The Key Techno-Economic and Manufacturing Drivers for Reducing the Cost of Power-to-Gas and a Hydrogen-Enabled Energy System

Abstract

Water electrolysis is a process which converts electricity into hydrogen and is seen as a key technology in enabling a net-zero compatible energy system. It will enable the scale-up of renewable electricity as a primary energy source for heating, transport, and industry. However, displacing the role currently met by fossil fuels might require a price of hydrogen as low as 1 $/kg, whereas renewable hydrogen produced using electrolysis is currently 10 $/kg. This article explores how mass manufacturing of proton exchange membrane (PEM) electrolysers can reduce the capital cost and, thus, make the production of renewable power to hydrogen gas (PtG) more economically viable. A bottom up direct manufacturing model was developed to determine how economies of scale can reduce the capital cost of electrolysis. The results demonstrated that (assuming an annual production rate of 5000 units of 200 kW PEM electrolysis systems) the capital cost of a PEM electrolysis system can reduce from 1990 $/kW to 590 $/kW based on current technology and then on to 431 $/kW and 300 $/kW based on the an installed capacity scale-up of ten- and one-hundred-fold, respectively. A life-cycle costing analysis was then completed to determine the importance of the capital cost of an electrolysis system to the price of hydrogen. It was observed that, based on current technology, mass manufacturing has a large impact on the price of hydrogen, reducing it from 6.40 $/kg (at 10 units units per year) to 4.16 $/kg (at 5000 units per year). Further analysis was undertaken to determine the cost at different installed capacities and found that the cost could reduce further to 2.63 $/kg and 1.37 $/kg, based on technology scale-up by ten- and one hundred-fold, respectively. Based on the 2030 (and beyond) baseline assumptions, it is expected that hydrogen production from PEM electrolysis could be used as an industrial process feed stock, provide power and heat to buildings and as a fuel for heavy good vehicles (HGVs). In the cases of retrofitted gas networks for residential or industrial heating solutions, or for long distance transport, it represents a more economically attractive and mass-scale compatible solution when compared to electrified heating or transport solutions.

A comparative total cost of ownership analysis of heavy duty on-road and off-road vehicles powered by hydrogen, electricity, and diesel

“…Studies suggest proton exchange membrane (PEM) electrolysers have energy efficiencies between 60-80% [ 23 ] while the IEA [ 24 ] estimate electrical efficiencies of 56–60%. This work assumed a conservative electrical efficiency of 65% in 2021, increasing to 75% in 2025 and 85% in 2030, which is in alignment with future predictions by [ 25 ]. After 2030, the rate of efficiency increase slows and by 2040 reaches its peak of 90%.…”

Technical and Economic Analysis of Fuel Cells for Forklift Applications

“…Therefore, this study uses $8/kg as the benchmark hydrogen price and carries out the sensitivity analysis assuming the hydrogen price varies between $4/kg and $12/kg. The assumed hydrogen cost is within the range of reported hydrogen cost by water electrolysis 28 , 29 and coal gasification. 30 It is higher than the reported cost of steam methane reforming, but this baseline cost is reasonable when both hydrogen production and distribution are included.…”

Potential and Economic Analysis of Solar-to-Hydrogen Production in the Sultanate of Oman

“…The cost of the technology is one of the significant factors to consider when adopting technology. The cost reduction of PEM technology is substantial with the system scale-up [58]. The cost reduction rate of the PEM electrolyser is faster than the other technologies.…”