Can industrial-scale green hydrogen be cost-competitive by 2030?

Researchers identify locations and system designs for producing cost-effective, industrial-scale supplies of hydrogen from solar photovoltaic-powered electrolysis.

Kelley Travers    ·    August 26, 2020    ·    MITEI

Hydrogen has the potential to play an important role in deep decarbonization efforts due to its versatility as an energy carrier and usability in different sectors such as industry, where there is limited potential for direct electrification and efforts to reduce emissions have been slow. But while hydrogen use itself creates no carbon emissions, its production can actually have a huge environmental impact as over 95% is currently produced from fossil fuels.

Expanding decarbonization efforts across all energy sectors is contingent on producing energy carriers like hydrogen with zero or low lifecycle carbon dioxide (CO2) emissions at a competitive cost. To that end, researchers at MIT and Harvard have published a new article in Cell Reports Physical Science that identifies system design choices and U.S.-based locations that could produce cost-effective, low-carbon hydrogen to supply industrial processes round-the-clock by 2030. The system, which uses solar photovoltaic (PV)-electrolysis coupled with storage, has the potential to compete with conventional natural gas-based hydrogen including the cost of carbon capture and sequestration (CCS).

The potential of “green hydrogen”—hydrogen produced from renewable energy—is already gaining traction around the world. This is evidenced by new, promising project announcements for large-scale green hydrogen production, including a solar-powered electrolysis pilot in Florida and a green ammonia facility in the Kingdom of Saudi Arabia.

In the Cell Reports study, the researchers examine the levelized cost of a hypothetical standalone green hydrogen plant combining solar PV, electrolysis, and on-site storage to enable round-the-clock hydrogen production. Focusing on the techno-economic outlook for 2030, the researchers developed an optimization model to analyze the impacts of component cost projections, location, and system design factors on the cost of supplying green hydrogen 24/7 to industrial consumers. They also consider this as a limiting case for carbon emissions since it implicitly excludes grid-based fossil generation. Because grid electricity might still be associated with emissions in 2030, particularly at times of low solar availability, this could appeal to industrial customers who want to limit their exposure to intra-day and intra-year electricity price volatility while still achieving near-zero carbon hydrogen production.

“We wanted to develop a modeling approach that internalizes the cost of managing hour-to-hour variability of solar energy throughout the year in order to supply a demand that is likely to be continuous in nature,” says Dharik Mallapragada, a research scientist at the MIT Energy Initiative (MITEI) and the study’s lead author. “Our goal was to identify the cost of producing hydrogen at a steady rate from variable renewables that can be directly adopted by industrial customers who may not want to deal with the variability of the energy source that comes along with using green hydrogen.”

When designing for a low-cost facility capable of supplying hydrogen continuously from a variable renewable energy source like solar, it is particularly important to carefully evaluate the sizing of individual plant components, as well as the type of energy storage used, since the cost of production would be dominated by capital costs. The researchers used their model to identify the least-cost system design while considering simulated plant operations over a full year at an hourly resolution, with high availability of hydrogen supply (95%). They also used the model to evaluate the prospect of solar-powered electrolytic hydrogen with costs at or below $2.5 per kg, which would allow it to be cost-competitive with hydrogen produced from natural gas with CCS.

“Over the course of our research, we’ve seen that the component sizing really depends on the resource availability at a particular location,” says co-author Emre Gençer, a research scientist at MITEI. “In other techno-economic studies on green hydrogen, it is common practice to consider average solar resource availability throughout the year; but we show that it is important to consider intra-annual variations in solar availability. It leads to non-intuitive least-cost designs, such as overbuilding the solar array relative to the size of the electrolyzer.”

Another key driver of system cost is the type of hydrogen storage available: pressure vessels versus geological storage (such as salt caverns or depleted oil and gas reservoirs). The cost of the storage system used also impacts the sizing, and therefore costs, of the other plant components because it affects how much hydrogen the plant will be able to produce and store economically. While geological storage proves to be the least expensive option and is key to lowering overall system costs, it is also limited in its geographical availability. The authors also considered the option of deploying battery storage as part of the system design, but found that across nearly all of the evaluated scenarios and locations, it was less economical than deploying hydrogen storage.

While adhering to hourly solar availability, production requirements, and component inter-temporal operating constraints, the researchers examined the cost-optimal green hydrogen system design across nearly 1,500 locations spanning the continental United States. From these locations, they identified a number of sites close to existing industrial hydrogen demand that have the potential to produce economically viable green hydrogen at scale—though some of these are contingent on the assumed system cost projections for 2030 and availability of geological hydrogen storage.

“A decade ago, I would have ridiculed the possibility that solar hydrogen could take a meaningful bite out of the carbon budget, perhaps outcompeting natural gas with CCS,” says contributing author David Keith, a professor in Harvard University’s School of Engineering and Applied Sciences and Kennedy School of Government. “I was wrong. The drop in solar PV costs has been astounding, and now there is evidence that electrolysis cost can also drop quickly. Our analysis shows that reasonable extrapolation of current trends can make solar hydrogen produced in sunny places competitive with CCS hydrogen by the end of the decade.”

In future work, the researchers plan to reassess promising sites to quantify the scale of green hydrogen that can be produced at these locations while accounting for land availability constraints and the feasibility of geological hydrogen storage. They would also like to expand the analysis to other regions outside the United States and evaluate the costs when integrating the use of wind resources in conjunction with solar for producing hydrogen and other hydrogen-derived energy carriers such as ammonia, which may be easier to handle and transport. While this study looked specifically at solar due to its wide availability and lower land area requirements as compared to wind, the outlook for green hydrogen may be more compelling when considering wind-based or wind-plus-solar-based electrolytic hydrogen production.

“Today, renewable energy resources represent the lowest cost option for delivering electricity in many markets around the world, and over the coming decade the competitiveness of this energy will only increase,” says Francis O’Sullivan, the head of onshore strategy at Ørsted Onshore North America, who was director of research at MITEI when collaborating on this study. “Major energy-consuming sectors are now seeing an increasingly cost-effective pathway toward a lower-carbon future through the integration of renewables-derived green hydrogen into their value chains. I have no doubt that over the next five to ten years, renewables-derived electrolytic hydrogen will not just be able to outcompete hydrogen produced from fossil fuels with CCS, but in certain markets, green hydrogen will be able to directly compete on cost with natural gas-based hydrogen production even without considering the cost of carbon.”

This research was supported by MITEI’s Low-Carbon Energy Centers for Electric Power Systems and Carbon Capture, Utilization, and Storage. Many of the study’s findings were presented by Mallapragada in a recent MITEI webinar on the role of hydrogen in future energy systems.

Power Distribution & Energy StorageRenewable Energy hydrogenLow-Carbon Energy Centerssolar energy
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