When a sufficiently high voltage is applied to water using two electrodes, the effect is to cause the water to decompose into its two elemental constituents, hydrogen and oxygen. One gas appears at one electrode, the other at the second, so it is relatively simple to separate the two. This can form the basis of an energy storage system.
When water is electrolysed in this way the oxygen is normally discarded while the hydrogen is retained. Hydrogen is an excellent and versatile fuel which can be burnt cleanly in a power plant to regenerate electricity or used in a variety of other ways such as fuel for motor vehicles. Ideally the hydrogen would be burned in a fuel cell, a device capable of up to 60% energy conversion efficiency - perhaps rising 75% in a combined cycle configuration. When burnt, the product of combustion is water.
A major problem with hydrogen as a storage medium is round trip efficiency. Hydrolysis of water is generally only around 70% efficient, though some companies have claimed up to 80%. Assuming hydrogen to electricity conversion efficiency of 75%, and ignoring other losses, the round trip efficiency would be 60%. This is optimistic; when storage and other losses are taken into account, it would probably result in a round trip efficiency of closer to 50%.
While this is obviously a major handicap, the advantages of hydrogen may eventually make such losses acceptable. Fuel technology based on hydrogen is being developed but is not currently commercially viable. However the concept of a hydrogen economy7 could take off later this century.
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