Zero-carbon hydrogen could be cost-competitive in transport sector by 2030

Zero-carbon hydrogen fuel could realistically be produced at scale at a plant-gate cost of just $2-$3/kg by 2030, making the fuel an economically viable alternative for the transportation sector and industrial end-users, according to a recent study published by the University of California, Irvine.

The research, sponsored by the California Energy Commission, provides a roadmap for rapid development of the renewable hydrogen production capacity needed to help the state meet an aggressive target to fully decarbonize the its economy by 2050.

Assuming sufficient policy support from the state of California, researchers project demand for renewable hydrogen could exceed 400 million kg/yr by 2030. By 2050, they forecast demand could reach 4 billion kg/yr – enough to refuel some 2.2 million fuel cell electric vehicles per day, according to estimates from the US Department of Energy's office of energy efficiency and renewable energy.

The study's projected, fuel station price for light-duty vehicles at $6 to $8.50/kg by 2025, which includes transportation costs and state tax credits, is ambitious at best, according to S&P Global Platts Analytics. The projection assumes a 75%-88% reduction from current hydrogen fuel prices, likely requiring cost reductions across the supply chain from feedstock energy and production capital-expenditure to fuel transportation and storage.

In support of those technological improvements, California's nascent hydrogen industry will require significant government investment. According to UC Irvine researchers, tax credits and other financial support would need to be extended beyond fueling stations to help develop hydrogen production, processing and storage facilities along with transportation infrastructure.

The study's market development recommendations also call on California to promote access to natural gas pipelines by establishing system blending limits and interconnection requirements.

PILOT TECHNOLOGIES

While the $2-$3/kg FOB cost required to offer a $6-$8.50/kg price to consumers at fueling stations is ambitious, some existing pilot technologies claim to have already achieved this target.

In late May, developer SGH2 said that its proprietary waste-gasification production process would yield zero-carbon hydrogen at a cost of $2/kg at its planned 40,000 ton/yr facility in Lancaster, California – expected to begin operation by 2023.

Other existing green hydrogen production technologies, which use intermittent renewable electricity and deionized water, manufacturing the fuel at much higher costs, generally estimated at $10-$15/kg.

Mirroring market projections offered by UC Irvine, SGH2 says that its facility's production would initially supply California's growing light-duty fuel cell electric vehicle market. Both researchers and SGH2, though, envision future market growth coming from to heavy-duty vehicles, industrial end-users and power generators.

MARKET DEVELOPMENT

In the near term, zero-carbon hydrogen offers a promising pathway to decarbonize California's gasoline and diesel-reliant transportation markets, but the fuel also faces significant logistical, infrastructural and policy challenges.

Currently, hydrogen delivered to California's 40-some vehicle fueling stations arrives in relatively small truck-loaded volumes, significantly limiting the industry's potential scalability.

A distributed production model, like that proposed developer Ways2H, could offer a short-term solution that allows the industry to grow by siting new production closer to end-users and fueling stations. Longer term, though, California will require policy support for the retrofitting of its natural gas pipeline grid – a change that could dramatically expand the fuel's reach to transportation markets and beyond.

Currently, regulations in California and many other jurisdictions effectively consider hydrogen a contaminant, prohibiting the fuel's injection into the grid. Beyond concerns over pipeline safety and integrity, hydrogen fuel blends can require significant changes to infrastructure for power generators, industry and even residential-commercial end-users.

A new standard that would allow low-concentration blends of hydrogen in California's gas pipelines is currently under consideration at the state's public utilities commission.

At the CPUC's direction, California's gas utilities are preparing to make recommendations in November on the safety and viability of a hydrogen fuel blend in their respective distribution networks.