Power and renewables

Hydrogen is ready to turn green

Hydrogen

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Jason Goodhand

Jason Goodhand

Global Business Lead Storage

If you’ve been reading the energy industry news lately, you’ve likely noticed an uptick in content on hydrogen.

If you’ve been reading the energy industry news lately, you’ve likely noticed an uptick in content on hydrogen—its use as a fuel in transportation and maritime and as a basis for energy storage, among other things. You might be new to the concept of hydrogen’s use as an energy carrier, but scientists and engineers have been harnessing hydrogen for more than 200 years (see the Rozière Balloon and Samuel Brown’s internal combustion engine). If you are new to hydrogen, there’s a ton of other articles explaining electrolysis, fuel cells, and steam methane reforming. Here’s a good start.

When I started my clean energy career at a hydrogen fuel-cell startup in 2002, we used to say jokingly that in the fuel cell industry, we are about 10 years away from hydrogen fuel cells…and we have been for more than two decades. At the time, the hydrogen industry focused on passenger cars – Tesla Motors didn’t exist yet, and the GM EV1 had just been discontinued – as a potential solution for clean, cheap, sustainable fuel. The stocks of a few fuel-cell companies had skyrocketed and fallen alongside the dot-com boom. The future of hydrogen was unclear.

I went back to school in 2004 and wondered if I’d be missing out: Would hydrogen take off? Or had I dodged a bullet? Well, hydrogen never left the scene, but you can’t say that it has taken flight, either. I’d say it was “parked” while other technologies went to the forefront, like solar PV and lithium battery-powered vehicles.

Yet something feels different this time. With solar and wind costing less than average traditional generation (Irena, 2019), renewably-generated hydrogen (“green hydrogen”) has growing attention. Big companies have hydrogen divisions, countries are announcing green hydrogen funding and policy; and projects are moving from R&D scale (kW), to pilot-scale (MW), to early adopter (>10MW) status. What’s changed? Back to 2002, the technology that had best demonstrated "scaling up" and driving costs down the way we understand it today was the semiconductor. Wind, solar, batteries, and anything else in the “clean energy” space was still really expensive. So, when modelling a future based on cars running on green hydrogen or storing energy, the input costs were much too high and the cost reductions due to scaling were hypothetical.

The wind, solar, and battery equipment manufacturers have proven that by scaling up and demonstrating that with broad adoption and increased volume we can have the technologies we want at a lower cost. This provides key insights into the hydrogen costs outlook:

1) capital costs for electrolyzers (technology that produces green hydrogen if powered by renewable energy) should follow the same declining cost curves we’ve seen for solar panels and lithium batteries; 

2) the input cost of renewable electricity to power electrolyzers  is, and will be, incredibly low, lower than one might have imagined years ago; and

3) with the need for two decades of continued CO2 emission reductions, clean solutions like green hydrogen are even more pressing.

We now see that green hydrogen costs are not tens of times more expensive than hydrogen produced by fossil fuels but more like two to four times as expensive and trending towards parity (SBC Global, 2019). A solar PV module was three times the cost in 2013 as it was in 2019 and currently provides the cheapest form of electricity in many regions today.

So, the recent uptick in hydrogen content I mentioned is due to the fact that the fuel, which plays a unique role as a demonstrated clean energy carrier, can be produced cleanly at costs that can be considered economically viable in the not too distant future. Now governments, energy and oil companies, and investors can make sound economic decisions to deploy these solutions.

The first applications of green hydrogen are likely to be in industries that use hydrogen today, such as ammonia production, and carbon-intensive industrial processes that fit well with hydrogen for heat as opposed to electricity, such as steelmaking. With the lowered costs the key to project development today is likely early adoption for offtake and use cases rather than generation.

Through a combination of low-cost renewables, incentives, and the right hydrogen use cases, we’ll soon see the building of multi-MW scale green hydrogen facilities. And we won’t have to wait 10 years.

Contact us:

Jason Goodhand

Jason Goodhand

Global Business Lead Storage