Supply Chain Frontiers Issue #25. Read all articles in this issue
It is not difficult to envisage a supply chain for a physical product, but how about one for a far less tangible item such as renewable energy? A research project at the Zaragoza Logistics Center (ZLC), Zaragoza, Spain, is developing supply chains for wind-generated energy that is distributed in the form of hydrogen. The work will help wind power company Acciona Energy and the Spanish government to understand how these energy sources might serve future markets.
The lack of a physical presence is not the only supply chain challenge posed by wind power; forecasting supply levels is as reliable as forecasting the weather– literally. “It’s about as uncertain a supply as you can get,” said Jarrod Goentzel, Executive Director of the MIT-Zaragoza International Logistics Program, and head of this ZLC research project.
The demand-side picture is also problematic. For example, electricity generated by wind turbines can be bought by national grids, but since the supply is so erratic the grids can’t rely too much on this source. “In order to capture and leverage the potential of renewables, you need to be able to scale the demand and match it to supply,” said Goentzel. “Supply chain thinking definitely comes into play.”
To handle the mismatch of supply and demand, you need to have an effective way to manage inventory of wind-generated electricity. It can be stored in a variety of ways – water reservoirs, compressed air, flywheels, batteries, hydrogen – each with different trade-offs in terms of efficiency and portability. The current ZLC project looks specifically at the possibility of harnessing the electricity from wind turbines to produce hydrogen through electrolysis that can be used to fuel vehicles.
These mobile applications represent the largest potential market for hydrogen fuel. Hydrogen fuel cells have been tested in public fleets such as city busses, and there are some new test installations with private cars in California. Fuel cells offer promise for green transportation, providing, of course, that drivers have ready access to filling stations.
The ZLC researchers are looking at a number of scenarios. Initially, demand would likely be focused in fleet applications, where large numbers of vehicles refuel at central locations. Next, in densely populated urban areas it might be possible to establish a network of hydrogen pumps. The installations could then be rolled out to the main highway arteries, and finally refueling points could be deployed in thinly populated rural areas. “We are designing distribution networks for these different scenarios in Spain and matching each demand picture to supply to identify the best way to distribute hydrogen,” Goentzel explained.
An optimization model is determining the type and level of activity in each network node and the associated flows of hydrogen fuel between these points. The model is considering various combinations of nodes including feedstock sources, a portfolio of production methods, and locations, in addition to the wind farms, storage/distribution locations, and dispensing stations.
There are a number of distribution issues that have to be addressed. For example, there are challenges in using existing natural gas pipelines to transport hydrogen, because the gas reacts with the metal walls of the pipes. “But the interesting thing about hydrogen is that it can be stored and transported in three states, as a gas, a liquid, or even as a solid, in the form of metallic alloys,” said Goentzel. Another transportation challenge for hydrogen derived from wind power is that “wind farms are situated in places where people don’t live, but the demand is where people do live,” he said.
Funded by the Spanish government, the ZLC research is being conducted in collaboration with Acciona Energy – a leading developer of wind parks worldwide, with more than 5,300 MW installed in 12 countries – to analyze the demand for the energy it produces. The scenarios are focused on long-term investment and consider a wide variety of supply/demand projections for hydrogen up to the year 2030. The knowledge will also help Spain’s government plot demand patterns and plan future infrastructure requirements.
The research has broader implications as well, pointed out Goentzel. Hydrogen is one of a number of zero- or low-carbon fuels currently under development, but without an efficient supply chain these renewables will not be viable commercially. “We need to find new paths for getting cleaner energy to consumers, so our research has applications beyond the use of hydrogen,” he said.
For more information on the ZLC energy research, contact Jarrod Goentzel.