Top 3 Obstacles for e-NG Projects That Rely on Renewable Energy

August 2024 by Simon Pickup

Investments in e-NG projects are skyrocketing, with individual e-NG producers easily achieving hundreds of millions of dollars in financing rounds. While the industry’s potential continues to draw support, there are some pitfalls that must be considered. Especially when the e-NG project depends upon renewable energy infrastructure.

1. The cost of building & operating

Building and operating a solar farm costs about $1.06 per watt or an investment of $5.3M for a 5MW project. Wind farms cost more, with land-based projects averaging $1.80 per watt and offshore projects $3.50-$4.00 per watt. These costs have risen over previous years.

“Inflation has hit the entire energy sector, and renewable energy is no exception.”

Renewable Costs Have Risen: Policymakers Can Help Reverse the Inflationary Blip – Forbes

Such a significant investment on the front end is challenging given there is no offset until the project generates electricity, with the build estimated at 4-5 years. And that’s being very optimistic.

Before you begin your countdown to go live, remember to factor in the time and resources needed to prepare for the project (development permits, environmental approvals, filling hard-to-staff roles such as power engineers, etc.) and—even worse—queueing up in the ever-growing backlog of requests to connect to the grid.

Teralta e-NG uses clean, stranded hydrogen with no requirement for renewable energy. Instead, we skip this step. Besides spending a few months on project development, we move directly to the production stage, producing e-NG in less than 24 months.

2. The connection to the grid

At the end of 2021, over 8,100 energy projects in the US (mostly wind, solar, batteries, etc.) were in the queue awaiting permission to connect to electric grids—up from 5,600 the year before. Today, the interconnection system has become so overwhelmed that wait times often exceed four years, and some grids no longer accept requests.

“The nation’s largest regional grid, stretching from Illinois to New Jersey, has been so inundated by connection requests that last year it announced a freeze on new applications until 2026.”

The US Has Billions for Wind and Solar Projects. Good Luck Plugging Them In. – The New York Times

Along with an interminable wait to connect to the grid, developers may face additional costs to fund infrastructure upgrades. For example, better transmission lines and other improvements required to support the energy the project will produce which the local grid is incapable of accommodating.

With no reliance on a renewable energy source to produce hydrogen, grid connectivity isn’t a requirement for Teralta e-NG. Instead, the electricity needed for the project is quickly provisioned onsite using existing partner infrastructure.

3. The storage of energy

A challenge with renewable energy is that it is variable, produced only when the sun shines and the wind blows. Instead of adjusting to the grid, it must be flexible and adapt to the energy as it fluctuates. Failure to accommodate these ebbs and flows may result in “firming” by dispatchable, non-renewable sources, rendering the energy less than 100% clean.

Many in the industry believe that energy storage is the key to providing a consistent supply of clean energy to manage fluctuations in production. However, energy storage is not cheap.

“It costs more to store electricity than to make it.”

Bill Gross, co-founder of Energy Vault The Renewable-Energy Revolution Will Need Renewable Storage – The New York Times

Doing the math, for renewables to qualify as 100% clean energy, storage must cost $20 per kilowatt hour in energy capacity (or lower). This is a staggering 90% decrease from the cost of energy storage today. Until the cost of renewable energy storage is moderated, the project must absorb these expenses or accept (and sell) energy that is less than 100% clean.

Since the Teralta e-NG model doesn’t require the generation of renewable energy, building infrastructure to store it is unnecessary. Given how busy we are producing and distributing e-NG to our offtakers, this is a good thing.

Teralta and our partners are on track to produce and transport e-NG by 2027, contrary to others in our space who aim for production in the early to mid-2030s.

Together, we’re building Canada’s first e-NG project that uses stranded hydrogen to generate the lowest-cost clean hydrogen on the market today. And we’re delivering the project in record time. To learn more about Teralta e-NG, read the e-NG blog post, visit our website, or reach out to me directly via LinkedIn.

Top 3 Obstacles for e-NG Projects That Rely on Renewable Energy

1. The cost of building & operating

2. The connection to the grid

3. The storage of energy

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