Published November 2023
This report presents a techno-economic evaluation of hydrogen production technologies that are based on electrolysis of water. Three types of technologies analyzed are:
- Alkaline water electrolyte (AWE)-based electrolysis technology
- Polymer electrolyte membrane (PEM)-based electrolysis technology
- Solid oxide electrolyte (SOE)-based electrolysis technology
Hydrogen is a very important chemical and regarded as a backbone for the fertilizer, chemicals, and oil refining industries. Also, due to its high energy content on mass basis, it is recently gaining great importance as a potential source for carbon-free energy, which can be derived from renewable and carbon-free sources i.e., water and solar/wind energy-based electricity. This trait of hydrogen is very important from the environmental point of view as hydrogen production from the fossil materials-based sources (natural gas, coal and petroleum derivatives) results in generating large amounts of CO2 which, being a greenhouse gas, is damaging to environment. When produced from natural gas, 1 pound of hydrogen generates 10-12 pounds of CO2. Coal-based hydrogen plants are even more polluting, generating almost twice as much CO2 as the gas-based plants. As bulk of the hydrogen produced worldwide comes from the aforementioned fossil materials, an enormous amount of CO2 is emitted into the atmosphere during the production of hydrogen. To save from environmental damage, therefore, that CO2 needs to be captured on-site and stored underground where possible.
Hydrogen produced from water by electrolysis using electric power produced from the renewable energy sources like solar or wind energy is clean, as practically no CO2 is generated at any point in the process. However, electrolysis processes are quite expensive, mainly due to the high cost of electricity and electrolyzers. Therefore, the production cost of hydrogen is not yet competitive with the same of fossil materials-based hydrogen. Nevertheless, those costs are coming down quickly, although not fast enough to bring the electrolytic technologies cost at par with the conventional technologies cost. Still, the momentum for expansion is set up.
In the above background regarding the hydrogen production from fossil sources, this report examines hydrogen production based on the electrolysis technologies. The report also presents economic pictures of the production technologies as they stand in their current state. The report also evaluates economies for the same processes in an environment of changing costs of the two main cost components: electricity and electrolyzers.
The report does not take into account any clean hydrogen production tax credit (PTC) or credit for CO2 avoided. A clean hydrogen PTC, under Section 45V of the Inflation Reduction Act (IRA), awards up to $3/kg ($1.36/lb) of hydrogen produced to projects that have a lifecycle greenhouse gas emissions intensity of less than 0.45 kg per kilogram of hydrogen.