Just about all of the ingredients are there to transform potential into reality for a robust hydrogen market: abundant resources, underground storage, infrastructure, a market on which to build and technological expertise.

However, taking hydrogen—whether it’s green, blue or another color—to the next level will require addressing some critical needs, including driving down costs, experts said during a recent hydrogen-focused virtual event.

“One of the ways we’re going to get the cost down is the economies of scale, but economies of scale don’t work when it’s too expensive to start with,” said Bob Hebner, director of the University of Texas at Austin’s Center for Electromechanics.

R&D must go hand in hand with economies of scale, he added.

“To do that, we need better materials; we’re going to [need] better controls. We’re going to need to really take advantage of the promise that hydrogen storage has,” Hebner said, noting large underground storage caverns and the ability to store energy for longer can be a game-changer for the grid. “Suddenly, you can start storing energy for half a year. Or you can store hydrogen at one point in one location and transport it to another location and generate electricity there.”

The insight was shared amid ambitions by many across the globe to transition to cleaner forms of energy. Mostly used today for refining oil, producing fertilizer and treating metals, experts believe hydrogen’s ability to generate electricity and fuel vehicles via hydrogen fuel cells could boost the transition to a low-carbon energy system.

Hydrogen, the most plentiful and lightest element on earth, is seen as a cleaner alternative to fossil fuel-based sources—specifically natural gas, which is used to produce gray (most common today) and blue hydrogen (which incorporates carbon capture and storage)—used to generate electricity. Green hydrogen relies on renewable sources such as wind and solar power to generate electricity. The electricity is used to split water into separate hydrogen and oxygen molecules by way of a process called electrolysis, using an electrolyzer.

While green hydrogen is the most sustainable of the hydrogens, it remains the most expensive to produce. However, falling renewable power costs is helping to improve economics. As noted in a 2019 International Renewable Energy Agency (IRENA) report, costs for electrolyzers are falling as the technology scales and evolves.

“Electrolyser costs are projected to halve by 2040 to 2050, from US$840 per kilowatt (kW) today, while renewable electricity costs will continue to fall as well,” the report stated. “Renewable hydrogen will soon become the cheapest clean hydrogen supply option for many greenfield applications.”

To be competitive, green hydrogen must be generally produced at less than US$2.50/kg, depending on the market and other factors, according to IRENA.

Advancing Technology

Researchers continue to advance technology, finding ways to use different materials to get hydrogen from water more economically. Researchers at the University of Central Florida have created a nanomaterial to successfully get hydrogen from seawater.

Key is understanding nature well.

In simple terms, purified seawater plus solar light equals hydrogen with nanoelectrolysis.

“If we can directly harvest the solar energy and combine with the blue ocean, that will always generate the green hydrogen for us to use for free,” said Dr. Yang Yang, an associate professor at the university’s Nanoscience Technology Center.

Electrolyzers are sensitive to the purity of water, Yang added, noting heavy metals or other organic things found in water can damage the electrolyzer.

However, the nanomaterial created—made of nickel selenide with added iron and phosphor—enhances the efficiency and stability required for industrial-scale electrolysis, while cost-effectively balancing competing reactions of elements typically found in seawater, he explained.

“We are trying to use solar panels to generate electricity combined with the electrolyzer to directly harvest hydrogen from the ocean,” Yang said.

The technology is one of many steps backers of hydrogen development are working to push at the Bowman Centre for Sustainable Energy in Ontario.

One of the problems we have is at a commercial scale, the kind of scale that we produce gasoline, we really don’t have a green hydrogen supply,” said Ed Brost, an associate at the center. “In addition, we don’t have a market for green hydrogen, partly because it’s so expensive. In a sense, we have the classic chicken and egg story here.

Making it Work?

To address that, the center teamed up with Queen’s University to carry out a techno-economic feasibility analysis of hydrogen storage in salt caverns for 500 MW. The study scope covered clean electricity and grid interconnects, electrolysis, gas compression, salt caverns and decompressing hydrogen and routing it to fuel cells as well as voltage and exporting power to the grid.

“Hydrogen is stored there [in salt caverns] and when economically appropriate would be drawn from the well, decompressed, sent to a fuel cell or thermal conversion unit to make electricity,” he said. “Electricity would be sold during peak time and peak pricing periods.

All of the technologies involved have low technology risk, he said.

What will it take to make it work?

If the project could secure support from the government and/or elsewhere plus “better engineering to get the capital cost down to $300 million and get an arbitrage price of around $20 per megawatt hour—that’s the difference between peak and off-peak power,” he said, “this project would make money: $50 million a year would return in a utility’s grade investment to the investors or a simple six-year payout.”

Good news for developers is that several governments, including in Canada, are committed to helping fund hydrogen projects and have rolled out hydrogen strategies to move closer toward goals.

In the U.S., the Department of Energy, which offers funding opportunities, launched in 2021 the Energy Earthshots initiative. Its Hydrogen Shot aims to reduce the cost of hydrogen to $1 per 1 kilogram in one decade.

“The risk reduction we can achieve comes in from utilizing the local infrastructure and ... taking advantage of local government commitments,” Hebner said. “If a government is willing to put billions of dollars on the table to help hydrogen to move forward, that significantly reduces risk for the companies investing in that area.”