Potential for electrolysis-based hydrogen small in medium term: Platts Analytics

Curtailed renewables and negatively priced electricity can provide a use case for PEM electrolysis production of hydrogen, but the medium-term potential is small, according to S&P Global Platts Analytics' latest Hydrogen Monitor, published Monday.

Pure H2 demand of around 76 million mt/year is met almost entirely from steam methane reforming or gasification of fossil fuels.

Supply of H2 last year went to either refining (38.5 million mt) or ammonia (33.3 million mt) production, with 4.75 million mt for other uses, Platts Analytics said.

A tiny fraction is derived from water electrolysis, with Platts Analytics' global cumulative outlook for green H2 capacity of just 0.2 million mt/yr in 2020, rising to 0.5 million mt/yr in 2028.

Platts hydrogen price benchmarks currently assess the cost to produce green H2 at between $2.50-$3.50/kg (including capex, California PEM Electrolysis), versus $1.50-$2/kg for conventional gray H2 from steam methane reforming of natural gas (including capex, California).

While curtailed renewables and negative power prices offer a potential low-cost feedstock for electrolysis, curtailed volumes remain relatively small and intermittent (50 TWh in China, under 6 TWh in Germany, under 1 TWh in California), lead report author Zane McDonald said.

"Assuming typical PEM electrolyzer performance, 1 TWh of electricity can produce around 20,000 tonnes of H2," McDonald said.

The medium-term outlook for blue hydrogen production (fossil feedstocks plus carbon capture, use and storage) was better, but still modest compared to conventional volumes.

"We see global blue hydrogen capacity of around 0.5 million mt/year this year rising to nearly 3.5 million mt/year in 2028," McDonald said, with the significant proviso that blue hydrogen production was reliant on commercialization of carbon capture technology and adequate CO2 storage capacity.

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