Hydrogen has the potential to facilitate the integration of disparate energy systems. Electrolysis-based hydrogen production enables a key link between the electricity sector and end uses for hydrogen, including transportation, heating, agricultural, and industrial applications [1–4]
. Hydrogen cost-competitiveness analyses are usually oversimplified by using annual average electricity cost by state or region. This approach does not allow for location-specific value assessments. Using 7,182 industrial and commercial U.S. retail electric utility rates [5]
, this study addresses a lack of understanding about the electric utility rates, the costs to produce hydrogen, and it addresses the potential to reduce production costs and support electric grid needs by operating electrolyzers more dynamically. Results show that hydrogen production from a 1 MW electrolysis unit is already cost-competitive under a large number of current electricity rate structures. Sensitivities show that the ideal yearly capacity factor for an electrolyzer, which is a highly flexible load, is between 90%–95%, depending on the structure of the utility rate and the electrolyzer capital cost. Based on the operation of electrolysis equipment, hydrogen production costs range from U.S. $2.6 kg-1 to U.S. $12.3 kg-1, and costs are less for electrolyzers that operate flexibly according to the changing rate structure. Our analysis shows that electrolysis-based hydrogen production costs in some locations are already less than the U.S. Department of Energy target of U.S. $4 kg-1 for 81 utility rates. Thus, hydrogen is already cost-competitive in the U.S. energy sector and has a number of interesting possible roles to play in future energy and transportation systems.
References
[1] International Energy Agency. Technology Roadmap: Hydrogen and Fuel Cells. Paris, France: International Energy Agency; 2015. doi:10.1787/9789264239760-en.
[2] Stevens J, Rustagi N, Pivovar B, Ruth M, Boardman R, Gilroy N, et al. “ H2 @ Scale †– an emerging cross- sector opportunity in the USA. Gas Energy 2017:22–7.
[3] Dodds PE, Staffell I, Hawkes AD, Li F, Grünewald P, McDowall W, et al. Hydrogen and fuel cell technologies for heating: A review. Int J Hydrogen Energy 2015;40:2065–83. doi:10.1016/j.ijhydene.2014.11.059.
[4] Staffell I, Dodds P. The role of hydrogen and fuel cells in future energy systems. 2017.
[5] National Renewable Energy Laboratory. Utility Rate Database (URDB) 2017. https://openei.org/wiki/Gateway:Utilities (accessed October 13, 2017).
