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Meeting the US goal of producing a kilogram of hydrogen using
renewable electricity for $1 in a decade will be impossible unless
the cost of generating that power decreases, the head of the
Brussels-based Hydrogen Council said 31 August.
Describing the US Department of Energy (DOE) target cost for
"clean" hydrogen, which was announced in late June, as "a
very ambitious target," Hydrogen Council CEO Daryl Wilson said 80%
of the current cost of producing green hydrogen lies on the energy
side, "so, we need to fully deploy some very low-cost renewable
energy and add some innovation to make this target."
Rather, "we are projecting—on the basis of current industry
efforts around the world—the price of producing green hydrogen
somewhat above $2/kg in the US by 2030," Wilson told DOE's Hydrogen
Earthshot summit, which is being held 31 August through 1
September.
US Secretary of Energy Jennifer Granholm has described "clean
hydrogen" as a "game changer" in US efforts to decarbonize the
economy by mid-century.
She said the existing clean energy technologies won't get the US
to its net-zero goal so "we have to innovate" and "deploy, deploy,
deploy."
According to IHS Markit estimates, the cost of producing green hydrogen through
splitting water molecules by electrolysis that is powered by
renewable electricity is currently $4-$5/kg. In comparison, the
cost of producing "blue" hydrogen from fossil fuels while
sequestering the carbon or from renewable natural gas captured from
landfills is estimated at $1.50/kg-$2/kg.
Promise of clean hydrogen
The challenge is to make "the promise of clean hydrogen a
reality" and that means investing across the entire value chain
from production to transportation to end use, said Senator Joe
Manchin, Democrat-West Virginia, who chairs the US Senate Energy
and Natural Resources Committee and delivered the summit's keynote
address.
Manchin pointed to the Senate-approved bipartisan infrastructure bill
that authorizes $9.5 billion to promote research, development,
demonstration, and deployment of technologies to produce hydrogen
and apply them across the value chain, including hard-to-abate
sectors like long-distance trucking, shipping, steel, cement, and
chemical manufacturing.
Of this amount, he said, $1 billion is reserved to improve the
efficiency, increase the durability, and reduce the cost of
producing clean hydrogen using electrolyzers to less than $2/kg by
2026.
According to DOE, there are about 170 MW of electrolyzers
currently installed in the US.
Commercialization is key
The "name of the game is commercialization," Vanessa Chan,
director of the DOE Office of Technology Transition, which is
charged with expanding the commercial impacts of research in
technology that the agency conducts.
"Moving along that continuum is hard. It is hard because to get
to that full-scale market adoption requires entire ecosystems and
value chains to be convinced that investors are better off
supporting your solution than what the status quo is right now,"
Chan said during a session on financing and deployment.
Commercialization takes a lot of time and a lot of capital, she
added, pointing to the $30 million fund that pairs national
laboratories with external partners to commercialize energy
technology.
However, Jigar Shah, who heads DOE's Loan Program Office (LPO),
remains confident the vast majority of the green hydrogen cost
reduction can be met through scaling up technology deployment that
"we have helped develop at the Department of Energy and fund over
20 years."
Shah said the LPO, which provides loans and loan guarantees for
large energy infrastructure projects, has received requests from $3
billion-worth of active projects in the hydrogen industry "some of
that is powered by renewable energy and green hydrogen and some of
them are other colors."
Rounding error
In the US, IHS Markit anticipates a $14-billion need for capital
expenditure on electrolyzers by 2030.
Currently, the capital investment in green hydrogen is "just a
rounding error" in the US, "but the future looks very bright and we
see our outlook materializing as we go forward and gain momentum,"
according to Alex Klaessig, senior director for IHS Markit's
Hydrogen and Renewable Gas Forum and a panel participant.
"Our planning scenario might actually undershoot the actual
demand by 2030, and this massive growth will all be underpinned by
technology innovation, government policy and support, and the
continuing evolution of the marketplace itself," Klaessig said.
Posted 31 August 2021 by Amena Saiyid, Senior Climate and Energy Research Analyst
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