Economics of green hydrogen

[GregLocock]

Some real numbers

“A key drawback of the existing green hydrogen production process is that a considerable portion of the renewable energy used to produce the hydrogen is lost in the production process,” EnergyQuest said.

“It takes around 45 kilowatt hours to produce one kilogram of green hydrogen, but that one kilogram can only be used to generate 30kWh of electricity, and production of green ammonia involves a further 13-25 per cent energy loss.”

EnergyQuest estimates the electricity required to generate 15 million tonnes of green hydrogen – the federal government’s target by 2050 – requires more than double Australia’s total annual electricity generation.

1 kg of hydrogen is worth about A$3.00 . 45 kWh of electricity even at mate's rates is going to be at least 10c/kWh. A 100 tonne/day facility costs about $750m. They can get a bribe of $2 /kg from the taxpayer.
Income
sales 100000 kg@300 days/year@($3+$2)/kg=150M

Expenses
Electrodes/maintenance?
Electricity 100000 kg@300 days/year@($4.50)/kg=135M
Pay?
Interest 750M*.04=30M

Not an enticing set of numbers

Not surprisingly 99% of proposed Australian green hydrogen plants have been axed, are on hold, or some other euphemism for not happening. The most recently announced is

A major $750m green hydrogen plant has been axed in South Australia, a fresh setback for the fledgling industry just days after Anthony Albanese pledged the clean-energy source would help underpin its Future Made in Australia plan.

Global commodities company Trafigura, which owns the Nyrstar lead smelter at Port Pirie, had hoped to build the world’s largest hydrogen electrolyser facility as part of an ambitious scheme that included funding from the state government. While the mooted 100-tonnes-a-day facility was set to open in 2025, the developers opted not to proceed after completing an engineering and design process last year.

 

[LittleInch]

Using electricity to create hydrogen to generate electricity again is plainly not going to work well unless moving the electricity to the same place is not viable either.

It's all about finding a use for hydrogen where you need a load of heat created currently by natural gas, e.g cement, chemical plant, district heating, etc Electricity generation from gas is at cost 55% efficient so that's always destined for inefficiency.

 

[GregLocock]

Yes, these plants need to be colocated with customers, ideally. Whyalla was proposed as one site where the big steel smelter could use the hydrogen. But that smelter is currently in receivership. The Trafigura thought bubble was less well located, as it was colocated with a lead smelter, which they are also thinking about closing down.

On another tack, I had a look for where all the taxpayer money was available to be siphoned off into the pockets of rent seekers.


Where hydrogen eligible support is funding that can generally be used for Net Zero enthusiasms and is not particularly targeted at H2. So that's $60B, about 50 times the impact of the cyclone the treasurer claims will blow the budget.

Currently all operational green hydrogen plants across Australia produce just over 2 tonnes per day in total.

 

[Tomfh]

Another one has gone bust, LOL. Hydrogen - the fuel of the future, and always will be.

Green hydrogen project at Port Pirie smelter shelved

Plans for a $750 million green hydrogen facility at Port Pirie, which was initially announced in 2021, have been shelved, the state government says.

www.abc.net.au

 

[EdStainless]

I have worked the numbers with a plant here in the US and it is interesting.
They have a very large piece of land.
The location is amenable to both PV and Wind generation.
They also use hydrogen in their processes.
Their plan is to use the hydrogen production as a way to store energy that they have no use for.
They could sell excess power to the utility, for 75% of the wholesale rate (usually less than $0.02/kWh).
In this application it actually makes sense.

 

[LittleInch]

The biggest issue I have seen so far is that, especially for Blue Hydrogen (from methane with CCS) is that ignoring the CAPEX, the OPEX and energy equation results in a energy source overall about 50% of what you started with, including the costs and energy involved in CO2 sequestration. So for simple replacement of methane in any normal heating / firing activity, someone, somewhere is going to need to pay for that. To date I've not seen any decent way of doing this and politicians world wide can't find a way to sell this to the pubic at large, especially given the shrillness of politics and the divide between those who accept we need to change and those who don't.

The only project I've been involved in which seem to make more sense are those where Hydrogen is used as a feedstock for some process to e.g. make iron or steel from iron ore or whatever process Ed is talking about. Then you either get carbon credits or sell the product as "green" steel or whatever.

Replacing some lower level industrial uses for methane in factories, fertiliser / cement plants etc has some traction, but again, who pays the cost?
for countries who import all their methane it could make sense if they have a load of wind or solar production, but not to displace electricity.

 

[GregLocock]

One issue I've seen in that sensible approach is that the market for green steel seems to be rather limited.