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The way to Produce Inexperienced Hydrogen for $1/kg – Casey Handmer’s weblog

The way to Produce Inexperienced Hydrogen for $1/kg – Casey Handmer’s weblog

2024-03-09 06:27:34

At Terraform Industries we consider in a future the place power is universally low cost, clear, and plentiful. We’re creating a scalable electrolyzer to ship the most cost effective potential inexperienced hydrogen, which we use as a precursor chemical to make low cost artificial carbon impartial pure gasoline in our Terraformer.

We discover in our conversations with different builders within the local weather/power house that the future of hydrogen is usually incompletely understood, so I’m penning this publish to clarify how Terraform is approaching the query.

Hydrogen manufacturing makes use of loads of power. Inexperienced hydrogen, produced with out CO2 emissions, is presently a dearer possibility than manufacturing from CH4, which produces loads of CO2. We would like inexperienced hydrogen to compete on value, not simply vibes. We consider that appropriately developed power ought to ship a inexperienced dividend moderately than demanding a inexperienced premium, and that speedy mass market adoption relies on beating the incumbent polluters on value.

(As an apart, it’s fairly clearly not possible to implement common adoption of dearer carbon-free power by means of, eg, obligatory carbon offsets, as larger gasoline costs are political suicide no matter system of presidency.)

The price of inexperienced hydrogen is a mixture of the embodied power (opex) and the amortized value of the hydrogen electrolyzer (capex) which splits water into hydrogen and oxygen utilizing electrical energy. Hydrogen distribution prices are additionally extraordinarily excessive, however as a result of Terraform is barely utilizing hydrogen as a right away precursor we’re going to disregard distribution prices right here. There are different strategies for making carbon-free hydrogen, similar to methane pyrolysis, which we will even not develop additional on this publish.

Let’s get quantitative. One of the best actual world legacy electrolysis methods eat about 50 kWh/kg-H2. The theoretical optimum is 39.4 kWh/kg-H2, and Terraform’s electrolyzers are nearer to 80 kWh/kg-H2 because it permits us to ship a decrease value of hydrogen for causes that can quickly be obvious.

The fee purpose for inexperienced hydrogen is $1/kg-H2. It’s broadly believed that if inexperienced hydrogen can attain this threshold it is going to be a lot far more enticing on the power market. For context, the Inflation Discount Act (IRA) inexperienced hydrogen manufacturing tax credit score (PTC) in part 45V is value $3/kg-H2, which can be sufficient to make it aggressive with steam reforming within the brief time period.

The most cost effective retail grid energy is roughly $100/MWh. Utilizing 50 kWh/kg-H2, we see that electrical energy value alone works out at $5/kg-H2 – a transparent non-starter. Assuming a $1/kg value is achieved, electrical energy value should be lower than $20/MWh, and that’s assuming zero capex – an unwise assumption as electrolyzers are historically very costly items of apparatus.

Nonetheless, $20/MWh focuses the eye. The place can one discover energy that low cost or, ideally, cheaper? Enter photo voltaic! This isn’t the place to talk endlessly about solar, but when hypothetically we have been in search of an power technology know-how which a) received 10x cheaper within the final 10 years, b) was scaling up manufacturing by not less than 50% per 12 months, and c) had no shifting elements, photo voltaic photovoltaic (PV) is it! Certainly, in lots of giant markets right now it’s now cheaper to put in and function a photo voltaic plant than to function an already present coal or gasoline plant. And when you love another electrical energy technology know-how, I’m blissful for you, please attain $10/MWh LCOE and I’ll purchase terawatts of it.

We would like the most cost effective potential energy. What provides value to solar energy? Transferring it from the array to a different place. Utilizing it at evening. Utilizing it when there are clouds blowing by. A typical solar-grid system right now may have, along with the photo voltaic panels, a big and costly “steadiness of plant” together with inverters, battery storage, substations, grid interconnects, after which the remainder of the electrical energy distribution grid, which incorporates lengthy distance transmission traces, extra substations, transformers, energy traces, restore crews, insurance coverage, fireplace security, billing departments, legacy energy crops, and so forth and so forth and so forth.

We would like the most cost effective potential energy, so we now have to delete all these further value sinks which don’t truly make energy and which add a lot far more than $20/MWh in value. Then, decide if we are able to use the ensuing, least expensive potential uncooked photo voltaic electrical energy to make hydrogen. Certainly, proper now we now have a take a look at rig set as much as derisk photo voltaic panels straight feeding an electrolyzer, with none intermediate energy conversion.

The one largest objection we hear to feeding uncooked photo voltaic direct present (DC) into our electrolyzer is that photo voltaic utilization is round 0.25 so our electrolyzer will want to have the ability to throttle down in a single day, and our electrolyzer utilization will solely be 0.25. For a given amount of hydrogen, we’ll want 4x as many electrolyzers and they’re extraordinarily costly.

Including batteries to clean out provide provides substantial value, with the most cost effective geography-dependent wind/photo voltaic/battery inexperienced energy coming in at about $45/MWh, or $2.25/kg-H2 on energy alone. At present charges of battery value enchancment, it is going to be a number of a long time till 24/7 energy shall be lower than $1/kg-H2, so we should discover one other means!

Let’s detour barely into electrolyzer value land. Massive scale 50 kWh/kg-H2 electrolyzers sometimes value $1000s/kW, however we’ll stick with $1000/kW as a pleasant spherical quantity. 1 MWh of electrical energy produces 20 kg of H2. If we function a $1m, 1 MW electrolyzer for 50,000 hours (5.7 years flat out), we’ll produce 1,000,000 kg-H2. Assuming zero financing or upkeep prices and complete amortization over that interval, capex alone works out to $1/kg, which is extraordinarily ominous. I can’t see how we are able to get to $1/kg-H2 if capex is $1/kg and the most cost effective 24/7 energy is $2.25/kg-H2, for a complete of $3.25/kg-H2.

50 kWh/kg-H2 is already near ultimate electrical effectivity, so the one method to minimize the per-unit capex value is to amortize gear over an extended time interval. However even when 0% financing and $0 upkeep prices might be discovered, hitting $1/kg-H2 would require (eg) 24/7 electrical energy for $15/MWh and a 25 12 months payback interval, which locations extreme constraints on the business’s capability to scale up rapidly. There simply isn’t that a lot 0% curiosity cash on 25 12 months loans floating round.

Why are electrolyzers so costly? To hit 50 kWh/kg-H2 or ~80% effectivity, electrolyzers want to make use of costly platinum group steel electrodes, particular separation membranes, warmth exchangers, pumps, post-processing, and very excessive pressures and temperatures, which additional prohibit materials selections and manufacturing processes. However in essence, electrolyzers are glorified electrical resistors, with no extra intrinsic complexity than a kettle that boils water and prices $15/kW, together with free two day transport from China!

Let’s re-examine the above hopeless economics with a unique set of numbers. For the sake of argument, let’s say the Terraform electrolyzer can hit $100/kW and 80 kWh/kg-H2. That is less expensive than a standard electrolyzer, but it surely’s additionally simply 50% environment friendly, which permits us to delete all of the costly stuff. Critically, it’s blissful to eat variable diurnal photo voltaic DC straight from the panel at $20/MWh. We’ll amortize over the identical 5.7 years, however assume solely 0.25 utilization for a complete of 12500 hours.

Our hypothetical 1 MW electrolyzer prices simply $100,000. Over 12,500 hours it consumes 12,500 MWh, producing 156,250 kg-H2, costing simply $0.64/kg-H2 for capex. Energy prices work out to $1.60/kg-H2, for a complete of simply $2.24/kg-H2 – greater than $1 cheaper than the upper utilization, larger effectivity legacy electrolyzer mannequin.

That is fascinating – it goes in opposition to our instinct concerning the advantage of excessive effectivity and excessive capital utilization. Nevertheless it’s not significantly mysterious. Hydrogen is an power product, and if we’re doing it proper then 70-80% of the product value shall be electrical energy opex. That is significantly essential within the context of photo voltaic value persevering with to say no. A excessive capex possibility will nonetheless value quite a bit even when electrical energy value goes to zero, whereas a decrease effectivity, larger energy consumption possibility will go value financial savings on low cost energy by means of to the patron. Virtually talking, the easiest way to “brief” future photo voltaic value declines is to develop infrastructure now that achieves extremely scalable low capex by buying and selling away some electrical effectivity and being versatile sufficient to eat intermittent renewable electrical energy sources.

To make this future extraordinarily legible, let’s run the numbers once more however with $10/MWh photo voltaic value, similar to we count on by about 2028, the identical decrease effectivity (50%, 80 kWh/kg-H2) and with $50/kW capex, which continues to be dearer than most family home equipment of comparable complexity. Now capex is simply $0.32/kg-H2 whereas opex is $0.80/kg-H2, for a complete of simply $1.12/kg-H2, which is extraordinarily near the magical $1/kg, whereas legacy methods that can’t exploit low cost photo voltaic will nonetheless be round $3/kg.

For the absolutely normal case, the figures beneath give quantitative mannequin evaluation displaying that the fee penalty of photo voltaic load shifting past ~0.25 utilization locations insurmountable limitations on reaching $1/kg-H2 for inexperienced hydrogen. There’s a saving grace! We will construct low utilization decrease effectivity electrolyzers cheaply sufficient to get to $1/kg-H2, however we now have to observe the most cost effective photo voltaic wherever it leads – on this case away from 100% utilization and excessive electrical effectivity.

I’m 100% assured that by the point we’re mass producing this method at these costs later this decade, not solely will this be the most cost effective hydrogen out there wherever, it’s going to even be the most cost effective chemical power and by far essentially the most scalable – providing <5 12 months ROI with an especially aggressive provide chain and capable of deal with almost each market on Earth. That is in sharp distinction to fossil oil and gasoline, which is hidden underground in only a few locations on Earth and not possible to take advantage of with out world infrastructure.

Certainly, as we’ve written before as soon as photo voltaic artificial gasoline hits the fee parity threshold with fossil hydrocarbons there shall be unstoppable world growth till additional value reductions and capability will increase saturate demand. Conservatively, we count on the oil and gasoline business to develop from $6.4T/12 months right now to not less than $25T/12 months as soon as second order world financial progress is factored in, and if we execute properly we might be accomplished by ~2040.

Render of 1 MW Terraformer displaying electrolyzer stacks (blue), CO2 seize system (orange) and gasoline synthesis reactor (yellow). There are 32 electrolyzer stacks every consuming 25 kW straight from adjoining panels (not pictured).

See Also

This pure implication of the essential underlying economics implies some probably sudden future developments, which I’ll checklist right here for completeness. We count on to see the event of roughly 400 TW of solar worldwide, >90% of which can provide artificial fuels almost definitely by way of hydrogen electrolysis after which catalytic synthesis utilizing direct air seize (DAC) CO2. It will eat roughly 5% of Earth’s land floor space, corresponding to present roads and urbanization and quite a bit much less (by way of each space and ecological affect) than present exploitation with farming and forestry, to not point out typical fossil fuels extraction or uninhabited deserts.

Whereas electrification will proceed to displace present hydrocarbon utilization, significantly in floor transportation and a few residential heating functions, we count on hydrocarbon consumption to shift and develop, significantly in manufacturing and aviation as we transfer in the direction of a close to time period way forward for unconditional materials abundance for everybody on Earth. Do we wish a future the place Europe pushes by means of obligatory low high quality carbon offsets on airfares, additional limiting the privilege of excessive velocity journey to the richest of the wealthy? Or do we wish a future the place low cost carbon-neutral aviation gasoline expands entry to globe-spanning journey alternatives for lots of of tens of millions of individuals whereas additionally enabling a renaissance of supersonic transport?

Whereas hydrocarbons right now provide roughly 2/3 of the ~100 quads of power consumed yearly within the US, by ~2040 hydrocarbons shall be downstream of low cost photo voltaic, simply as almost all grid electrical energy shall be downstream of photo voltaic, offering power to prospects by means of parallel distribution networks of electrical energy, oil, and gasoline.

This Sankey diagram offers a tough sketch of the US energy economy because it existed in 2021.

This Sankey diagram exhibits how we count on pure economics forces will reshape the power financial system over the following 20 years.

The Terraform electrolyzer consists of roughly 4000 particular person cells. 100% market saturation implies the deployment of 400 million 1 MW electrolyzers worldwide. Not together with ongoing fleet turnover, we count on the artificial gasoline business to construct and deploy 1.6 trillion electrolyzer cells, every roughly the scale and price of a eating plate, over the following 20 years. On common this works out to 2500 cells per second! I’m cautious of exaggeration however I feel it’s truthful to say that by way of elements, factories, ramp charge, and power consumption, that is the single largest technology roll out to happen within the historical past of humanity, and can trigger the opposite so-called industrial revolutions to pale into insignificance.

We’re hiring!

Right here is a photograph of a part of our present electrolyzer design. When you’ve got the imaginative and prescient, perception, and instinct to assist us convey this electrolyzer to the plenty then e mail us at We’re in search of a one-pager of constructively important design assessment commentary demonstrating your understanding of its design constraints, necessities each actual and pointless, and, in fact, what we’ve missed.

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