done with electrolyzers in a hundred years is mass produce them. No innovation at all. Virtually.
So what we need to do, is start making so many electrolyzers, that the cost plummets like it did with windmill, and solar. Even with today’s costs of electrolyzer technology, which is over 100 years old, it turns out we can produce hydrogen, today, for a car for example, at a price somewhere between eight to 10 dollars, about eight dollars a kilogram. And eight dollars a kilogram is four dollars a gallon for a car. And there are statistical analyses that have been done, Sandia Labs did one, saying that number’s going to come down to probably three dollars a gallon, once we get into mass production. Again, that’s a portable handout. So if capital markets are ready to fund renewable energy projects … I get a call, gosh, once every day probably? For somebody looking for an opportunity to invest in renewable energy, or someone who’s got a renewable energy project that wants an investor. So the capital markets are ready, regulators are starting to get ready, which really shocked me. We’ve been fighting this battle for five years. Now, it’s sort of like we’re on the home team all of a sudden which feels great.
And last but not least, we believe that the strategically located electrolysis plants located near areas of excess renewable energy, can manage, not only California’s curtailment problem, but do with valuable long term storage reserves. And that’s what we believe what we’ve designed for, in this case, Montecito, and the crisis, is good globally, it’s a first way to get integrated, renewable, 100% micro grid systems, this is what Modi is now building in India, we believe the hydrogen enabled micro grids which he’s not building in India, but we believe hydrogen enabled micro grids will integrate with existing energy systems, so we have a smooth transition, and we believe the solution coupled with pioneering leadership and investment can catalyze on unimaginable growth in the advanced energy industry and the global energy economy as a whole. So we believe at the World Business Academy, that this is the solution to move humanity to the next energy paradigm. Welcome to the hydrogen economy. Thank you.
These are the three papers … if you get a copy of the slides you’ll be getting this. So the first one by Christoph D. Martini, you can see was published at Cal Tech, relying on fuel cells and micro grid management that goes with that paper, and the one that came out of Sandia. And actually, no that’s Enel, and then Sandia’s the last one.
Rinaldo: 44:32 Thank you. Questions?
Question/Answer Period: Unfortunately, those asking questions were not recorded or mic’d, but we found the answers valuable.
Speaker 1: How do you see the role of the traditional regulator playing in the South, can you [inaudible 00:44:40]?
Rinaldo: Well, as I said, I think they’re signing up to it. So the California Energy Commission is definitely ahead of the PUC on this one. But I think in the … I’m sorry for this … there’s a way to turn that off or something. The California Public Utilities Commission has been dragging it’s feet. And one of the reasons is … This is a great analogy for electricity. Absolute power corrupts absolutely. So what’s happened is, because of the 120 monopolies we’ve got built into out system, with Edison and PG&E. And because the regulators in California realized they had to break generation away from distribution, there is confusion as to how the utilities, or the IOUs, the Investor Owned Utilities, will be playing in the future. The PUC was hostile to change because it wanted to keep those utilities shored up. Where they used to say, in San Francisco, “we keep the lights on.” So the utilities commission is located here in this town. Not Sacramento. That’s now changing because the California Energy Commission, which is responsible for hitting our mandates, is saying, “we don’t want you to keep building this crap.”
And what I’ve alluded to earlier, when we were fighting the case for four and a half years, when we were to stop the Peaker Plant in Oxnard, we lost at the hearing level. We lost at the internal appeals to the PUC. We lost at the full PUC. And the California Energy Commission for the first time that I know in history, wrote a letter two days after the decision saying, “well until 30 days is up it’s not on our desk. But if you send that decision to us the way it’s written right now, we’re going to turn you down, because we believe the petitioners,” that’s us, “made a compelling case that photovoltaic combined with storage absolutely can meet the needs of this planet.” In fact, part of the presentation we gave was to show that 350 megawatts, without a push, and we identified the actual roofs we’d put it on. We did say, theoretically we could put it up there.
So what’s happening is that there’s a regulatory shift that’s starting to happen, politics tends to be slower than business, business is constrained by politics, that’s the state, but what’s happening is that the movement’s now accelerating more towards the business side of that equation, because the need is that great, and the profitability is that high. So you’ll see that acceleration occur, no matter who’s President of the United States, even though we probably know who the next governor is going to be, certainly true, for example, [inaudible 00:47:10] governor, this will go at a quicker pace.
Speaker 2: Yeah I have a question. So first of all you showed for example a hydrogen powered vehicles, I’m just curious what the range is on those- [crosstalk 00:47:22]
Rinaldo: Sure. Yeah. Okay. So my range is listed at 300 miles. It takes me about 4.9 minutes, no 4 minutes and 50 seconds to fill up from empty, so it’s much better than recharging. I’ve been able to drive everywhere in the state of California without running out of fuel, I do have to look on my handheld, California Fuel Partnership puts all the stations, the status of every station, available or hydrogen, and I look before I go and I go, “well 150 miles from now, where am I going to be?” and I pick a station near there. They’re almost all located next to major arterial freeways, so it’s easy on, easy off, and I’ve had no problem driving from San Diego to the bay area.
Speaker 2: And what’s the cost for traveling compared to Santa Monica, Newport-
Rinaldo: That’s a great question. Fortunately, like the Prius, Toyota and now Honda are subsidizing hydrogen vehicles so if you haven’t heard about the great giveaway, all the hydrogen’s free right now. So my car, which has a Lexus Technology Package, has a Lexus ride, great … all the amenities you could imagine, Bose sound system … I am leasing it for 349 dollars a month and I pay nothing for fuel. So I say that compares favorably.
Speaker 2: Final question, I mean this is a big segue away from the vehicles, but you know the elimination of the transportation lines and stuff like that is a very interesting thought how would that apply, say, major wind farms or some remote location like Eastern Montana, would you use the wind farm to produce hydrogen, and truck the hydrogen out to the point of use? Would that be-
Rinaldo: Yeah. So it’s relatively inexpensive to move hydrogen now. But the ideal is the future of hydrogen is the same as the past of natural gas. So you get a wind farm … Montana has so much wind. It’s like the Saudi Arabia of mid-America, right? So you put in a simple pipeline, if that was a natural gas field, pipeline would already be there. And for those who don’t know, you can retrofit a natural gas pipeline, anything built in the last 10 years takes almost no retrofitting, a few thousand have to get changed. And if it’s an old, old pipeline, and all you can do is sleeve it, so the pipelines are there, we’re not going to be increasingly using it for natural gas, despite what the current federal government or EPA thinks, and it’s ideal for hydrogen.
One of the things people don’t know is that there’s a thing called hythane, so when you mix 15 hydrogen with a regular natural gas, it burns in the stove of your home identically as natural gas. So we can be bleeding hydrogen in as we’re taking natural gas down into every home in America, if we want.
Speaker 2: Can you mix it with methane, from dairies [crosstalk 00:50:15]?
Rinaldo: Can you, yes, you probably don’t want to. Methane from dairies is not as consistent as natural gas, in a pipeline. So we deal with impurities in that subject. So can you do it, technically, yes, practically, probably not a good … You know what you could do better with methane? You combust it on the farm and run it. There’s a place called the Mason-Dixon Farm in Virginia that has been operating on 100% of it’s own power since the 70s, late 70s, and the biggest cash crop is the electricity it sells into the grid, it’s second biggest cash crop is milk, it has almost no employees. It’s all electrified.
Speaker 3: So you have all these micro grids that are connected [inaudible 00:50:57] in California. Are they connected by hydrogen pipelines, and if so, don’t you have a say in [inaudible 00:51:02] issues for the [inaudible 00:51:03]?
Rinaldo: Well first of all if they’re contiguous, it’s not an issue. Okay? Remember, you can pour a megawatt over a 16 kV local distribution line no problem in either direction. So if they’re contiguous, you don’t have a problem that’s the example UC San Diego and San Diego Gas and Electric, they were contiguous. In the case, and this is the hard case, when you have two utilities, one’s in Goleta, Edison, 16 miles of nothing but empty land and hills, until you get to Lompoc, which is at the southernmost part of PG&E. We believe that you can truck that 16 miles with hydrogen between them if you had a power outage in one of them, in one micro grid, let’s say the one in Goleta goes down. Well, 16 miles in a semitruck, with that tanker I showed you, is roughly the cost of one driver at about 10 … that would cost about 15 dollars for the driver and about 100 dollars for the truck.
Speaker 3: And if the landslide takes out the highway?
Rinaldo: Always another issue coming from the other side. So when the landslide takes out Pacific Coast Highway going up to Big Sur-
Speaker 4: [inaudible 00:52:15] transmission lines.
Rinaldo: Took out the transmission lines. First … they were on top and then took them down … but you can still get to either side from the other side, you just can’t cross that barrier. So, not an issue. You lose the road, come from the other direction. So if the slide is in Lompoc, you come from the Goleta direction. If the slide is in Goleta, you come from the Lompoc. And you go around. When the Thomas Fire happened, some people like Craig Lewis, who had to get to an appointment, literally drove like, what, four hours? He had to go four hours around the cutoff. Because the road was …
I’ll take who was next. Ma’am, you had your hand up?
Speaker 5: I’m curious if [inaudible 00:52:56] are now. We’re not building anymore hydrogen [inaudible 00:52:58], no, nope, not an option. So we covered the transmission line, but it’s not an option. Let’s say we wanted to deploy a one, maybe five megawatt power plant, might be created to serve an area, a city like Oakland [inaudible 00:53:18] we have a serious issue, and it’s happening right now. What kind of cost would you link to a hydrogen [inaudible 00:53:27] generator, over an area-
Rinaldo:Put a generator? You mean like a fuel cell?
Speaker 5: [crosstalk 00:53:32]-
Rinaldo: Well you daisy chain it. So don’t put more than you have to, size it right, so if today you need one megawatt, put in one megawatt like a server farm, and add the next megawatt when you need it. But I would also urge you to look at local generation, so even in a place like Oakland, here’s a reasonable calculation … if you have six acres of rooftops, and Oakland’s got tons of rooftops because they have a lot of industrial, particularly down by the wharf … six acres equals one megawatt of generation. So if you were to take the parking lots in Oakland, if you were to take building tops in Oakland, if you were to take concrete tilt-up industrial buildings in Oakland, you probably will be an energy supplier to people north of Oakland or in living across the county. That’s the short answer.
Well the cost is the function … Again, are you going to generate locally, or nothing locally? Okay, that’s a political question. Alright? But we know the cost to generate solar in Oakland is about five cents a kilowatt. And it’s dropping, probably going to be four soon. We know a contract was just done for a solar array in the desert for three cents a kilowatt. So four cents a kilowatt is a good number to use, five tops. Now, if you generate it for five cents, and you sell it to PG&E, they’re going to mark it up and sell it back to you, obviously, and that’s a political question. But I can tall yeah at five cents a kilowatt, four cents a kilowatt, you got all the solar you want.
Wind comes in at three to four cents also. I suspect because you’re on the bay, you’ve also got wind. And a subject often people don’t look at, is that vertical wind is an urban opportunity waiting to happen. When you think of wind today you think of massive, 300 meter towers, with these huge blades, like Altamont Pass. Don’t have to do that. On my boat, I have two that big around windmills, tri-bladed. They generate all the electricity I need to run my boat, which is quite large, and it doesn’t need to be plugged in because you can get very efficient vertical wind applications. So I just urge you to look at all the different technologies for generation, look at what you’re willing to originate locally for green energy, just don’t do anything from fossil fuels. And what you’ll find is you can’t give me gasoline at four cents a kilowatt. It’s not that cheap.
Rinaldo: Okay. Next, ma’am you had your hand …
Speaker 6: Thank you for your presentation. So how do you see micro grids chained together in more remote locations, like you saw the example of India but we’re not going to build a transmission line [inaudible 00:56:15] and may not be feasible to, say, drive hydrogen in a truck between, like, for example, in Canada we have our remote communities, can’t drive they’re completely isolated.
Rinaldo: Yeah, again, you could generate the hydrogen locally-
Speaker 6: Like, if it’s down. You proposed to connect them together-
Rinaldo: No, I’m saying, you could generate in any community no matter how remote, including … He’s doing it in the Arctic Circle. He’d generating hydrogen with the power in the Arctic Circle. So you take solar in Canada, or wind, both which are good resources, and you generate the excess power you want, to electrolyze it into hydrogen, and you put it in storage tanks like what David showed you, and that storage will be there for when the wind doesn’t blow or the sun doesn’t shine. For weeks, months, years. So any community can do it, now, you could, also, and I gave the example, 16 miles away and there is really good highway, you can drive it. But my goal would be every micro grid should be self-sustaining if at all possible, and if you can’t get hydrogen from somewhere else, make your own, on site. Just overbuild your generation capacity from renewables. People missed how much power comes out of the sun and the wind. It’s massive. So when you tap it, don’t just tap it for the light bulb going on, tap it for the electrolyzer running. That would be my suggestion. Does that answer your-
Speaker 6: Yeah, I mean I guess it doesn’t provide a resiliency-
Rinaldo: Yes it does because the tank is there. So whenever you push the button, instantly, it creates electricity. When I put my foot on the pedal of my car, there is no delay, even a second. It’s instantaneous. Because the fuel cell is the release of an electron from a hydrogen molecule that touches an oxygen molecule. And the speed at which those two touch is mind blowing. So it’s faster than even spinning up, it’s faster than diesel. I mean, there’s very few technologies that are as fast in terms of response time. And in terms of resilience, the more hydrogen you got, the more resilient you are.
Rinaldo: Someone else?
Speaker 7: You said you can use water treatment water for the electrolysis. Can you use seawater?
Rinaldo: Well, yes, you could, but you are adding to the cost. So to do seawater, you would do a reverse osmosis, RO filter, this has been proposed by a company in Honolulu, actually, and you have to put in the energy cost of turning the seawater into H2O, but then you start from there. We like sewage water frankly, it’s because it’s going to waste in a state which is very water scarce, and is going to get more scarce. And it turns out, it’s an easier … see, if you gave me tap water, I can’t use that to make hydrogen. I still have to run it through a filter. Have to have 99 percent purity. Well it turns out, that our sewage treatment water, because of state law, is very close to 99. So I still have to filter it, but it’s not a massive job, so the energy costs are very low. Energy cost on seawater, different situation.
Speaker 7: Yeah I was just thinking of offshore wind, and out there, generating the hydrogen out of the-
Rinaldo: The platforms? People actually suggested that. The platforms on the channel, yeah.
Rinaldo: Okay, I think my time is up, unless there’s one more question that anybody would like? I would call on the question myself. Thanks very much for your attention, I appreciate it, I hope that wasn’t too much.
