Hydrogen continues to attract interest in the energy sector as a fuel with application in a wide variety of industries, which is among the reasons S&P Global Platts has expanded its suite of hydrogen assessments.
Starting April 1, Platts will publish hydrogen assessments for Japan, expand its offering in North America from two regions to 11 and add assessments in the Netherlands.
Because there does not yet exist a substantial spot market for hydrogen in these locations, Platts is modeling the cost of hydrogen production based on regional natural gas and electricity assessments, and including some assumptions for capital and operating expenses.
As markets develop, Platts will review its assessments to reflect evolving trade patterns. But in the interim, Platts hydrogen assessments provide a tool for the market to help evaluate the cost of producing hydrogen.
In Japan and in North America, Platts hydrogen assessments reflect the cost of production from three different production pathways: steam methane reforming, proton exchange membrane electrolysis and alkaline electrolysis.
The Netherlands assessments feature a fourth production pathway: steam methane reforming with carbon capture and storage.
At each location and for each production pathway, there will be two assessments: one showing the cost of hydrogen production without capital and operating expenses, and a second with those expenses included.
Platts is aware of a number of companies, including oil majors, which are interested in the development of a hydrogen economy, where the gas is used as a fuel for transportation, power generation and even materials production.
Industrial clusters in several geographical regions, including the Port of Rotterdam, are repurposing existing gas infrastructure for hydrogen production, transportation and storage.
Dutch oil giant Shell and partners are planning to build Europe's largest renewable-based hydrogen project, using offshore wind to produce hydrogen by 2027. Other key companies in the emerging hydrogen economy include Japanese firm Kawasaki, which is testing cryogenic technology to make large-volume shipping of hydrogen a reality.
While there is plenty of buzz around so-called green hydrogen, which would use renewables to create hydrogen without any CO2 emissions, traditional steam methane reforming using gas or syngas from coal could meet a prospective increase in demand.
"Hydrogen production from natural gas is a mature and relatively low cost production pathway, costing less than $1/kg in some circumstances," said Zane McDonald, a senior analyst for S&P Global Platts Analytics. "Additionally, this production pathway dovetails well with decarbonization efforts as carbon capture can be used effectively to reduce the global warming potential of the hydrogen without choking off the use of reliable and affordable fossil fuel assets."
In California, which is building out a network of retail hydrogen refueling stations, there is also interest in developing a standard for the injection of hydrogen into existing gas pipelines.
Current regulations in California and many other jurisdictions effectively consider hydrogen a contaminant, prohibiting the fuel's injection.
Beyond concerns over pipeline safety and integrity, hydrogen fuel blends can also 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 California 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.
Pipeline safety studies show that blends ranging anywhere from 5% to 20% hydrogen can be safely injected directly into the gas stream, depending on the specific design and age of the targeted grid.
As the CPUC weighs an upcoming interim blending standard, the agency is already pursuing a technical study examining the possibility for significantly higher blends.
Italy's SNAM, a pipeline and gas storage company, as well as ITM Power in the United Kingdom are also evaluating the blending potential of hydrogen.
On Wednesday, Platts assessed the cost of hydrogen, including CapEx, produced in Japan via steam methane reforming at $2.08/kg, down from $2.12/kg the prior day; the cost of hydrogen, including CapEx, produced in the Netherlands via steam methane reforming was assessed at 1.04 Eur/kg, up from 1.02 Eur/kg; and the cost of hydrogen, including CapEx, produced in Southern California via PEM electrolysis was assessed at $1.99/kg, up from $1.90/kg.