Economics of Hydrogen Generation

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This entry is adapted from the peer-reviewed paper 10.3390/chemengineering8010017

Hydrogen is known as the lightest and the most abundant element. It supplies energy to fuel the stars and the Sun. It is considered non-toxic, odorless, colorless, highly combustible, and unpolluted.

hydrogen energy fuel cell electrolytic photolytic thermal technique

1. Introduction

Hydrogen is known as the lightest and the most abundant element. It supplies energy to fuel the stars and the Sun. It is considered non-toxic, odorless, colorless, highly combustible, and unpolluted. Also, it is an energy carrier ^[1]; it scarcely exists by itself and should be generated from compounds that contain it. Hydrogen is versatile; it can be produced from varied resources, and it is used in a wide range of applications. It can be converted into electricity using conversion devices like fuel cells ^[2]. The main advantages of hydrogen are its high electrochemical reactivity, theoretical energy density, safe combustion products, and unbounded availability. However, hardness storage, low density under normal circumstances, and explosion hazards represent the main impediments to the use of hydrogen in fuel cells. Many sources could be used to generate hydrogen, like water, fossil fuels, and renewable energy. According to its production method, hydrogen can be classified as follows ^[3]:

-: Gray hydrogen: fossil fuels are used to produce hydrogen, like natural gas and oils; this kind of hydrogen releases a large amount of CO₂ into the air during its production process.
-: Blue hydrogen: hydrogen is produced using fossil fuels, and it is accompanied by carbon-capture storage technology to decrease carbon dioxide emissions.
-: Green hydrogen: hydrogen is generated by electrolysis powered by renewable energy, such as solar, wind, geothermal, nuclear, and waste energy. It is considered to be a clean technology to generate hydrogen.
-: Brown hydrogen: this type of hydrogen is considered to be the most affordable and the most harmful to the environment due to the thermal coal that is used in the generation process.
-: Turquoise hydrogen: hydrogen is fabricated using methane pyrolysis technology that yields solid carbon.
-: Yellow hydrogen: this refers to the hydrogen generated by electrolysis using solar energy.
-: White hydrogen: this type of hydrogen is geological, which is established in underground deposits and formed via fracking. Presently, there are procedures to harness and exploit it.

Hydrogen energy is versatile in terms of its usage and generation. Currently, it is used in the production of methanol and ammonia, the fabrication of vitamins and pharmaceutical products, and the hydrogeneration process of liquid oils. Also, hydrogen is used to extract sulfur and nitrogen compounds in refinery processes ^[4]. It is used to produce steel by replacing coking coal and to generate fuel for transportation. Moreover, some companies are planning to use hydrogen to heat and cool buildings and to generate power to minimize GHG emissions and improve efficiency.

Hydrogen energy is anticipated to be a sustainable fuel for the future. Recently, the development of hydrogen technologies has gained more international interest and attention due to the significant role that hydrogen can play in increasing energy security and economic sustainability. Hence, hydrogen energy can sustainably cope with the global growth in energy demand. In addition, hydrogen energy can be used to generate and store energy and to deal with the intermittent nature of renewable energy sources ^[5]. Also, hydrogen can contribute to decarbonization in many sectors, including chemical, transportation, and steel production, and therefore, it can enhance air quality, boost energy security, minimize oil reliance, and cope with climate change. Moreover, hydrogen can be produced from plastic waste materials through several thermo–catalytic processes; therefore, it is considered to be a solid waste treatment ^[6].

The neutral carbon characteristic of hydrogen depends on the cleanliness of its generation method, the feedstock used, and the energy used in its generation process ^[7]. Therefore, it is essential to determine the hydrogen origin before considering it as a green energy source. The kind of feedstock and energy and the desired end-use purity determine the specified technology and hydrogen generation method.

2. Economics of Hydrogen Generation

2.1. Cost of Hydrogen Based on Hydrogen Types

An analysis of the hydrogen-based energy system has been conducted ^[8]. The findings pointed out that the global future energy system will be established mainly on electricity and hydrogen. The cost of hydrogen relies on technologies used to generate hydrogen and the feedstock used. Among the different types of hydrogen (colors), the lowest cost of hydrogen generation is gray hydrogen, with a price range from 0.88 to 2.31 USD/kg of H₂ ^[9]. The cost of blue hydrogen is higher owing to the necessity to use devices/systems to capture and store carbon, and it ranges between 1.32 and 3.30 USD/kg of H₂ ^[10]. The generation cost of green hydrogen through electrolysis is the most expensive, and it ranges from 2.42 to 9.01 US USD/kg of H₂ ^[9]^[10].

Figure 1 displays the cost of blue hydrogen, generated with coal and gas, and green hydrogen in 2019 and a future estimation of their costs ^[11]. It can be noticed that the cost of blue hydrogen generated with gas is the lowest, and the cost of green hydrogen is the highest. Blue hydrogen is 2–3 times cheaper than green hydrogen. Nevertheless, the cost of green hydrogen is projected to drop significantly, by up to 60%, to reach a minimum value of 1.5 USD/kg by 2050. Many issues affect the cost of green hydrogen, such as the renewable electricity price, operating hours, and the electrolyzer investment cost ^[12]. Innovation and enhanced efficiency are required to maximize the electrolyzer’s ability to reach multi-gigawatt (GW) levels. The drop in electricity price and the investment cost of electrolysis facilities are fundamental to producing a competitive green hydrogen.

Figure 1. The global cost of hydrogen generation ^[11].

2.2. Cost of Hydrogen Generated Based on the Technologies Used

Currently, the most predominately used and economical technology for hydrogen generation is the steam reformation of methane. Around half of all global hydrogen is generated using steam reformation, with a generation cost of 7 USD/GJ. Partial oxidation of hydrogen showed a competitive price for hydrogen generation. Nevertheless, a carbon capture and storage system should be integrated to minimize the greenhouse gases generated by thermochemical technologies, and in this case, a rise in hydrogen price by 25–30% must be considered ^[13].

Gasification and pyrolysis of biomass are among the thermochemical technologies used to generate hydrogen. The cost of hydrogen generation by gasification and pyrolysis is costly, about three times greater than the cost of hydrogen generated by steam reformation technology. Therefore, these technologies are generally not deemed as cost-competitive for steam reformation. The cost of hydrogen generated by gasification and pyrolysis of biomass ranges from 10 to 14 USD/GJ and from 8.9 to 15.5 USD/GJ, respectively. The generation cost depends on different factors, including the equipment, accessibility, and cost of raw materials ^[1].

Generating hydrogen using water electrolysis is considered to be the simplest and most efficient process without byproducts. However, the generation of hydrogen through water electrolysis is costly due to the cost of electricity needed to split the water and the cost of water. Decreasing the electricity prices and increasing the operating hours are crucial for hydrogen generation through electrolysis ^[14].

An economic analysis of the different hydrogen generation technologies has been carried out ^[15]. Results demonstrated that the most economical technology is the generation of gray hydrogen. In addition, the study indicated that alternative technologies could be economically competitive in the future. Gasification and pyrolysis have the potential to be competitive over time ^[16]. Also, results showed that hydrogen-generated power by solar energy is the most ecofriendly process. The main technologies to generate hydrogen by 2030 will be steam reformation of natural gas and catalyzed biomass gasification. In addition, coal gasification and electrolysis will be used to a limited extent. Hydrogen production using solar energy is arguable in a given context and is questionable but also possible. The use of solar energy will most likely rise by 2050 ^[1].

A comparative study of the different hydrogen generation technologies in terms of efficiency and cost has been performed ^[9]. Findings showed that hydrogen generation based on fossil fuels is not in phase with the transition toward a sustainable energy future. Also, the study pointed out that in the case of the generation of blue hydrogen, substantial fugitive methane emissions happen, which is not taken into consideration in most studies. Moreover, the study discussed the possibility of decreasing the cost of electrolysis in the future. The introduction of a global hydrogen market is viewed as an important key player since it would enable countries with suitable circumstances for renewable energy generation to generate hydrogen at lower costs ^[17].

The cost breakdown of different technologies used to generate hydrogen is displayed in Table 1. The highest investment cost is recorded for PEM electrolysis, with a value of 3163 (USD/kW), and the lowest is for the SMR technology. Steam reformation and steam reformation with CCUS have the highest operating time and the lowest energy price.

Table 1. Cost breakdown of gray, blue, and green hydrogen ^[17].

Alkaline Electrolysis	PEM	SMR	SMR with CCUS
Investment cost (USD/kW)	2836	3163	1090	1939
O&M (USD/kW)	42.54	48	51.27	57.82
Efficiency (LHV)	64	66	76	69
Operating hours	3000	3000	8322	8322
Energy price (USD/kW)	0.044	0.044	0.033	0.033

References

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