"With increasingly low clean energy costs, renewables-based hydrogen production could once again be competitive with steam methane reforming (SMR)," says Cédric Philibert, senior energy analyst at the International Energy Agency (IEA). New-built wind farms in Morocco, and solar PV in Dubai and Chile where electricity costs are around $30/MWh, according to his insight, can compete with SMR paired with carbon capture and storage.
"Producing hydrogen via renewable energy is not a new idea. Still, the vast majority of this industrial hydrogen is produced from coal gasification or SMR, both highly energy-intensive and polluting technologies," he commented
Breaking hydrogen out of water through electrolysis is a technology that is currently much less used; but it can when using cheap hydropower in regions such as Norway and Iceland, or wind and solar power.
Competing on price and runtime hours
“Price is not the only consideration however,” Mr Philibert pointed out. “To be competitive, the electroylzers would have to have relatively high utilization factors – that is, they would have to run for several thousand hours per year.” But under the right conditions, e.g. in the agriculture sector, electrolyzers can have massive consequences for sustainability.
About half of industrial hydrogen is used in ammonia production. Ammonia production alone is responsible for about 360 million tonnes of CO2 emissions each year, or about 1% of the world’s total emissions. By 2050, we expect that the consumption of ammonia will increase by around 60%, according to IEA estimates.
The best of both worlds – places with low prices and a high ulilization factor – can be found in sunny, windy regions with the right combination of solar plants and wind farms.
“Some of the areas with the best resources, in China and in the US, are far from fertilizer demand centres but both electricity and ammonia could be transported. Other places, such as Western Australia, Western Sahara, the horn of Africa or Patagonia to name some, may also be very far from demand but they offer large sparsely-populated areas and have access to oceans. In that case, ammonia plants would likely be sited directly next to the electrolysers,” he explained.
Use as future energy carrier, CO2-free fuel
Future use of ammonia includes stand-alone use as carbon-free fuel or as an energy carrier to store and transport energy or else as a process agent in CO2 emissions-free steelmaking.
“The market for climate-friendly hydrogen generating technologies can only expand in a world striving to mitigate climate change,” Mr Philibert said, underlining that “SMR with CCS remains an economic option. However, as many countries are considering how to produce synthetic methane or other hydrocarbons from renewable hydrogen – exactly the inverse of SMR – manufacturing ammonia with renewables-based hydrogen is the simplest first step.”