Obtain the data you need to make the most informed decisions by accessing our extensive portfolio of information, analytics, and expertise. Sign in to the product or service center of your choice.
Prospects for producing "green" hydrogen from renewable energy
sources is largely dependent on the cost of producing renewable
power, according to various energy experts at the recently
concluded CERAWeek by IHS Markit conference.
As more countries commit to net-zero carbon goals and transition
to low-carbon economies, hydrogen, irrespective of its origin from
renewables or from fossil fuels equipped with carbon capture
technology, is increasingly being viewed as a viable approach.
Green hydrogen has the potential to decarbonize the most
energy-intensive sectors of the economy. Some companies, like
Emirates Global Aluminium, already are producing with green-powered
hydrogen supplied by Mohammed Bin Rashid Al Maktoum Solar Park in
the UAE.
Experts say producing green hydrogen right now isn't as
cost-competitive as producing "grey" or "blue" fossil fuel-origin
hydrogen primarily because companies have to factor in the cost of
producing renewables.
During CERAWeek panels and discussions, the prospects for
extracting hydrogen in a "green" format rather than from a "grey"
or "blue" fossil fuel-origin garnered air time, with even the Biden
administration's Special Envoy on Climate John Kerry name-checking
hydrogen as part of the climate change solution set, according to
IHS Markit Cleantech Executive Director Peter Gardett.
The reason why oil and natural gas companies are eyeing the blue
and grey varieties is that they work with existing markets,
infrastructure, and business models, while preserving workforces
with existing skills.
Green power cost dominates
For green hydrogen to be viable, the levelized cost of producing
hydrogen, or the lifetime cost of building and operating an energy
source, has to decline, Armin Schnettler, executive vice president
of Siemens Energy's new energy business, said during a March 5
discussion called "What Color is my Hydrogen?"
"If we look at the cost of hydrogen, or green hydrogen, for the
future then it is important to notice that the green electricity
cost is [the] dominating factor, so we need to go where green
electricity is cheap," Schnettler said.
The levelized cost of green hydrogen in locations with good
availability of renewables is around $4-$5/kg, according to Soufien
Taamallah, director of IHS Markit energy technologies and hydrogen
research, who moderated a separate 2 March panel on hydrogen
production and costs. This panel had representatives from Nel
Hydrogen US and Malaysian oil firm Petronas, as well as a research
scientist from MIT Energy Initiative.
An IHS Markit "Top 10 CleanTech Trends in 2021" white paper reports a 40% decline in the
cost of hydrogen from electricity between 2015 and 2020, with cost
reduction anticipated to continue as the costs to generate
renewable power and produce hydrogen from electrolyzing water are
lowered. By 2025, IHS Markit estimates, an additional 40% decline
in levelized cost of green hydrogen when triple-digit MW
electrolysis plants come online.
Nel Hydrogen, Oslo-based company that manufactures
electrolyzers, has set a target of bringing the cost of producing
green hydrogen down to $1.50/kg by 2025, which will make it
competitive with grey hydrogen, or hydrogen produced from reforming
of oil and natural gas that analysts say is around $1-$2/kg.
When comparing capital expenditure versus operating expenditure,
the cost of electricity is the biggest factor driving up the cost
of green hydrogen, which is produced in an electrolyzer from using
electric current to break up water molecules, according to Everett
Anderson, advanced product development vice president for Nel
Hydrogen US.
Malaysian oil firm Petronas is already at work on
an in-house electrolyzer technology. It also has embarked on a
green hydrogen demonstration project with the state-owned utility
Sarawak Energy in the hopes of driving down the cost of production
to the $1-$2/kg range, Mahpuzah Abai, CEO for Petronas Technology
Ventures, said 2 March.
In the long run though, Schnettler and others agree that
hydrogen has to come from green, renewable sources, but for the
short-term blue hydrogen, or hydrogen derived from natural gas
facilities equipped with carbon capture, is the way to go.
Also participating in the 5 March discussion with Siemen's
Schnettler was Bashir Dabbousi, technology, strategy & planning
director for Saudi Aramco. Dabbousi told IHS Markit Vice President
Shankari Srinavasan that the national oil company of Saudi Arabia
is "definitely" interested in opportunities to produce hydrogen
that has zero carbon attached to it, but especially from its oil
and gas resources.
Importance of "blue" hydrogen
"Blue is very important to us," Dabbousi said, pointing to the
company's successful demonstration project in which 40 metric tons
of "blue" ammonia were shipped to Japan, with the resulting carbon
dioxide partly used in an enhanced oil recovery project and partly
to produce methanol.
Noting that Saudi Arabia is endowed with tremendous solar
resources, he added: "As costs of producing green hydrogen become
competitive, this is another area the Kingdom and other players in
the region will be looking at."
Unlike Dabboushi, ExxonMobil CEO John Woods, however, wasn't as
enthusiastic about the prospects for green hydrogen, saying it is
limited by costs and technology limitations. "Frankly, to do the
job as required to help get society to net zero, we are going to
need more advances and costs associated with that," Woods said in
yet another 2 March discussion on energy prospects with IHS Markit
Vice Chairman Daniel Yergin.
Viable alternative
That hydrogen is now being recognized as a viable alternative to
a carbon-intensive economy comes as no surprise to Dharik
Mallapragada, research scientist with MIT Energy Initiative.
Mallapragada said vast declines in wind and solar installation
costs, coupled with the realization that electrification may not be
possible for all aspects of the economy, has increased the appeal
for hydrogen as a viable alternative.
Which form of hydrogen production will yield the most
cost-effective low-carbon option depends on the region, according
to Mallapragada.
For instance, where gas is abundant and cheap, blue hydrogen
might be the low-carbon cost-effective option, along with some
grid-based or renewables-based electrolytic production of hydrogen.
In other places where gas has to be imported in large quantities
like India, and the rest of South Asia, electrolytic production of
hydrogen may be the solution, he added.
Looking ahead though, Dabbousi said he expects hydrocarbons,
notably oil and gas, will remain a feedstock for hydrogen.
"We don't believe green or renewable-based hydrogen will be the
only player," he said, citing a recent Hydrogen Council report that
said blue and green hydrogen would share the market on a roughly
50-50 basis come 2050.
What will disappear from the map is grey hydrogen, he added.
Posted 10 March 2021 by Amena Saiyid, Senior Climate and Energy Research Analyst
