French Bank Lazard has stated that the US Inflation Reduction Act (IRA) tax credits could make atom-powered electrolyzers more competitive than green hydrogen production.
While blue, green, and grey hydrogen production are more commonly known, nuclear-powered electrolyzers, which produce “pink” hydrogen, have been relatively unknown. Pink hydrogen’s production has been hampered by debates within the European Union about nuclear energy’s qualification as renewable energy, delaying major projects such as those led by EDF.
However, Lazard’s recent analysis has created a buzz in Europe by indicating that nuclear-powered electrolyzers could provide hydrogen at a cheaper price in the US than green hydrogen. The competitiveness of pink hydrogen in the US is due to the large subsidies distributed by the government under the IRA. The Lazard Bank estimates that the levelled cost of pink hydrogen (LCOH) in the United States, obtained by including subsidies, would be just under 0.5 euros per kilogram, while that of green hydrogen is around 0.8 euros per kilogram.
Calculations were made based on a 100 MW electrolyzer, where the price difference resulted from the level of subsidy and very different plant capacity factors. Green hydrogen plants have a capacity factor of 55%, while pink hydrogen plants have a capacity factor of 95%. This is due to nuclear energy’s stable baseload energy profile compared to the variable and intermittent power supply of renewable energies. Therefore, a pink hydrogen plant could produce about 63% more hydrogen per installed kWh of electrolysis capacity than a green hydrogen facility, according to Lazard’s modelling.
However, without a subsidized model, the LCOH of pink hydrogen would be between €2.50 and €5/kg, depending on the size of the electrolyzer (between 20 and 100 MW) and the technology used. Green hydrogen, on the other hand, would cost between €3.20 and €7/kg. It should be noted that to date, only grey hydrogen is produced at a price of less than €1/kg.
The potential impact of pink hydrogen production could be significant. According to Lazard, pink hydrogen plants have the potential to produce 63% more hydrogen than green hydrogen plants, which could lead to a significant reduction in the cost of hydrogen production. This would also make hydrogen fuel cells more competitive with fossil fuels in industries such as transportation, power generation, and heating.
In conclusion, Lazard’s analysis shows that nuclear-powered electrolyzers could produce hydrogen at a lower cost than green hydrogen, thanks to subsidies provided by the IRA. While pink hydrogen production has been relatively unknown, its potential to produce more hydrogen than green hydrogen plants could have significant implications for industries that require hydrogen fuel cells. However, challenges such as public perception of nuclear energy and the high initial capital costs may impede the development of pink hydrogen projects.
