Producing hydrogen using surplus renewable electricity will become economically feasible at scale before 2035, says a new report from DNV GL.

This so-called “green hydrogen” would then become a carbon-free source of electricity that can be stored indefinitely and used on demand, and can also be used for heating, transport and industrial processes.

The green hydrogen would be created using advanced proton exchange membrane (PEM) electrolysers, which split water molecules into hydrogen and oxygen atoms. DNV GL predicts that this green hydrogen would be 15% cheaper than standard “grey hydrogen” produced from natural gas by 2050.

But this does not mean that hydrogen production will be the most cost-effective method in 2050 of dealing with surplus wind and solar energy (produced at times that when electricity supply exceeds demand).

“Hydrogen production is often presented as the default option for using surplus electricity from renewable generation,” says the 64-page report. “However, in this paper we show that there is an investment merit order for coping with surplus electricity.

“The first option for managing surplus VRES [variable renewable energy sources] generation is curtailing it. It sounds counter-intuitive, wasting potential renewable energy. But for just [a] few operating hours per year, other options are not feasible as they cannot recover their investments. Then, respectively (auxiliary) heat production (temporarily replacing gas) and battery storage (selling the electricity later for a higher price) follow. Only then, hydrogen production becomes an economically viable option.”

The cheapest methods of converting hydrogen into electricity, the study adds, would be to burn it in a gas turbine, followed by fuel cells.

In 2050, green-hydrogen use will be “significant” across the power, heating, transportation and industrial sectors, and so much power will be diverted to its production that it will affect the wholesale price of electricity.

So, rather than only using surplus electricity (at a wholesale price of zero or close to zero), hydrogen production will require electricity at other times too, increasing the demand for power and therefore raising the wholesale price of electricity, which in turn will raise the cost of hydrogen production.

“Standard electricity price projections may not suffice any more… because the availability of hydrogen for peak electricity generation will change electricity peak prices as well,” the report says.

The price of hydrogen will also be affected by demand from the transport and industrial sectors.

“If, for instance, a volatile wholesale market for hydrogen develops towards 2050 and use of hydrogen as a transportation fuel is price setting, other uses will have to pay this same price. The way hydrogen markets and hydrogen price setting mechanisms develop towards 2050 is of main importance,” says the study.

The most cost-effective way of storing high volumes of green hydrogen will be to use subsurface spaces such as salt caverns or depleted natural-gas fields. Above-ground solutions will require hydrogen to be liquefied or pressurised, significantly increasing the cost of storage.

Chemical storage, such as converting hydrogen into ammonia by adding nitrogen, could be a feasible option when long-distance transportation, the study adds

Transition

Green hydrogen feasible at scale before 2035: study