A 100MW alkaline electrolyser offers the most competitive levelised cost of hydrogen (LCOH) at present, according to a new modelling tool developed by US non-profit the Electric Power Research Institute (EPRI).

The tool calculates the LCOH by evaluating various inputs including technology, regional electricity cost, water cost, plant power input, average stack power consumption and capacity factor.

“Our goal was to develop a platform that can help decision-making at the first stage of a project, when developers are evaluating locations and technologies for their plant,” said Behrooz Motealleh, senior engineer for hydrogen electrolysis at EPRI, speaking on a webinar organised by German knowledge-sharing platform Mission Hydrogen.

“Our goal was to develop a platform that can help decision-making at the first stage of a project” Motealleh, EPRI

“It aims to help them understanding the relative effect of various different factors on the overall LCOH that will be produced,” he added.

The tool took two years to develop. EPRI began the project when it saw that various countries and companies had different ways of reaching the LCOH figure.

“We wanted to have very detailed, transparent assumptions that enabled like-for-like comparisons,” added Motealleh.

The tool also has a component that allows the expected reduction in technology prices over coming years to be factored into cost outputs.

Comparing costs

In demonstration cases for the tool provided by the EPRI, alkaline electrolysers offer cheaper outputs than proton-exchange membrane models, even in cases with variable renewable input.

The tool also demonstrates the huge impact of the US Inflation Reduction Act on production costs. Without the tax incentive, costs were between $4/kg for the most cost-effective combination of factors and $12/kg for the least. A $3/kg production tax incentive therefore reduces the costs of the most expensive projects by a quarter and brings the least expensive close to the US government target of $1/kg.

The tool also demonstrates that electricity can count for up to 50% of overall LCOH costs, making wholesale electricity prices a key factor in deciding on where electrolysers should be located.

A separate academic study carried out by the Swinburne University of Technology in Australia earlier this year found electricity prices can be even more important in determining the LCOH of a hydrogen project. The study found that, in certain cases, 71% of LCOH was accounted for by electricity, followed by upfront capex at 20%, and fixed operating and maintenance costs at 9%.

The study noted that green hydrogen can currently be produced for between $7.7/kg and $9.6/kg without subsidies in various parts of the world, and estimated these costs could fall to $6.5/kg and £3.4/kg by 2030 and 2040 respectively.

Blue hydrogen production costs are currently around $2–3/kg depending on the price of natural gas, according to the International Renewable Energy Agency, which has also said that green hydrogen costs can fall to be competitive with these price levels by 2030. This level would also make green hydrogen competitive with incumbent fuels in the transport sector, according to a study by the International Council on Clean Transportation, which found hydrogen reaches cost parity with diesel at $3.7–5.3/kg, depending on region.

A study by research firm BloombergNEF found hydrogen does not become competitive with natural gas as a fuel for industrial sectors until it reaches at least $1/kg.

In order to achieve cost reductions, the long-term performance of electrolysers must be tracked as they start to be deployed around the world, according to Aruna Chandrasekar, research engineer at the EPRI.

“We will work on tracking long-term performance, which is needed in the industry today, identifying the key performance indicators and conducting sensitivity analysis on various parameters affecting hydrogen production,” she said, speaking on the Mission Hydrogen webinar.

---

Author: Tom Young