Companies are pouring a lot of money into the idea that hydrogen can help decarbonize the fossil-fuel-based economy.
But first, they have to figure out a way to produce that hydrogen more cheaply.
Today, hydrogen is mostly used in the production of fossil fuels and to make ammonia, an ingredient in many fertilizers. But it is also promoted as fuel for heating or transportation or power for industrial processes.
One drawback to hydrogen as a form of green energy, however, is that nearly all of the world’s hydrogen is produced in a greenhouse-gas-intensive process: heating natural gas with steam to split it into hydrogen and carbon dioxide. This type of hydrogen is known as gray hydrogen, or sometimes blue hydrogen if the factory has carbon-capture technology.
The main low-carbon alternative for producing hydrogen, dubbed green hydrogen, is made by passing renewable electricity through water using a machine called an electrolyzer to split it into oxygen and hydrogen. The process, which often runs off private access to a wind or solar plant, doesn’t cause emissions, but it does guzzle electricity and water.
How’s the weather?
Even as governments lavish subsidies on low-carbon hydrogen production to bring down costs, some experts doubt that it will ever be cost-effective for all the low-carbon applications that have been proposed. Electrolyzers are constrained by the cost of renewable electricity and when it is available—in other words, on the weather.
“The biggest influence on the cost of hydrogen is utilization—how often that electrolyzer is running—and access to cheap power,” says David Cunningham, director of cleantech and renewables at advisory firm Gneiss Energy. “That’s where renewables fall down.”
Creating Hydrogen More Efficiently
Electrolyzer makers are vying to come up with new designs that use electricity more efficiently to lower the cost of making green hydrogen. Australian startup Hysata says it improved on existing technology by developing a system that soaks up water like a sponge.
Green hydrogen currently costs between approximately $3 per kilo and $26 per kilo, according to data from S&P Global. The Energy Department has said it needs to cost about $1 per kilo to unlock new industrial applications. Closing that gap with current technology depends on renewable electricity becoming a lot cheaper.
The Hydrogen Council, an industry group, says the cost of making hydrogen with electrolyzers could fall to $1.40 a kilogram by 2030 in the right circumstances, such as renewable electricity being available for as little as $13 per megawatt hour.
But while it has become cheaper, renewable electricity costs a lot more than that. During the first half of 2022, according to research firm BloombergNEF, power from new utility-scale solar and onshore wind facilities on average cost $45 per megawatt-hour and $46 per megawatt-hour, respectively. Even the cheapest renewable power, from Brazilian wind farms, cost $19 per megawatt-hour.
The cost challenge casts a shadow over the wider role that hydrogen can play in the economy. “The hydrogen market offers a potentially very large but still very uncertain opportunity,” analysts at investment bank Jefferies wrote in October.
Still, polluting industries and governments are betting on hydrogen. Jefferies estimates that electrolyzer sales will exceed $100 billion this decade. And governments are throwing money at the technology.
The U.S. Inflation Reduction Act introduced a tax incentive of up to $3 per kilogram for new methods of hydrogen production, depending on how polluting they are. That sweetener could make green hydrogen cheaper than gray hydrogen in the U.S. by 2030, analysts say.
But whether the industry can stand on its own depends on how far the flood of money brings down costs.
A better electrolyzer
Electrolyzer makers are vying to come up with new designs. Sunfire GmbH, a German manufacturer, has developed a way of using steam instead of liquid water, tapping heat from industrial processes. The company closed a funding round early this year worth about $192 million, and later received an undisclosed investment from Amazon.com Inc.’s Climate Pledge Fund that will help it scale up production.
Hysata, an electrolyzer startup based in Wollongong, Australia, just rented an 86,000-square-foot factory where it expects to be making commercial-scale systems by 2025.
These companies are among several that claim dramatic improvements in efficiency over existing technology. Current electrolyzers generally convert around 75% of the electricity they use into hydrogen energy.
Hysata said in a paper published in the scientific journal Nature that its system has achieved 95% efficiency, a figure the company says would allow it to make green hydrogen using about 20% less electricity than a regular electrolyzer. That would mean hydrogen manufacturers would need to spend less money on renewable energy, bringing down costs.Read More..
Source : wsj
