The high cost of hydrogen has long been a significant hindrance to the widespread adoption of hydrogen fuel cell vehicles (FCEVs). Despite the environmental benefits, consumers are often deterred by the refueling expenses and lack of refueling infrastructure. Companies like Toyota have recognized this challenge and have taken proactive steps to address it. For instance, Toyota offers buyers of its hydrogen-powered cars up to $15,000 towards refueling costs, aiming to offset the high prices and make the vehicles more attractive to potential customers.
Yet, the question remains: how low could the price of hydrogen really go? This is crucial for the broader adoption of hydrogen technologies, not only in cars but across various sectors.
Currently, the price of hydrogen varies significantly based on the production method and geographic location. Traditional methods, like steam methane reforming (SMR), are less expensive but have a significant carbon footprint. Green hydrogen, produced via electrolysis using renewable energy, is more sustainable but currently more expensive due to high electricity costs.
How is Hydrogen Produced using SMR and Electrolysis?
First off, to understand the pricing of hydrogen we must first understand the different processes used to source hydrogen used at refueling stations and the reasons for using one process over another. The three possibilities for hydrogen fueling stations are SMR (grey hydrogen), electrolyzers (green hydrogen), and SMR with carbon capture (blue hydrogen). The system being used by the majority of refueling stations right now is SMR (steam methane reformation) which is a way to source hydrogen from the natural gas methane, and while this is the cheapest method to produce hydrogen and is still better for the environment than ICE it still does release carbon dioxide into the environment. The environmentally ideal option would be electrolyzers, but the technology is still very expensive and needs a bit more investment. Electrolyzers work by a process called electrolysis which is when the electrolyzer device uses electricity to split water into hydorgen and oxygen. This hydrogen is then stored in tanks and used for refueling. From the explanation we see that electrolyzers do not release any harmful byproducts unlike SMR.
So Now that you know how it works, how cheap could it get?
According to our recent discussions with Brian Lewis, a partner at Element One (an Electrolyzer manufacturer), the cost of producing green hydrogen largely depends on the cost of electricity. "It depends on the cost of electricity, of course, but generally, if it's about 10 cents per kilowatt hour just to produce the hydrogen, it's going to be about $5 per kilogram. Then there are additional costs associated with transportation and things like that, beyond that. And so ways to get the price down, perhaps to be a green hydrogen solar system. Let's say, for an example, that we can amortize that cost over a long period of time, and then we could also get the $3 per kilogram subsidy from the government that we can drive the cost of the hydrogen much lower than that. And so that's kind of what we're somewhat focused on is, how do we get the cost of the hydrogen down so that it can be competitive with SMR?"
When we asked Brian about if this potential lower cost of electrolyzer energy could compete with SMR prices he answered “Well, just the SMR alone is probably $1 or less per kilogram. However, if we're going to try to do apples to apples, we would need to consider that to get blue hydrogen, they would have to do carbon capture, and that can be $100 per ton of CO two collected, and that's a fairly expensive process to handle. So if you add in the blue side of things, we can get the green pretty close to what SMR would produce” This possibility is huge for the future in terms of the environment and industry growth.
Find the full interview with Element One below
To make green hydrogen more affordable, several strategies are being explored:
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Renewable Energy Integration: By integrating solar and wind power into hydrogen production, costs can be significantly reduced. Solar energy, in particular, offers the potential for lower costs, especially in regions with abundant sunlight.
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Government Subsidies and Incentives: As mentioned in the quote from Element One, government subsidies can play a crucial role. For instance, a $3 per kilogram subsidy could drastically lower the production costs, making green hydrogen more competitive with SMR.
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Technological Advancements: Continued innovation in electrolyzer technology and scaling up production can lead to economies of scale, further driving down costs. Advances in catalyst materials and system efficiency are particularly promising.
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Long-term Cost Amortization: Spreading the capital costs of renewable energy infrastructure over a longer period can also help lower the overall cost of hydrogen production.
While the path to cost-competitive green hydrogen is challenging, the potential benefits make it a worthwhile pursuit. Hydrogen has the versatility to decarbonize multiple sectors, including transportation, industrial processes, and energy storage, thus playing a pivotal role in achieving global climate goals.
To Conclude
In conclusion, with strategic investments in renewable energy, technological advancements, and supportive government policies, the price of hydrogen can indeed fall to levels competitive with traditional fossil fuels. This transition is essential not only for the hydrogen economy but for the broader effort to reduce carbon emissions and combat climate change.
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