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Alan Mammoser

Alan Mammoser

Alan Mammoser writes about energy, environment, cities, infrastructure and planning. He writes the weblog, www.warmearth.us

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The Two Major Obstacles To A Hydrogen Revolution


Hydrogen will play an indispensable role in a future carbon-free energy system, according to nearly everyone concerned with the matter. But scenarios showing its share in final energy in the year 2050 vary considerably. The International Renewable Energy Agency (IRENA) says 12%, the Brussels-based Hydrogen Council says 18%, while the EU’s announced target is 24%.  

Whatever the final outcome may be, industry watchers now largely agree that there are two realms where costs must come down for carbon-free hydrogen to advance. The cost of renewable energy, already the object of remarkable reductions in the past decade, must continue to fall. And the cost of water electrolysis for hydrogen production, encompassing the basic hardware of green hydrogen, the electrolyser, must follow a similar path downward. 

Many see both poised to happen. In fact, the two are integrally related, with operating expense and capital cost factoring into the total cost of electrolyser operation. The decline of renewable power prices is expected to continue, with accelerated deployment of renewables into grids. But capital costs must come down as well, with electrolysis equipment being manufactured more quickly and less expensively. 

While the price of solar PV power has fallen approximately 90% in the past 10 years, it needs to fall still further and governments appear determined to help. For example, in March, the US Department of Energy (DOE) announced its objective that the cost of utility-scale solar power fall by more than half in 10 years, from a current cost of 4.6 cents per kilowatt-hour (kWh) to 3 cents/kWh by 2025 and 2 cents/kWh by 2030. DOE announced a host of R&D projects and seed capital for improved photovoltaics (perovskites, thin films) and Concentrated Solar Power (CSP) to achieve higher efficiencies and lower costs. 

The cost of electrolysis technology has been declining as well, with design improvements for higher efficiency. Improved alkaline units are being deployed even while buyers are turning increasingly to higher efficiency proton exchange membrane (PEM) electrolysers. Meanwhile the technology is advancing for solid oxide electrolyser cells (SOEC), which promise to achieve very high efficiency from high heat input, from industrial heat sources, and potentially from nuclear reactors.    

The question now is whether water electrolysis for hydrogen production can follow the fortuitous downward cost curve that solar PV has followed for the past ten years. It will be critical to keep driving down the cost, as electrolytic hydrogen will have to compete with ‘blue hydrogen’ produced with natural gas and carbon capture, which is now less costly. Success will lead to the hoped-for widespread adoption of what advocates have called the ‘Holy Grail’ of hydrogen, which is electrolytic hydrogen produced with renewable electricity (i.e., ‘green’ hydrogen). 

Scaling up

The general belief today is that carbon-free hydrogen will get its start in industrial applications, in major industry clusters, first in the form of blue, later in the form of green. For green, electrolysers are critical and they continue to be manufactured at small scale with much hands-on craftsmanship, even by big manufacturers. Yet the world’s global manufacturers are planning to scale up in order to lower cost. 

This was apparent in panel discussions in the recent Middle East Energy Online 2021 conference, organized by Informa Markets, during which major industry players shared insights on their plans for production.  

A major player to watch is the German industrial giant thyssenkrupp, which as a steelmaker as well as a hydrogen producer sees the hydrogen question from both producer’ and user’s points of view. 

Related: $70 Oil Could Put The Brakes On China’s Crude Buying Spree The company’s standard alkaline water electrolysis unit is a 20MW module, which produces approximately 4000 cubic meters of hydrogen per hour. This module is the company’s current building block for hydrogen production, such that a 100MW unit requires the combination of 5 blocks. It can keep building from there. For example, to achieve 2.2GW of electrolysis capacity for the giant project at NEOM, the company will need to assemble 110 blocks. 

“We've reduced cost and increased size of our basic module to 20MW,” said Malcolm Cook, Vice President for Business Development at thyssenkrupp. “Now our focus is going from our current 1GW manufacturing chain up to 5GW annual production,” he said. 

The company’s scale up of its electrolyser production is not on a strict timetable and will occur as orders come in. But Cook says that the company is ready to invest in a ramp up. 

Another major player in the field is the US engine-maker Cummins Inc., which greatly expanded its hydrogen production capabilities two years ago when it acquired Canada-based Hydrogenics Corporation (with France’s Air Liquide retaining part ownership). The acquisition gave Cummins new expertise in both hydrogen fuel cells and in electrolysis, better positioning it for energy transition-related work. Since then, Cummins has been engaged in a host of small-scale green hydrogen projects.  

“In terms of project size, while 10MW was a target a couple years ago, we already have a 20MW PEM electrolyser in operation today in Canada,” said Denis Thomas, Global Business Development Leader for Electrolyzers at Cummins. “The next logical step are projects in the range of 100-500MW, which would be stepping stones to very large projects in the gigawatt range,” he added.  

“The main question is the timing because we're ramping up the manufacturing capacity, but it makes no sense to put all capacity in place because a lot of (hydrogen) projects are in development stage,” said Thomas. “Today we're fine with projects up to 500MW.”

Thomas explained that, at this point, clients will not likely require 1GW electrolysis capacity in one block. Rather, they will develop most projects in stages with a first phase requiring 100-200MW capacity. Yet clearly Cummins’ ambition is to reach the GW-level of production capacity, possibly around 2025, he affirmed. 

Other big players aiming to rise to gigawatt scale manufacturing include British company ITM Power, which is in the early stages of planning for a large new electrolyser factory. Another is the Norwegian company Nel ASA, expanding its electrolyser production up to 500MW this year, with further expansion planned. Nel recently announced its goal to produce green hydrogen at $1.50 per kilogram by 2025, which would make it cost comparable to conventional fossil-based hydrogen. Meanwhile the Danish company Haldor Topsoe, and the Spanish joint venture Iberlyzer, are also expanding production capacity over the next two years. 

None of these companies is ready to exceed 1GW annual production in the near future. 

Following the PV path?

Green hydrogen exists today in only minute quantities. Its cost is at least twice that of fossil-based hydrogen. There is essentially no market for it. So it is still very early days for the industry. 

Today, approximately 10 million metric tons (Mt) of hydrogen are produced annually by industries in the United States, while approximately 120 Mt of hydrogen are produced globally (China is the largest producer country). Nearly all of this is produced with processes causing high carbon emissions. 

It has been estimated that to reach current US hydrogen production with renewable electricity would require 115GW of offshore wind power. The difficulty of doing that becomes obvious when one considers that the US is now officially striving to have 30GW of offshore wind power by the year 2030. 

IRENA, in its energy transition roadmap to 2050, estimates that global production of green hydrogen must reach approximately 400 Mt, which would require a total installed electrolyser capacity of 5 terawatts (TW) by 2050. Today, total installed electrolyser capacity worldwide is approximately 8GW. 

Related: Expect A Wave Of Climate Lawsuits Against Big Oil Following Shell's Case


These figures show that the production ramp up that must occur to achieve the green hydrogen goals set by governments and international agencies is staggering. It will require sustained public initiative to set targets and lower costs for green hydrogen along its value chain, including in the critical field of electrolysis. 

Cornelius Matthes, Chief Executive Officer at Dii Desert Energy, a non-profit consultancy based in Dubai, sees cause for optimism. 

“There will be a lot of innovation on the electrolysis side with new technologies coming,” he said at the recent Middle East Energy Online 2021 conference. “For electrolysers it is going from manual assembly to largely automated production, combined with significant advancements in R&D.”

Matthes has counted 19 hydrogen projects worldwide that will require an electrolyser capacity of almost 140GW. This project pipeline, he thinks, will begin to spur higher levels of electrolyser production that will lower costs. 

“I have no doubt this will happen, that in ten years when we look back, we will probably see a successful story like what we saw with renewables 10 years ago.”

But it won’t happen unaided, as many of the hydrogen projects he points to are subsidized to some degree. 

“We should from a regulatory point of view apply what is possible to accelerate this development, to create standards, to create all prerequisites for a market,” said Matthes. 

By Alan Mammoser for Oilprice.com

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  • Mamdouh Salameh on May 31 2021 said:
    The two major obstacles to a hydrogen revolution are hype and cost.

    In 2020 roughly 87 million tons of hydrogen were produced worldwide amounting to 4.95% of global renewable production including hydro-power and 0.54% of global primary energy. So the projections of hydrogen share in the final energy by the International Renewable Energy Agency (IRENA), the Brussels-based Hydrogen Council and the EU at 12%, 18% and 24% respectively by 2050 is pure hype.

    The cost is still a major obstacle. Producing green hydrogen from water by electrolysis using solar or nuclear energy is extremely expensive, at least twice that of fossil-based hydrogen. Also producing blue hydrogen from natural and grey hydrogen from fossil fuels is far more expensive than producing natural gas.

    Furthermore, IRENA, in its energy transition roadmap to 2050, estimates that global production of green hydrogen must reach approximately 400 Mt, which would require a total installed electrolyser capacity of 5 terawatts (TW) or 5,000 GW by 2050. Today, total installed electrolyser capacity worldwide is approximately 8GW.

    Whether green, blue or grey, hydrogen needs far more energy to produce than it will eventually provide. If this is the case, then why don’t we?

    1- Skip the production of hydrogen altogether and use natural gas directly to generate electricity while employing carbon capture technologies to prevent CO2 being released?
    2- Use solar electricity or nuclear energy employed in producing green hydrogen by electrolysis to enhance current electricity generation and make it cheaper to customers rather than using a convoluted process of electrolyzing it and then use it to generate electricity thus adding to customers’ costs.
    3- Use steam generated from high temperatures produced by nuclear reactors to generate more electricity in a combined cycle for use in industrial plants instead of hydrogen.

    The only country in the world where hydrogen production by electrolysis is cost-effective is Iceland. The reason is that it has plentiful geothermal power and water. Geothermal power already generates virtually all Iceland’s electricity.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London
  • Paul F. on June 01 2021 said:
    This sounds like a reasonble plan...will countries start building nuclear plants again to achieve it?


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