When the world shifted from relying on coal as fuel to oil, the transition reshaped the international order.

Now, the world prepares yet another seismic shift -- from oil to renewable energy.

South Korea, which is the world’s ninth largest energy consumer and has next to no fossil fuel resources of its own, could step up to take lead in this great transition by facilitating a hydrogen economy, says Lee Seung-hoon, the director of H2Korea, a hydrogen think tank under the Ministry of Trade, Industry and Energy.

“Korea imports more than 90 percent of energy sources from overseas. If it doesn’t respond to the change of energy paradigm, it could face a grave threat to the economy,” Lee said.

According to him, some countries are enforcing stringent environmental policies such as carbon tariff, and forcing others to come along. The European Union is planning to introduce a carbon tariff on emissions-intensive goods from 2023. Norway is already imposing a carbon tax worth $100 per kilogram of carbon.

For one, Korea’s steel industry, which takes up 13 percent of the nation’s carbon emissions, could face complications in export activities from such regulations, Lee explained.

Falling short of green efforts would not only would hamper companies’ exports but also their cash flow, as increasingly more investors are putting environmental, social and corporate governance factors, in short ESG, as a key criterion.

To source electricity from clean energy sources and prove their ESG activities, five major Korean conglomerates -- SK, Hyundai Motor, Posco, Hanwha and Hyosung -- pledged in March to invest 43.4 trillion won ($38.9 billion) by 2030 to establish a hydrogen economy.

The private investment plan is also in sync with the government’s ambition to become a global pioneer in the hydrogen field.

As to the question of why hydrogen over solar, wind, or other green energy businesses, Lee said that hydrogen is the ultimate solution to renewable energy’s greatest weakness -- intermittency.

Wind power is generated only when it’s windy and the solar power when it’s sunny. While stability and predictability is the top priority in energy management, both wind and solar energy are inherently unstable in nature, with risks of excess supply and shortage.

As Korea expands the share of solar and wind in the national energy mix, the country will have to find a way to handle this issue, Lee said.

“Last year, Korea generated about 4 percent of electricity with solar and wind power. When it goes over 10 percent, there will be excess electricity. Some people suggest storing the leftover electricity inside giant batteries such as energy storage systems (ESS), but the idea comes from a lack of understanding in technology,” Lee said.

With current technology, batteries are slowly self-discharged over time, he went on. Also, ESS can’t be charged more than 80 percent due to safety issues and can’t be discharged less than 20 percent to preserve the lifespan of batteries.

“Simply put, ESS can only offer 60 percent of its original capacity,” he said.

The expert stressed that the role of ESS is not the long-term storage of electricity, but the short-term banking of electricity to prevent the grid system from being overloaded.

Instead of storing electricity with ESS, which is expensive due to global demand for batteries and electric vehicles, Lee suggests converting the leftover electricity into “green” hydrogen.

Hydrogen is described as green when it is produced by breaking water into oxygen and hydrogen with electricity generated 100 percent by renewables.

“The idea is to store green hydrogen inside tanks. At night when electricity demand peaks but solar power becomes redundant, we can use the green hydrogen and generate electricity with hydrogen fuel cells,” Lee said.

He added that excess electricity from solar and wind power can disrupt existing grid systems as witnessed on Jeju Island and in Germany.

“Jeju Island currently generates 18 percent of its electricity with renewables. Due to excess electricity, Jeju Island limited the operation of solar or wind farms more than 180 times last year. It even offered subsidies to those who use electricity more at day time,” Lee said.

“When I visited Germany last August, demand for electricity was low due to the coronavirus outbreak, and solar and wind power was generating more than 50 percent of electricity. During daytime, Germany sold excess electricity to neighboring countries. But at night, it had to purchase electricity from countries like Denmark.”

According to the national energy mix announced in December, Korea plans to generate 25.8 percent of electricity with renewables by 2034.

Green hydrogen is expected to help Korea reach the target without compromising the national grid system and benefit those living on islands who are paying electricity bills as much as 50 times more expensive.

“In Korea, there are 40 to 60 islands that are disconnected from the central grid system. These islands generate electricity independently with diesel and pay about 500 won per kilowatt of electricity, which is five times more expensive than 100 won in the mainland. Some islands even pay 5,000 won,” Lee said.

As approximately 11 percent of the world’s population live on islands, green hydrogen solution integrated with solar or wind power has unlimited commercial potential, but Lee pointed out that Korean authorities lack awareness on the true worth of green hydrogen.

“When I talk with local government officials, they don’t quite understand why green hydrogen is important and why the technology matters. Korea hasn’t conducted any feasibility study on the green hydrogen model, so many questions currently remain unanswered for optimizing the model,” Lee said.

This month, Hanwha and Korea Gas Corp. will launch a feasibility study in Pyeongchang, Gangwon Province that explores generating electricity with a wind turbine to produce green hydrogen.

Set for commercial operation in the second half of next year, the 30 billion-won project will produce 290 metric tons of green hydrogen annually, which would be enough to charge 130 units of Nexo -- Hyundai Motor’s hydrogen fuel cell powered SUV -- every day.

By Kim Byung-wook (kbw@heraldcorp.com)