This report examines the price of hydrogen production from renewable electricity in both the United States (U.S.) and the European Union (EU).
Commissioned by the ICCT, this study calculates the distribution of hydrogen prices under different scenarios of electricity transmission and cost reductions at a national level for the EU and sub-state regional level for the U.S.
Scenario 1 assumes the electrolyzer uses renewable electricity transmitted through the electric grid and can benefit from high capacity factors, while scenario 2 assumes the electrolyzer is directly connected to an off-grid renewable electricity generator. Scenario 3 assumes the electrolyzer is only operated on electricity that would otherwise be curtailed. Three renewable electricity technologies are assessed, including solar photovoltaic (utility-scale), onshore wind, and offshore wind.
With the objective of developing an understanding of the costs associated with the production of hydrogen from water electrolysis using various forms of intermittent renewable electricity in the U.S. and the EU, the report summarizes the minimum prices that correspond with the most favorable locations within both the U.S. and the EU. The data, from public sources, includes a large database of price projections for electrolyzers and capacity factors for wind and solar generators for both the United States and Europe. This study builds a transparent accounting of hydrogen prices when produced from a variety of renewable electricity generators.
This work examines the price ofH2production from renewable electricity generators in both the UnitedStates and the European Union. Many other reports exist on this topic, but with varying degrees of transparency to cost assumptions. These methodological differences make it difficult to compareH2prices from different studies without first examining all the details. We note that many high profile studies reportH2prices that ignore other system costs beyond those associated with the electrolyzer CAPEX and the purchase of electricity to operate the electrolyzer. There are, of course, other system costs that must be considered in order to build out a fully operationalH2electrolysis plant. Data on these other system costs are still not well understood and should be documented more fully, but to zero them out completely could be misleading. We also note that many of the projections of electricity price would be considered optimistic even when compared to the optimistic electricity price scenarios included in this work. In some cases, these “best” case scenarios might represent a “global best” while other projections of electricity price are more opaque.
In this study, we assume plant costs originate from the electrolyzer CAPEX, electrolyzer replacement(if necessary), electricity, water, piping, compressor CAPEX, storage, dispensing, and other fixed OPEX costs. With these data, we attempt to build the most transparent accounting ofH2prices when produced from a variety of renewable electricity generators. Our data is drawn only from public sources and includes a large database of CAPEX prices and capacity factors for wind and solar generators for the United States and Europe. This geographically explicit data is leveraged to calculate the distribution ofH2price for both the US and EU under three different connection configurations. Scenario #1 assumes that the electrolyzer is connected to the larger electric grid and can benefit from high capacity factors (but must pay associated grid fees). Scenario #2 assumes that the electrolyzer is directly connected to a renewable electricity generator(and thus does not need to pay grid fees, but the electrolyzer can only be operated at the capacity factor of the renewable electricity generator). Scenario #3 assumes that the electrolyzer is only operated on electricity that would otherwise be curtailed. Our primary results are summarized below; the minimum prices are shown here correspond with the most favorable locations within the EU and US
Grid Connected
•The median price ofH2(in the US, 2020-2050) will decrease from $11.59/kg to $8.44/kg; the mini-mum price decreases from $8.80/kg to $6.81/kg.
•The median price ofH2(in the EU, 2020-2050) will decrease from $16.05/kg to $10.46/kg; the minimum price decreases from $7.49/kg to $5.80/kg.
Direct Connection
The median price ofH2(in the US, 2020-2050) will decrease from $13.08/kg to $8.33/kg; the mini-mum price decreases from $7.12/kg to $4.90/kg.
•The median price ofH2(in the EU, 2020-2050) will decrease from $21.76/kg to $12.46/kg; the minimum price decreases from $6.62/kg to $4.70/kg.Curtailed Electricity•
The median price ofH2(in the US, 2020-2050) will decrease from $12.50/kg to $8.15/kg; the mini-mum price decreases from $8.48/kg to $7.13/kg.•The median price ofH2(in the EU, 2020-2050) will decrease from $12.97/kg to $8.43/kg; the mini-mum price decreases from $8.43/kg to $7.13/kg.
The hydrogen price (when produced from renewable electricity generators) calculated here is highly dependent on geographic location with significantly cheaper production prices in some favorable localities.
Source ICCT, By Adam Christensen, Three Seas Consulting
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