Graph of the Day: Whither the hydrogen economy?

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Capital cost, not hydrogen supply, will limit adoption to a mere 5.9 GW, dashing dreams of a revolutionary energy future.

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Capital cost, not hydrogen supply, will limit adoption to a mere 5.9 GW, dashing dreams of a revolutionary energy future, says Lux Research

As I’ve said for a decade now, hydrogen fuel cells are not going to be a significant, cost-effective CO2 reducer. In a 2005 journal article, “The car and fuel of the future,” I noted that:

Using fuel cell vehicles and hydrogen from zero-carbon sources such as renewable power or nuclear energy has a cost of avoided carbon dioxide of more than $600 a metric ton, which is more than a factor of ten higher than most other strategies being considered today….

A 2013 study by independent research and advisory firm Lux Research finds that despite billions in research and development spent in the past decade, “The dream of a hydrogen economy envisioned for decades by politicians, economists, and environmentalists is no nearer, with hydrogen fuel cells turning a modest $3 billion market of about 5.9 GW in 2030.”

Hydrogen fuel cells won’t be a major contributor to solving the problem of manmade climate change until the market is 100 times larger, which simply won’t happen fast enough to matter to the climate fight, even in the unlikely event they ever become a cost-effective CO2 reducer.

The Lux study, “The Great Compression: The Future of the Hydrogen Economy” (client subs. req’d),  finds that “hydrogen demand from fuel cells will total 140 million kg in 2030, a meager 0.56% of global hydrogen demand.” Looks like I’m going to win my big hydrogen bet!

Here’s the rest of the news release from Lux:

Although the cost of hydrogen impacts fuel cell market adoption, hydrogen fuel accounts for only 35% of the total cost of ownership (TCO) for stationary applications and 21% of the TCO for mobile applications, with fuel cell capital costs and membrane replacement costs making up most of the difference.

“The hydrogen supply chain is not the most critical bottleneck for fuel cell adoption,” said Brian Warshay, Research Associate and the lead author of the report titled, “The Great Compression: the Future of the Hydrogen Economy.” “High capital costs and the low costs of incumbents provide a nearly insurmountable barrier to adoption, except in niche applications,” he added. In order to determine the economic viability and potential of an expansive hydrogen economy in the energy sectors, Lux Research conducted a detailed analysis of the costs of hydrogen generation, distribution, storage, and consumption in an effort to find the greatest constraints and opportunities. Among their findings:

  • Hydrogen generation accounts for less than 33% of the cost at the pump.The costs of hydrogen compression, storage, and distribution make up the majority of the cost of hydrogen, offering the greatest opportunities for improvement and innovation.
  • PEM cells will have a $1 billion stationary market. Proton exchangemembrane (PEM) fuel cells for telecom power and backup will reach $1 billion in 2030, while fuel cells of all types for residential, commercial and utility generation will not prove cost-effective.
  • Mobile applications will be worth $2 billion. PEM fuel cells will reach $2 billion on the backs of forklifts and light-duty vehicles, while buses will remain miniscule. A robust hydrogen vehicle fueling infrastructure is necessary but ultimately insufficient to overhaul the passenger vehicle market.
  • Hydrogen demand from fuel cells will total 140 million kg in 2030, a meager 0.56% of global merchant hydrogen demand across all industries.

It is long past time to end the hype about hydrogen.

This article was originally posted on Climate Progress. Re-posted with permission.
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4 Comments
  1. David 7 years ago

    The author seems fixated on using hydrogen for transport, however it is not well suited to this because of the very poor energy density that can be achieved with practical storage systems. Much better to use battery vehicles and avoid all of the losses in electrolyser, compressor and fuel cells, not to mention the distribution problems.
    However, hydrogen may eventually be an attractive stationary storage option for 100% renewables systems if used with conventional gas turbines. This could offer very low capital cost peaking generation. The electrolysers need only be small in comparison with the generator output and moderate pressure pipelines could provide storage.

  2. Bob Wallace 7 years ago

    I don’t think Joe is “fixated”, he’s making the point that hydrogen is not likely to be our personal transportation solution.

    Might hydrogen be a good long term storage solution? Perhaps.

    It’s going to be very interesting watching how storage plays out over the next couple of years.

    If, for example, Ambri’s liquid metal battery scales up it will be almost impossible to beat it in terms of cost. 85% efficient which is better than using electricity to crack water and then burning the resulting hydrogen in a turbine.

    It’s also likely to have a much lower capex when one considers that hydrogen storage would require a “cracker”, storage and turbine. The Ambri is just a container of cheap stuff and should have a very long cycle/calendar lifespan.

    I’m not even sure that hydrogen would price out better than converting an existing dam to pump-up storage. That just involves digging a secondary pond to hold a few day’s water and installing a pump/turbine.

  3. Miles Harding 7 years ago

    In a renewable (say wind) environment, the total energy required for H2 production transmission and consumption is in the vicinity of three times that of electric distribution and batteries for each kilowatt hour of energy delivered to the wheels of an EV.

    If hydrogen is sourced from wind or PV, it makes no sense in any circumstance.

    For H2 production to account for only 33% of the total distribution costs, it would have to be sourced from reformed natural or coal gas.

    This amounts to no solution either.

    It makes more sense to skip the hydrogen step and fuel generators directly with the source gas. Larger plants could capture the CO2. The existing electricity distribution network can then be used to transmit the energy to the consumer.

    Diesel buses and trucks can burn natural gas directly and don’t need to be hydrogen fueled.

    For domestic consumers, the H2 economy maintains dependency on energy companies for fuel, good for oil companies and bad for consumers.

    Consider PV electricity generated at home: An economical EV (Mitsubishi I-Miev) can be driven for approximately 50km on the energy collected from a single kilowatt of PV panels each day.

  4. John D 7 years ago

    Renewable hydrogen can be converted to a range of practical transport fuels by reacting with CO2 or nitrogen. Both renewable ammonia and methanol can be used in used in fuel cells or conventional engines Makes a lot more sense to use this approach than stuffing around trying to use hydrogen as a transport fuel. See: http://pragmatusj.blogspot.com.au/2013/03/renewable-low-impact-fuels-game-changer.html

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