Solar hydrogen is set to be less expensive than hydrogen produced from natural gas with carbon capture and storage (CCS), according to a report.
Published in the journal, Solar RRL, the study led by the European Technology and Innovation Platform for Photovoltaics outlined how considering the cost of solar hydrogen – €31-81/MWh (€1-2.7/kg) – it is clear green hydrogen is not yet competing with natural gas. However, this will change rapidly, with solar electricity and water electrolysis costs decreasing fast and as soon as the CO2 emissions cost of a realistic level is factored in.
Up to a third of the required solar and wind electricity would eventually be used for electrolysis to produce hydrogen. This will see the cumulative electrolyser capacity increase to around 17TWh by 2050, with huge growth potential from the current 20GW. Come 2030, it forecast the levelised cost of hydrogen (LCOH) for solar hydrogen to fall to €20-54/MWh (€0.7-1.8/kg), making it a competitive clean fuel globally up against hydrogen produced from natural gas with CCS. Up to 2050, costs would fall further, reaching €10-27/MWh (€0.3-0.9/kg).
Mass production of electrolysers would offer the potential for an even bigger cost reduction. It further explained an extremely high OPEX used in calculations has been a factor in increasing the LCOH in many estimations when, in reality, there is not a lot of operation and maintenance done for an electrolysis system.
It also suggested how further LCOH reduction would be possible through directly using DC power generated by the PV system. This is down to both PV and electrolysis system working with DC, meaning conversions to AC and back to DC again are inefficient and increase cost. Noting that direct DC systems are not yet standard solutions in the hydrogen sector, it suggested that they should be developed for local solar hydrogen production.
As electrolyser technology matures further, the related risk perceived by investors should also decrease, lowering the WACC – weighted average cost of capital – rate of the investment. This is significant, it said, due to WACC being the most important input parameter in the calculation of LCOH after location and solar yield.