Cost of producing hydrogen to plunge: report

Bloomberg has reported that the cost of producing hydrogen gas with renewables is likely to plummet in the coming decades, making one of the most radical technologies for reducing greenhouse gases economical.

An analysis by BloombergNEF arrives at the conclusion that the most abundant element is likely to play a growing role in reducing pollution from power producers and industry. The findings add to the potential for widespread use of hydrogen. While the gas has been hailed for decades as a carbon-free energy source, the cost and difficulty of making it has confined it mainly to niches like fuelling rockets and helping upgrade blends of oil.

“Once the industry scales up, renewable hydrogen could be produced from wind or solar power for the same price as natural gas in most of Europe and Asia,” said Kobad Bhavnagri, BNEF’s head of special projects. “These production costs would make green gas affordable and puts the prospects for a truly clean economy in sight.”

If produced on a large scale, hydrogen could feed into a range of applications, fuelling long-haul transport and steel-making and the manufacture of cement. Each of those industries requires the sort of energy hydrogen packs, delivering temperatures hot enough to melt metal and stone.

It’s those industries that are finding it difficult to remove emissions. Hydrogen also can also be stored, shipped and used to produce electricity or fed into fuel cells that are increasingly appearing in cars and small power plants.

BNEF looked at how to generate hydrogen from renewable sources such as wind turbines and solar panels. It also examined how the gas that’s produced can be stored to provide energy at times when the wind doesn’t blow and the sun doesn’t shine.

Renewable hydrogen costs may fall to as low as US$1.40 per kg by 2030 from the current range of $2.50 to $6.80, BNEF said in the report. That could slide further to 80 cents by 2050, equivalent to a natural gas price of $6 per million Btu. Gas in New York closed at $2.17 per million Btu on Wednesday. It last traded above $6 in 2014.

The most cost-efficient strategy would be to connect a hydrogen operation directly to both wind and solar energy sources. That would maximise the time the hydrogen plant could run as wind often blows when it’s not sunny and vice versa, according to the report. Countries where the renewable energy is expected to be more expensive, such as Japan, will face higher costs to produce green hydrogen.

Using a ‘fully optimised’ system design, solar and wind can provide power to electrolysers, which extract hydrogen gas from water, for as little as $24 per MWh by 2030 and $15 by 2050, according to BNEF.

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