Interests heading here
The demand for hydrogen continues to grow and the current annual production at about 70 million tonnes per year relies mostly on fossil fuels. Natural gas contributes the largest as fuel for the production (6% of global natural gas), followed by coal (2% of global stock). A very small percentage is produced using electricity and oil. The low cost of natural gas and capital expenditure for the infrastructure is one of the reasons for this skewed fuel dependence.
The cost of production from Natural Gas was found to range between 0.9 to 3.2 USD/kg of H2, while production costs due to renewables fall between 3 to 7.5 USD/kg. It is quite evident why electrolysis contributes to less than 0.1% of global hydrogen production at the current rate of production. However, the evolution of the renewable energy market, particularly solar PV, wind and battery storage, has spurred interest in electrolytic Hydrogen.
Further, the cost competitiveness of hydrogen as a low-carbon solution when compared to peer technologies (low carbon, conventional sources) holds promise depending on the application. This includes use as feedstock for ammonia production and hydrocracking in refining processes. Hydrogen also emerged as the only competitive alternative to decarbonise applications where carbon capture storage (CCS) sources were not available.
On the technology side, cost reduction strategies by design optimisation at both stack level and system level in electrolysers have also been evaluated. At the system level, economy of scale continues to be a promising opportunity to reduce production costs. On the other hand, at stack level, certain applications can be affordable where small sizes are required (such as in residential or transport applications). More importantly, there is a long-term sustainable design approach required whereby alkaline systems need to have lower dependence on critical materials like platinum and cobalt. An early approach to innovative design has the potential to significantly reduce not only the economic, but also social cost of extraction for scaling up green hydrogen.
On the demand side, Hydrogen use is dominated by industry, followed by transport, building and power generation. In industry, oil refining and fertilizer production sub-sectors are the largest demand centres. The power sector is set to benefit from hydrogen as an attractive option for storing renewable energy. Moreover, hydrogen and ammonia (also produced using hydrogen) can be used in gas power plants to increase power plant flexibility. Overall, it is estimated that hydrogen applications can be cost-competitive for over 15% of the global energy demand when compared to other low-carbon alternatives.
Today’s hydrogen production globally is resulting in about 830 million tonnes of CO2 emissions into the atmosphere every year. It is interesting to note that if all hydrogen output at present was produced using electricity, this would result in a total demand of 3,600 TWh, which is larger than European Union’s current annual electricity generation. It is already critical to enable an upcoming hydrogen economy powered by renewables using ‘green’ electricity.