Cost of Hydrogen production

There has been discussion here about the costs associated with the various colors of hydrogen production. I thought it would be interesting to look at these costs on an energy content basis. That way, we can compare to other energy sources, such as natural gas. The energy basis units that follow are in Million British Thermal Units (MMBTU). MMBTU is just a unit of energy, or heat.

Some definitions, for those who are unfamiliar…
Green Hydrogen is produced using electrolysis, with the electricity coming from renewable energy sources.
Gray Hydrogen is produced from natural gas. The vast majority of gaseous hydrogen is currently produced using this process, and is therefore gray.

As described by the Department of Energy, the cost of producing green hydrogen is around $5 per kilogram. The (higher) heat content of hydrogen is 61,084 BTU per lb. At 2.2 lbs per kg and a million BTU per MMBTU…

($5/kg) x (1 kg/2.2 lb) x (1 lb/ 61084 BTU) x (1e6 BTU/MMBTU) = $37.21 per MMBTU

As described here, and some other places, the cost of producing gray hydrogen is around $1.5/kg. Using the same calculation, this comes to $11.16 per MMBTU

With the heat content of natural gas at 1036 BTU per cubic foot, the recent cost of natural gas used in the US electric power industry is $2.27 per MMBTU.

To summarize:
Green hydrogen: $37.21 per MMBTU
Gray hydrogen: $11.16
Natural gas: $2.27

There is a goal to get the cost of green hydrogen down to $1 per kg by 2031. However, this would still be $7.44 per MMBTU, which is more than 3 times the current cost of natural gas. There is also blue hydrogen, which is the same as gray, except the CO2 is captured and sequestered somewhere. The cost of this blue variety is thought to be higher than gray, but less than green, according to some sources I have read.

Hydrogen remains an expensive way to produce energy. If you want a gaseous energy source, pulling natural gas from the ground and burning it directly is much less expensive, although it releases CO2 during the combustion.

_ Pete

7 Likes

Yes, thermodynamics makes selling green hydrogen and the like a difficult sell. But hey, set it up to be sold via bitcoin with humma humma and gooba gooba, and Hey Bingo! I bet you could find people eager to invest as if it were like selling golden crepes wrapped round caramelized apples with Brandy and bacon on a Quebec winter morning.

It’s coming!

d fb

2 Likes

You left out blue hydrogen where CO2 produced as a co-product is captured and sequestered.

We still have the problem of mobil fuels. At present hydrogen and battery electrics are the most likely choices. Biodiesel or green fuels like ethanol or derivatives will also be costly.

What is the best green solution to this problem? Time will tell. Meanwhile the debate goes on and inventors do their best to resolve the issues.

1 Like

I actually did mention it toward the end of my post, but I didn’t put any numbers on the cost.

The dirty little secret about CO2 capture and sequestration is the CO2 is usually used for enhanced oil recovery (EOR) in the oil and gas fields. Air Products operates such a blue hydrogen plant in Port Arthur, Texas.

https://www.energy.gov/fecm/air-products-chemicals-inc

From the link:
The APCI Port Arthur ICCS project is demonstrating a state-of-the-art system to concentrate CO2 from two steam methane reformer (SMR) hydrogen production plants located in Port Arthur, Texas.

And:
The compressed CO2 is then delivered to the Denbury pipeline for transport to Texas Enhanced Oil Recovery (EOR) projects in the West Hastings Field where a monitoring, verification and accounting (MVA) program ensures the injected CO2 remains in the underground geologic formation.

~ ~ ~ ~ ~ ~ ~

Does it really reduce net CO2 emissions if the captured gas is used to extract even more fossil fuels from the ground? If you look at the current carbon capture and storage (CCS) projects in the US, the large majority of them use the CO2 for enhanced oil and gas recovery. That doesn’t seem very green to me, but it does make the economics more favorable, since the CO2 then has a value associated with it.

~ ~ ~ ~ ~ ~ ~

There is also pink or red hydrogen, which comes from using nuclear power to supply the electricity for the electrolyzers. Nuclear plants are superior to wind or solar facilities for this purpose, because the nukes operate 24 hours a day. If you run a chemical manufacturing plant, you generally don’t want to shut it down if the wind dies down or the sun sets. Most chemical plants are most efficient with continuous operations.

Constellation Energy operates a small demonstration hydrogen production facility at the Nine Mile Point nuclear plant in upstate New York.

Constellation also has plans for a larger 250 MW hydrogen production facility at an unnamed nuclear plant. The $3/kg tax credit offered by the IRA certainly makes economics of such a plan more favorable.

https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/constellation-to-build-900m-green-hydrogen-production-facility-74372628

_ Pete

1 Like

Yes, I skipped blue hydrogen, but not dismissively.

Whereever actual thermodynamic and total emissions shows us a way to lessen greenhouse gas emissions that makes sufficient economic and political sense, we should do it. We are not and we will not until it is much later in our slooow stooopid self centered short time horizon political and economic processes.

d fb

Everyone knows that hydrogen is not an energy source. It is merely a convenient form to store and transport energy. The thermo part is not relevant. If you are willing to provide the needed energy, it works. If not it doesn’t.

So what is the most cost effective and practical solution? Regardless of energy source.

1 Like

The carbon dioxide captured in making synthetic ammonia is often sold for use in carbonated beverages and fire extinguishers, etc. But volume demand is tiny compared to what energy production will make.

CO2 can also be easily captured from any boiler that burns natural gas. Removing steam is easy. Using oxygen instead of air removes nitrogen giving you a relatively pure stream.

Some CO2 in sequestered in rock formations. Much is reportedly to be stored as compressed gas underground. Some can be converted into chemicals like ethylene carbonate.

Traditionally fermentation plants have used carbon dioxide to make dry ice.

Yes, CO2 sequestration is very much about how much leaks into the atmosphere and how much is sequestered successfully long term. And at what cost. Recent discussions of ethanol as a green fuel has centered on pipelines to collect the CO2 and transport it to a sequestration site. Who pays for this transportation? And can you get permits to build them?

2 Likes

Europe is planning massive projects in Africa with renewable wind and solar. The plan is to build data centers and electricity production for European and African needs. The side project is to create green hydrogen for transport.

1 Like

You left out the DOE Hydrogen Shot program: https://www.hydrogen.energy.gov/docs/hydrogenprogramlibraries/pdfs/hydrogen-program-plan-2020.pdf

The first Energy Earthshot, launched June 7, 2021—Hydrogen Shot—seeks to reduce the cost of clean hydrogen by 80% to $1 per 1 kilogram in 1 decade .

Currently, hydrogen from renewable energy costs about $5 per kilogram. Achieving the Hydrogen Shot’s 80% cost reduction goal can unlock new markets for hydrogen, including steel manufacturing, clean ammonia, energy storage, and heavy-duty trucks. This would create more clean energy jobs, reduce greenhouse gas emissions, and position America to compete in the clean energy market on a global scale. These efforts would ensure that environmental protection and benefits for local communities are a priority.

Over the past 20 years, DOE has invested more than $4 billion in a number of hydrogen and related areas, including hydrogen production from diverse domestic sources, hydrogen delivery and storage, and conversion technologies including fuel cells and turbines. These research efforts, in collaboration with industry, have resulted in a number of successes such as advanced production systems capable of producing carbon-free hydrogen for less than $2 per kg with carbon capture and storage. DOE funded R&D has also reduced the cost of transportation fuel cells by 60% and quadrupled durability, and has resulted in over 1,100 U.S. patents issued and over 30 commercial technologies in the market.

The key technical challenges for hydrogen and related technologies are cost, durability, reliability, and performance, as well as the lack of hydrogen infrastructure. To achieve widespread commercialization, hydrogen
utilization technologies must enter larger markets and be able to compete with incumbent technologies in terms of life-cycle cost, performance, durability, and environmental impact. Non-technical barriers also need to be
addressed, such as developing and harmonizing codes and standards, fostering best practices for safety, and developing a robust supply chain and workforce.

Fossil Resources
Fossil fuels such as natural gas or coal are the source of most of the hydrogen currently produced in the world. Today, approximately 95% of the hydrogen in the United States is produced by catalytic steam-methane-reforming (SMR) in large central plants fed by the existing natural gas infrastructure. Partial oxidation of natural gas (or other hydrocarbons), autothermal reforming (converting natural gas, steam, and oxygen to syngas), andgasification of coal (or coal/biomass/waste-plastic blends)—all with CCUS—are other options leveraging domestic resources. Combining fossil-based processes with CCUS offers a promising near-term option for carbon-neutral hydrogen production, and using CCUS when co-firing fossil-based feedstocks with biomass offers the potential for carbon-negative hydrogen as an additional environmental benefit. Other emerging approaches include the direct pyrolysis of methane into hydrogen and solid carbon co-products. Advanced production systems have been developed that are capable of producing carbon free hydrogen for less than $2/kg with CCUS. For example, industry has demonstrated a fully integrated hydrogen production facility at the Port Arthur CCUS project at the
Valero Refinery. While SMR and gasification with CCUS are mature industrial technologies that can produce hydrogen for a cost of less than $2/kg today, ongoing RD&D in the areas of catalysis, separations, controls, polygeneration, capital cost reductions, process intensification, and modularization with advanced design methods (e.g., parametric design), including through the use of artificial intelligence, can further reduce the cost of fossil-based hydrogen production. Research advances in gasification and reforming technologies with CCUS, including reductions in capital and operating costs, target carbon-neutral hydrogen production at less than $1/kg.

Biomass and Waste-Stream Resources
Domestic biomass and waste-stream resources, with the potential for over a billion dry tons of feedstock annually,46 can be leveraged for sustainable hydrogen production. Applicable categories of feedstocks include primary biomass energy sources such as poplar, willow, and switchgrass, as well as biogas produced from anaerobic digestion of organic residues from sources such as landfill, agricultural waste, and municipal solid waste. Primary biomass can be gasified using well-established technologies, or even co-fed with coal or waste plastics in the gasification process. It can also be processed into bio-derived liquids for subsequent reforming into hydrogen and, when coupled with CCUS, could potentially produce carbon-negative hydrogen. Biogas, with additional cleanup requirements, can be reformed to produce hydrogen using a process similar to SMR. Certain waste-stream feedstocks can be used to produce hydrogen through biological-based processes such as fermentation and microbial assisted electrolysis, or through novel thermal and non-thermal plasma-based processes. The cleaning up of waste streams that occurs in these processes is an additional benefit. Depending on feedstock availability and cost, some approaches—including gasification and steam reforming of biomass and waste-streams—may be economically competitive in the near term. To enable broader adoption, RD&D is needed to address challenges for both near- and longer-term technologies, including improvements in conversion efficiency (e.g., through advanced catalysis and separations, as well as process intensification) and reductions in the costs of pre-treating and transporting feedstocks.

Water-Splitting Technologies
There are a number of processes that split water into hydrogen and oxygen using electric, thermal, or photonic (light) energy from diverse, sustainable domestic sources (such as solar, wind, nuclear, and others). Lowtemperature electrolyzers (including liquid-alkaline and membrane-based electroyzers) that use electricity to split water offer near-term commercial viability, with units available today at the multi-megawatt (MW) scale. These electrolyzers can be coupled to the electric grid, or integrated directly with distributed-generation assets to produce hydrogen for various end uses. The cost of hydrogen produced from lowtemperature electrolysis depends strongly on the electricity cost: it currently ranges from $5–$6/kg-H2 for electricity pricing in the
$0.05–$0.07/kWh range. The availability of lower-cost electricity— for example, in the $0.02–$0.03/kWh range from emerging wind and
solar assets—coupled with ongoing advancements in electrolyzer

1 Like

Actually, he mentioned it:

It is just plain tough to make the economics work at those prices.

2 Likes

But he does not say what is the price of natural gas is going to be in 2031. Natural gas is not going to stay at low price of $2.27 as we have seen in the last few years. The economics is on the hydrogen side in 2031.

As U.S. storage inventories draw down close to the five-year average by the end of injection season and with new demand from liquefied natural gas export projects coming on line in late 2024 and mid-2025, we expect natural gas prices to rise to an average of $3.30/MMBtu in 2025. Because of rising prices, we expect dry natural gas production to increase by 2% next year.

https://www.eia.gov/outlooks/steo/report/natgas.php#:~:text=As%20U.S.%20storage%20inventories%20draw,of%20%243.30%2FMMBtu%20in%202025.

One way to look at it is the price of hydrogen is too high.
Another way to look at it is the price of natural gas is too low.

The low price of natural gas is a big reason why there is so little serious interest in nuclear power these days. Why go through all of the trouble of new nuclear build, when the combined cycle gas plants are relatively easy to build? Sure, nat gas is a fossil fuel that emits lots of CO2, but gas is cleaner than coal, so it can be spun into a PR win.

The (September) Henry Hub futures price for natural gas is currently below $2/MMBTU. It is tough to justify any other type of reliable, dispatchable power generation at that kind of price.

_ Pete

1 Like

It always comes down to price. You can set whatever carbon targets you want, but the fossil fuel alternative ultimately must be somewhat price competitive, otherwise you’ll never get there. There has to be a market component driving it in there somewhere.

If we are serious about climate change, carbon tax is an obvious solution. Miracle new technologies may happen, but more likely this is political posturing. Stall and delay as long as possible. And settle for token measures too small to make a difference.

4 Likes

Absolutely. Carbon tax, cap and trade, whatever. Should have happened in the 2000s. Won’t happen any time soon in the current political climate. So all the incentives have to be on the carrot side. That’s good, but I don’t think is enough.

1 Like

The power industry experts disagree with your statements above.

The low cost of solar and wind is the big reason for so little serious interest in nuclear power. As I have documented previously, solar and wind are cheaper to build and operate than combined cycle natural gas plants. And natural gas prices have been volatile for years are going to rise in 2025 to 2030. Therefore, new natural gas plants would not be economic in most cases.

Solar and wind have grown faster than natural gas plants in the last 5 years and they will add much more capacity in 2024 and later years.

EIA reports that new utility scale power generation capacity added in 2024 will be as follows:
Solar = 36.4 GW
Wind = 8.2 GW
N.G. = 2.5 GW
Nuclear = 1.1 GW
https://www.eia.gov/todayinenergy/detail.php?id=61424

1 Like

And earlier this year we learned that the cost of electrolysers for green hydrogen production is rising instead of falling.

https://www.hydrogeninsight.com/electrolysers/cost-of-electrolysers-for-green-hydrogen-production-is-rising-instead-of-falling-bnef/2-1-1607220
Inflation and subsidy delays clobber economics of making and installing renewable hydrogen equipment…

The cost of producing and installing electrolysers for green hydrogen production in China, the US and Europe — three of the world’s biggest markets — has risen by more than 50% compared to last year , research house BloombergNEF (BNEF) has found, rather than the gradual reduction its analysis had previously indicated.

DB2

3 Likes

Interesting that energy is so sensitive to inflation. Wind turbins also have this problem.

One suspects labor and copper are the culprits. Easing inflation should help.

3 Likes

Keep in mind that most hydrogen production today (almost entirely from natural gas) is used to make synthetic fertilizer. The amount of greenhouse gases produced by this method is equivalent to that of the aviation industry.

Developing methods to produce green hydrogen cheaply is essential for mitigating the worst of climate change regardless of whether it is used for energy. https://royalsociety.org/news-resources/projects/low-carbon-energy-programme/green-ammonia/

Fortunately there is progress on this front . Farm in Kenya First to Produce Fossil-Free Fertilizer On Site - Yale E360

A small fertilizer plant, built by U.S. startup Talus Renewables, will use solar power to strip hydrogen from water. The liberated hydrogen will then bond with nitrogen in the air to form liquid ammonia. Every day, the plant will produce 1 ton of ammonia, which can be applied to crops as fertilizer.

2 Likes

The other major natural gas product is methanol. It is made into acetic acid and many derivatives. Formaldehyde in the glue for plywood and particle board etc. Ammonia turns into nitrates and most nitrogen chemicals.

Most synthetic chemicals are made from ethylene but C1 group is also large.

Inexpensive natural gas is important to the chemical industry.

2 Likes