In the burgeoning energy sector, the pursuit of clean, alternative fuels is continually evolving with leaps in technology and investments alike. The latest exploration into the area comes in the form of a pivotal report conducted by The Brattle Group, examining the changing economics of hydrogen production.
Prepared with the backing of the Environmental Defense Fund, this landmark report offers comprehensive insights into the dynamics influencing investments in hydrogen as a low-carbon alternative fuel or energy carrier.
Titled “Emerging Economics of Hydrogen Production and Delivery,” the report offers an in-depth evaluation of the cost structures of various types of hydrogen – from ‘green’ hydrogen generated via renewable-powered electrolysis, to the ‘blue’ variant produced through steam methane reforming with carbon capture, and even the nuclear-powered ‘pink’ hydrogen. Each carries a unique cost model and the report delves into the varying influences, including current tax incentives, research support from the US Department of Energy (DOE), and the effects of rapid commercialization on these costs.
The report also discusses intermittent power when renewables are available against steady-state production, projected hydrogen production technology and input costs for the years 2023 and 2030, and geographic variations, comparing scenarios in California, Southeast US, and New York. Another crucial aspect covered is the delivery and storage costs from production sites to market areas.
Findings from the report show how federal programs, primarily the recent Clean Hydrogen Production tax credit (45V), can neutralize around half of the production costs of green hydrogen, making it a potentially viable competitor against conventional hydrogen (grey hydrogen). Further, the expected decrease in electrolysis costs may provide additional reductions, sometimes matching or even defeating the DOE’s “hydrogen shot” goal of $1/kg by 2030 in some markets.
However, the report also indicates that developing a nationally interconnected market for clean hydrogen could face a slow roll-out, as hydrogen will likely be produced geographically close to its users, with both costs and technologies varying by location. Despite these potential hurdles, there is a clear hierarchy of use across industries, pinpointing hard-to-electrify industrial applications and some heavy-duty transportation as top priorities.
The report concludes that achieving the DOE’s projected national demand of 50 million metric tons per year of hydrogen by 2050 may require an energy input of up to 700 GW from renewable sources.
