Can green hydrogen be produced in a way that is cost competitive with fossil fuels, particularly for transport applications? In the diagram above you can explore various options and configurations by clicking on the grey circles.
A direct comparison with diesel can be made. Diesel costs about £1.40 per kg, but one kg of hydrogen contains three times the energy and, over and above that, the fuel is more useful – it can readily be converted to electricity (diesel fuel cells are only at an early development stage). Because of this greater utility, a price of £7.50 per kg or less for hydrogen could be considered competitive. Is this target achievable now (in 2021)?
The key component is a 3.6 MW electrolyser - the input power is a maximum of 3.6 MW and it can be directly matched with a 3.6 MW rated wind turbine or a 3.6 MW capacity PV array. The electrolysis inefficiencies are bundled together to give a nominal efficiency of 65%. This, like all the figures used in the model, is simply a typical and plausible value and does not refer to any particular electrolyser available in the marketplace. 1 MWh of electricity will make about 20 kg of hydrogen. Payback on the initial cost of the electrolyser, interest and maintenance costs along with the cost of deionised water are totalled together into an annual cost of £0.75 m, equivalent to £2,000 a day. (Could be much higher as minimal worker costs have been included - it is assumed that 2 - 4 people can run the entire facility.)
The four boxes on the left are the basic energy sources. The bottom one labelled ‘Capital Investment WT’ represents one way a national government could stimulate the sector by covering as a one-off grant the capital costs of wind turbines dedicated to the production of hydrogen. There will still be the turbine running costs and network transmission charges, estimated together at £15 per MWh. The turbine will generate 30 MWh a day on average (at a cost of £450 per day). Contrast this with a commercial wind turbine where the electricity cost would be £55 per MWh, £1,650 per day (2021 prices, including transmission charges).
A plausible alternative is to use electricity from constrained wind farms. This is when the operators is paid to switch the turbines off as there is no demand. The electricity cost is zero and only transmission charges would apply. For the constrained days the windfarm output far exceeds the electrolyser input hence battery buffering is desirable. With a 40 MWh capacity battery, the electricity available is 3.5 MWh per day only (this scenario is included to show that a lot of battery do not always add a lot to the mix). Another option is to use very cheap night-time electricity (with a smaller buffer). In this scenario, 12 MWh a day can be expected (remembering the wind farm output may be less than 3.6 MW at times).
The hydrogen produced must be cleaned, pressurised and bottled. This cannot be fully automated, hence a daily cost of £1,500 is estimated.
Instead of venting off the oxygen produced, it can be recovered and sold. However, so as not to compete with low cost oxygen generators, a very pure gas needs to be produced, implying a high capital cost for the processing and bottling equipment (equivalent to £2,000 per day). In addition, there is no guarantee a market exists hence the installation of this equipment can be rather speculative. Note that a lot of oxygen is produced, eight times the mass of hydrogen.
The electrolyser will run at 80 degrees C, and some of this heat can be used if there are industrial facilities nearby, or for district heating if there is a cluster of homes in close proximity. The problem here is that the energy is not reliable and predictable, and it is difficult to transfer useful heat when the source temperature is so low.
Finally, there is the environmental benefit which should be there but is not there yet. The saving in environmental damage because of the reduced carbon dioxide emissions should be rewarded. A notional figure has been proposed (equivalent to £45 per tonne CO2)!
You can (and should) question all the numbers used. The daily costs are definitely on the high side, but we would expect this to fall with mass production. But using optimistic values, as is commonly the case, does not allow the challenges to be properly identified and addressed.
Investigations