Whatever the end result, industry watchers now largely agree that there are two areas where costs need to come down for carbon-free hydrogen to advance. The cost of renewable energies, already the subject of remarkable reductions over the past decade, must continue to fall. And the cost of electrolysis of water for the production of hydrogen, encompassing the raw material of green hydrogen, the electrolyzer, must follow a similar downward path.
Many see the two about to happen. In fact, the two are integrally linked, with operating expenses and capital costs factored into the total cost of running the electrolyzer. The fall in renewable energy prices should continue, with an accelerated deployment of renewable energies in the networks. But investment costs must also come down, as electrolysis equipment is manufactured faster and cheaper.
While the price of solar PV has fallen by around 90% over the past 10 years, it has yet to come down and governments seem determined to help. For example, in March, the US Department of Energy (DOE) announced its goal of cutting the cost of large-scale solar power by more than half in 10 years, from a current cost of 4.6 cents per kilowatt hour (kWh) to 3 cents / kWh by 2025 and 2 cents / kWh by 2030. The DOE has announced a host of R&D projects and seed capital for improved photovoltaics (perovskites, thin films ) and concentrated solar power (CSP) to achieve higher yields and lower costs.
The cost of electrolysis technology has also fallen, with design improvements for greater efficiency. Improved alkaline units are being deployed even as buyers increasingly turn to more efficient proton exchange membrane (PEM) electrolyzers. Meanwhile, technology is advancing for solid oxide electrolyser (SOEC) cells, which promise to achieve very high efficiency from high heat input, industrial heat sources and potentially nuclear reactors.
The question now is whether the electrolysis of water for hydrogen production can follow the fortuitous downward cost curve that solar PV has followed over the past decade. Continuing to cut costs will be essential, as electrolytic hydrogen will have to compete with “blue hydrogen” produced with natural gas and carbon capture, which is now less expensive. Success will lead to the hoped-for widespread adoption of what advocates have called the ‘holy grail’ of hydrogen, which is electrolytic hydrogen produced with renewable electricity (i.e. hydrogen “green”).
The general belief today is that carbonless hydrogen will make its debut in industrial applications, in large industrial clusters, first as blue, then as green. For green, electrolysers are essential and they continue to be made on a small scale with a lot of craftsmanship, even by large manufacturers. Still, global manufacturers plan to expand in order to keep costs down.
This was evident in group discussions during the recent Middle East Energy Online 2021 conference, organized by Informa Markets, during which the main players in the industry shared their ideas on their production plans.
A major player to watch is German industrial giant thyssenkrupp, who as a steelmaker and hydrogen producer sees the hydrogen issue from both the producer and the user point of view.
Related: $ 70 worth of oil could curb China’s crude buying frenzy The company’s standard alkaline water electrolysis unit is a 20 MW module, which produces approximately 4000 cubic meters of hydrogen per hour. This module is the company’s current building block for hydrogen production, so a 100 MW unit requires the combination of 5 blocks. It can continue to develop from there. For example, to reach 2.2 GW of electrolysis capacity for the giant NEOM project, the company will have to assemble 110 blocks.
“We have reduced costs and increased the size of our base module to 20 MW,” said Malcolm Cook, vice president of business development at thyssenkrupp. “Now our goal is to move from our current 1 GW production line to an annual production of 5 GW,” he said.
The scaling up of electrolyser production by the company is not on a strict schedule and will occur as orders come in. But Cook says the company is ready to invest in a ramp-up.
Another major player in this field is the American engine manufacturer Cummins Inc., which considerably expanded its hydrogen production capacities two years ago with the acquisition of the Canadian company Hydrogenics Corporation (of which the French Air Liquide retains one. part). The acquisition gave Cummins new expertise in both hydrogen fuel cells and electrolysis, positioning it better for work related to the energy transition. Since then, Cummins has embarked on a multitude of small-scale green hydrogen projects.
“In terms of the size of the project, while 10 MW was a target a few years ago, we already have a 20 MW PEM electrolyser in service today in Canada,” said Denis Thomas, Global Business Development Manager for electrolysers at Cummins. “The next logical step consists of projects of the order of 100 to 500 MW, which would constitute a springboard towards very large projects of the order of the gigawatt”, he added.
“The main question is the timing as we are increasing the manufacturing capacity, but it does not make sense to put all the capacity in place because many projects (hydrogen) are in the development phase,” said Thomas. “Today, we agree with projects up to 500 MW. “
Thomas explained that at this point customers probably won’t need 1 GW of electrolysis capacity in a block. On the contrary, they will develop most of the projects in stages with a first phase requiring a capacity of 100 to 200 MW. Still, it is clear that Cummins’ ambition is to reach the GW level of production capacity, perhaps around 2025, he said.
UK-based ITM Power, which is in the early stages of planning for a new electrolyzer plant, are other big players aiming to achieve gigawatt-scale production. Another is the Norwegian company Nel ASA, which is expanding its production of electrolysers up to 500 MW this year, with further expansion planned. Nel recently announced his goal of producing green hydrogen at $ 1.50 per kilogram by 2025, which would make it comparable to conventional fossil hydrogen. Meanwhile, Danish company Haldor Topsoe and Spanish joint venture Iberlyzer will also increase production capacity over the next two years.
None of these companies are set to exceed the annual production of 1 GW in the near future.
Follow the path of PV?
Green hydrogen only exists today in tiny quantities. Its cost is at least twice that of fossil hydrogen. There is essentially no market for it. It is therefore still very early for the industry.
Today, about 10 million metric tons (Mt) of hydrogen are produced annually by industries in the United States, while about 120 Mt of hydrogen are produced globally (China is the largest country producer). Almost all of this is produced with processes causing high carbon emissions.
It has been estimated that to achieve the current production of hydrogen in the United States with renewable electricity, it would take 115 GW of offshore wind power. The difficulty in doing so becomes evident when you consider that the United States is now officially striving to have 30 GW of offshore wind power by 2030.
IRENA, in its roadmap for the energy transition by 2050, estimates that the global production of green hydrogen must reach around 400 Mt, which would require a total installed electrolyzer capacity of 5 terawatts (TW) by 2050. Today, the total installed electrolyser capacity in the world is around 8 GW. .
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These figures show that the ramp-up in production that must occur to meet the green hydrogen targets set by governments and international agencies is staggering. It will take a sustained public initiative to set targets and reduce the costs of green hydrogen throughout its value chain, including in the critical area of electrolysis.
Cornelius Matthes, CEO of Dii Desert Energy, a Dubai-based non-profit consultancy, sees reasons for optimism.
“There will be a lot of innovations on the electrolysis side with the arrival of new technologies,” he said during the recent Middle East Energy Online 2021 conference. “For electrolysers, this goes from manual assembly to largely automated production, combined with significant advances in R&D. “
Matthes has listed 19 hydrogen projects around the world that will require an electrolyzer capacity of nearly 140 GW. This pipeline of projects, he believes, will begin to drive higher levels of electrolyzer production that will lower costs.
“I have no doubt that will happen, that in ten years, when we look back, we will probably see a success story like the one we saw with renewables 10 years ago. “
But that won’t happen without help, as many of the hydrogen projects he mentions are subsidized to some extent.
“We should from a regulatory point of view apply what is possible to accelerate this development, create standards, create all the preconditions for a market,” said Matthes.
By Alan Mammoser for Oil chauffage
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