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Hydrogen: Fuelling the next generation of rail travel?

  • United Kingdom
  • Project and infrastructure finance
  • Energy and infrastructure

24-09-2018

Rail prides itself as being a green alternative to competing modes of transport, and with hydrogen-powered trains now a viable proposition, can this fuel a step-change in the pursuit of new low carbon rail services?

There have been a number of recent examples where hydrogen powered trains provide a sustainable solution. Alstom has recently been granted approval by the German Railway Office and received orders for the deployment of its hydrogen fuel cell passenger train, Coradia iLint. Other manufacturers are similarly driving the technology forwards, with Japan Rail having begun testing of its new hydrogen prototype. Alongside, authorities in Ontario are exploring hydrogen technology concepts, and the UK Government has announced plans to remove all “diesel only” trains from the British rail network by 2040. The use of hydrogen power is clearly in the spotlight, so we have examined the key issues to consider when any rail project is looking to adopt this new method of propulsion.

As with any new technology, there are uncertainties presented and all risks need to be well understood and managed to ensure a successful deployment. In particular, we see the following risks as important in this context:

Power and range output – Train operators will require a commitment from the rolling stock manufacturer (and ultimately the hydrogen technology provider) as to the power that the hydrogen technology will provide, the range of the train concerned, and a commitment to this over a specified period of time.

Ownership/leasing – Linked to the above, it is common for the technology provider to lease the hydrogen propulsion assets to the train manufacturer, with the added benefit that this allows a swap-out of the technology in the case of performance or reliability issues. The terms of that lease will need to be robust and properly tied into broader train leasing arrangements, to meet the demands of operators and authorities alike.

Compatibility – The new technology may be incorporated into purpose-built rolling stock, or retrofitted into existing assets. As such, it will be essential for the manufacturer and hydrogen technology provider to agree individual responsibility for compatibility, to ensure that the technology is fully integrated and meets the requirements of its specification.

Obsolescence – New technology can improve significantly in a short space of time, meaning clarity is needed on how the current hydrogen trains can be provided for a committed period of time, and how advances in future technology will or could be taken advantage of where they become available.

Pricing – There is a variety of pricing options that could be used to deliver this technology. For instance, it could be provided at a fixed price, on a cost plus basis, or using more innovative pricing arrangements. Such innovation could include payment by way of cost savings secured by the delivery of new technology, or conventional pricing twinned with lease payments for the hydrogen solution.

Infrastructure requirements – Hydrogen offers certain reductions in infrastructure requirements as compared to alternatives, such as removing the need for overhead line equipment for electrification (although, of course, electrified railways have significant intrinsic benefits especially for intensively used and high speed routes). It does require certain alternative infrastructure to be provided, including in particular fuelling facilities. It is important to map out what infrastructure is required, whether that will be railway-specific or can be delivered as part of other national infrastructure, and ultimately who will be responsible for it.

Consequential impacts – As the industry is accustomed to electric/diesel/bi-mode trains, hydrogen trains do have certain other impacts that need to be taken into account. In particular, hydrogen powered trains are typically heavier than their conventional counterparts, meaning the impact on track infrastructure is likely to increase, which may have an effect on track access charges.

Maintenance – Responsibility for maintenance of rolling stock typically sits either with a third party supplier, the operator or the manufacturer. As the market for hydrogen trains is relatively novel, we expect manufacturers (and hydrogen technology providers) will currently want to be responsible for maintenance of the hydrogen technology, though third party suppliers may be separately appointed once the market has further matured.

Environmental impact – One of the primary reasons for implementing hydrogen propulsion is to reduce the environmental impact as compared with alternatives because the only emission from the rail vehicle is water vapour. Hydrogen power can still have a significant environmental impact because it has to be manufactured through industrial processes which have an environment impact and it then needs to be transported to the fuelling point by vehicles which are unlikely to be zero emission. We expect authorities will seek to take a broader view of the overall environmental impact.

Safety – Last, but by no means least, manufacturers will need to provide extensive commitments on safety of the new technology to ensure that any risks are at an acceptable level, meet current safety standards, and proper procedures are in place for risk management and mitigation.

With hydrogen-powered trains already in production, it will be interesting to follow their initial deployment, and how the matters identified above are addressed the risks. Whilst we do not expect hydrogen trains to have universal application, they have significant future potential and are a crucial part of delivering a more sustainable rail network. The high pace of technological development should improve performance and reliability in the coming years, and consequently the risk landscape set out above will evolve as those advances are made.

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