Updated Hydrogen Costs – Adding to that?


By Paul Homewood

Researcher BloombergNEF (BNEF) found that the cost of manufacturing and installing electrolyzers to produce green hydrogen in China, the US and Europe – three of the world’s largest markets – has increased by more than 50% compared to with last year. descending analysis of it indicated earlier.

BNEF said in its new report that the main culprit for Western manufacturers is inflation, which has pushed up the costs of raw materials, utilities (such as electricity and water) and labor in the US and Europe. Europe increased. Electrolysis price survey 2024.

As a result, the average system-level cost (including plant staging and balancing) currently averages $600/kW for an electrolyzer made in China, while other Machines manufactured in Europe or America are about 2,500 USD/kW.

This makes Western electrolyzers four times more expensive than their Chinese equivalents, a gap that has not narrowed since the previous report, BNEF noted.

The researcher previously predicted that costs will gradually decline over three years from 2022, as many large-scale projects near completion.

Green hydrogen, once touted as the savior of Net Zero, seems to have fallen out of the spotlight recently. A few years ago there were wild, unsubstantiated predictions that hydrogen would become so cheap and easy to produce that we could all ditch fossil fuels.

Instead, as Bloomberg now reports, the cost of electrolyzers is going up, not down. Furthermore, the actual cost of wind power is also much higher than previously thought, so green hydrogen will be much more expensive.

So let’s take a closer look at these costs.

Back in 2018, BEIS published this report: government/publications/hydrogen-supply-chain-evidence-base.

I analyzed the report This.

It has this table:

I gather that PEM (Proton Exchange Membrane) technology is the technology most likely to be implemented. Baseline costs in 2025 are forecast to be £500/kW.

ONE learn Last October proposed a mid-range cost of the Eu727, equivalent to around £630/kW. Bloomberg estimates $600, but that figure is based on China’s extremely low production costs and is almost certainly heavily subsidized. It is worth noting that they estimate that European-made electrolyzers cost four times as much.

We can do the work reasonably for around £600.

The BEIS study assumes 52.0 kWh/kg H2 in 2025. energy density of hydrogen however, it is 33.3 kWh/kg, meaning the electrolysis process is only 64% efficient. In other words, 36% of the input energy is wasted.

Previous cost estimates were based on the lowest cost of renewable energy, especially offshore wind, which would have to supply the majority of the energy needed for electrolysis in the UK. As we now know, these costs were never realistic. The administrative strike price of offshore wind for AR6 is currently £100/MWh at 2023 prices. Allowing for an energy efficiency of only 64%, the input energy cost of hydrogen is therefore £156/MWh.

On top of that are operating costs. BEIS calculated £21/MWh in 2018, which could now be at £30.

So we were up to £186/MWh before adding CAPEX. BEIS estimates this figure at around £30/MWh in 2018. However, this assumes a lending rate of 5%. With interest rates rising since then and general inflation, a CAPEX of £60/MWh is not unreasonable.

This therefore gives us a total cost of £246/MWh.

Wholesale prices Natural gas has ranged between 55 and 85p/therm this year. The conversion rate is 29.3kWh/therm, giving a cost of £23.90/MWh, based on a midpoint of 70p.

Does anyone still think hydrogen is a good idea?


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