Bringing Down Electrolyzer Costs is Crucial for Green Hydrogen Deployment

Developing a viable green hydrogen project means meeting a series of requirements such as low electrolyzer costs, low Capex, low levelized cost of energy and a decent capacity factor. pv magazine spoke with George Touloupas, PV Solar, Energy Storage and Green Hydrogen expert at Clean Energy Associates, about these challenges and the current price trajectory of green hydrogen technologies. According to him, another important issue could be having enough equipment to create a GW scale industry.

Interview transcript

PV Magazine:

Hi George. Welcome to Only 5 minutes.

CEA:

Very nice to meet you. Thank you for having me.

PV Magazine:

George. You're currently working on several green hydrogen projects, so maybe you can tell us how long it may take for green hydrogen to become competitive with grey hydrogen or become commercially viable.

CEA:

Well, a lot depends on the incentives. So there is a market for hydrogen here, almost a hundred million tons, but it's all gray. So we do have a first low-hanging fruit, converting all this grey, dirty hydrogen into green. But doing that on a global scale is very challenging for many reasons, including the existing capacity of fertilizer manufacturers and local schemes and incentives globally. Of course, in the US, we have a very big incentive, the IRA inflection reduction act, that creates a very strong dynamic. Something will happen in Europe for sure, but it's still in the making. I would say.

PV Magazine:

How much the cost of solar electricity should drop in order to make green hydrogen more competitive?

CEA:

Yeah, it's all about the so-called LCOH, or levelized cost of hydrogen, right, which is rather a complex calculation, but it has three main factors. One of them is the LCOE, a level less cost of electricity. And obviously, when we have green hydrogen, we need clean electricity, and that is cheaply renewable solar and wind, which are variable. And then the second factor is the utilization rate. So for how long this expensive system will be working or idling based on nameplate capacity. And we all know that solar and wind are not, they don't have a big capacity factor. So maybe if they're combined and there is a good location, maybe we can reach 50%. So 30 to 50% is the range where various developers are expected, are expecting from the projects. And then here comes CapEx.

So if you have something that is expensive and that it's idling half of the time, basically like paying double the CapEx. So it's not a matter of LCOA, it's a matter of having everything in place. So have a good location where you can feed the renewables or even nuclear. Cause as we saw yesterday, France made it, and we have nuclear or pink hydrogen being counted as carbon-free. Now that's great because if you can have a hundred percent utilization, then so it goes really, really low. So it's complicated, right? I would say 2 to 3 cents. 2 to 3 cents is a good range.

PV Magazine:

And which are the most suitable locations for green hydrogen?

CEA:

I would say locations where renewable clean energy can be available at a very high capacity factor and low cost. So obviously around, let's say the solar belt around the globe or even at very high wind locations like offshore wind, for example, has a very high capacity factor. So that's a very good prime candidate for green hydrogen.

PV Magazine:

So going back to prices, what kind of green hydrogen prices we may expect for the next five years?

CEA:

Yeah, so the general consensus is that we need something in the range of 2 to 3 dollars per kilogram. Because when fossil gas was cheap, it was around 1.5 to 2 dollars per kilogram, and then it went a lot higher. Now it's still very high, but this might change in the future, might come down again. So generally, this is the range that is expected to be reached in a few years from now if everything is in place. So low-cost electrolyzers, low CapEx, low LCOE, and decent capacity factors.

PV Magazine:

In order to produce green hydrogen, do you think the industry should focus more on, uh, further reducing solar power costs or rather reducing costs of electrolyzers?

CEA:

Solar is cheap enough. I mean, it will get cheaper, but it's already very, very cheap. As I said, 2 to 3 cents per kilowatt hour is something that has been achieved in several places around the world. And also for wind, maybe in some cases this is also feasible. It's coming very fast if it's not today. So the next point is, I would say, cost - bringing down the cost of, electrolyzers increasingly efficiency as well. But this is not so easy, definitely bringing down the cost and having enough equipment. We have a big problem right now and that has to do with the issue of scaling up.

PV Magazine:

So this is a matter of scale again.

CEA:

Yes. So that's a very interesting question because I think there is a misunderstanding. It's not comparable to solar, right? Or even wind. It's a very old technology and it just happens so that in China, especially if it has a very mature cost and very long history. So there are already pretty low-cost, systems available from China. And I guess that this will follow in the West as well from Westerns. But that's for a specific technology that's called alkaline. The PM technology is way more expensive mainly because of, the need to use rare, expensive materials. That means that it's not scalable because there's a certain limit to the availability of these materials such as iridium. So we already have low-cost technology if we combine it with decent capacity factors and very low-cost renewables. So I think we can achieve this low-cost targets of hydrogen in several locations globally. Already today.

PV Magazine:

Time is up. George, thank you very much.

CEA:

Pleasure. Thank you.