The Rising Price Tag of Hydrogen: Assessing the Economics of Clean H2 Production

1. HYDROGEN PRODUCTIONCOSTANALYSIS • As theworld attemptstomoveawayfrom fossilfuels, hydrogenisbecomingmoreand more of a viable clean energy option. In additionto heatinghousesandpoweringcars,hydrogencan alsobeusedto • create electricity.However,whatisthetruecostofproducinghydrogen?Inthispiece,weexaminethe productionexpensesassociatedwiththemost populartechniquesforproducing hydrogen. • DownloadPDF:https://www.marketsandmarkets.com/industry-practice/RequestForm.asp • Theprocessknownassteam methanereforming,whichturnsnaturalgasinto hydrogenand carbon monoxide,isusedtoproducethemajority ofhydrogentoday.Atabout $1–2 per kilogram,thisis • currently themost affordablemethodofproducinghydrogen.However,therearealot ofcarbon emissions fromthis processbecauseituses fossilfuels. • Usingelectricitytosplitwatermolecules intohydrogenand oxygenisknownaswaterelectrolysis,andit is acleanermethodofproducing hydrogen.Low-carbonhydrogencanbeproducedbyelectrolyzer • systemsthatarefueled byrenewable energysourceslikesolar andwind.However,electrolysiscosts $3– 7 perkg morebecauseof thehigh costofelectricity. • Thermochemical productionisanothernewtechniquethatsplitswaterwithouttheuse ofelectricityby using heatand chemicalreactions.This mayresultinpricesfalling to between$1and $2perkilogram. However,thetechnologyisnotyetready forcommercial use. • Costsshoulddecreaseinthefutureasproductionincreases.Largersystems,bulk purchases of • electrolyzers,andtechnologicaladvancementscouldlowerthecost ofproducing green hydrogenrelative tolessenvironmentallyfriendlytechniques. Thatbeingsaid,low-carbonhydrogenstillcostsmorethan • methodsthatrelyonfossilfuels. • In order to create a sustainable hydrogen economy, research, private investment, and policy support from the government are all necessary to keep costs down. Clean hydrogen has the potential to be a practical energy source for combating climate change and cutting emissions in a variety of industries withtheappropriatepoliciesin place. • Significance ofHydrogenProduction CostAnalysis • It is essentialtocomprehend thecosts relatedto varioushydrogenproductiontechniquesin orderto • identifythemostpractical coursesofaction.The globalenergytransitionisanticipatedto heavilyrely on hydrogen, soevaluatingtheeconomicswillbe importantin determiningresearchpriorities, • infrastructureinvestments, policyincentives,and privatesectortactics.Hydrogenwillbe widely usedin • transportation,electricityproduction,andindustrialapplicationsduetoitscostcompetitivenesswith conventionalfuels.Reducingproductioncoststhroughtechnologicaladvancements,manufacturing scalability,and policysupport willbe criticalas thehydrogen economygrows.Makingdecisionstohelp realizethefullpotentialof hydrogenasanemissions-free energycarriercanbeaidedbyongoing analysisof the coststructureforgreenhydrogenproduction. • Keycomponentsofhydrogen productioncosts • Feedstockcosts:the inputs ofrawmaterials,suchas water ornatural gas,requiredtomake hydrogen.At themoment,naturalgas isthemost widelyusedfeedstock.

2. Capitalcosts:theinitialoutlayformachineryusedintheproductionprocess, such assteam methanereformersorelectrolyzers. • Operating costs:Ongoingcostsforlabor,maintenance,utilitieslikeelectricity. • Distribution costs:The coststo compress,transport, andstorethehydrogenafter production. • Productionscale:Larger scaleproductionallowsforeconomies ofscale thatreduceperunit costs. • Efficiency:Moreefficientproductionprocessesreduceinputcostsperunit ofhydrogen produced. • Financingcosts:Thecost ofcapitaltofinancenewhydrogenproductionfacilities. • Naturalgasreformingcurrentlyhasthelowestproductioncosts,butrenewableelectrolysismethods thatuse renewable electricityand waterarebecoming more affordable.Theparticularproduction technologyemployedcan have a significantimpactonoverallcosts. • ReadMore:https://www.marketsandmarkets.com/industry-practice/hydrogen/hydrogen-production- cost-analysis