IDEAS home Printed from https://ideas.repec.org/a/eee/ingrde/v3y2024i3s2949753124000262.html
   My bibliography  Save this article

Advancements in hydrogen energy systems: A review of levelized costs, financial incentives and technological innovations

Author

Listed:
  • Nyangon, Joseph
  • Darekar, Ayesha

Abstract

Hydrogen energy systems (HES) are increasingly recognized as pivotal in cutting global carbon dioxide (CO2) emissions, especially in transportation, power generation, and industrial sectors. This paper offers a comprehensive review of HES, emphasizing their diverse applications and economic viability. By 2030, hydrogen energy is expected to revolutionize various sectors, significantly impacting CO2 abatement and energy demand. In electricity and power generation, hydrogen could reduce CO2 emissions by 50–100 million tons annually, requiring 10–20 million tons of hydrogen and an investment of $50–100 billion, underscoring its role in grid stabilization. Additionally, in the heating sector, hydrogen could facilitate a CO2 abatement of 30–50 million tons. We examine the levelized cost of hydrogen (LCOH) production, influenced by factors like production methods, efficiency, and infrastructure. While steam methane reforming is cost-effective, it poses a larger environmental impact compared to electrolysis. The global life-cycle cost of hydrogen production decreases as production scales up, with current costs ranging from $1–3 per kg for fossil-based sources to $3.4–7.5 per kg for electrolysis using low-emission electricity. These costs are projected to decrease, especially for electrolytic hydrogen in regions with abundant solar energy. However, despite the technical feasibility of decarbonization, high production costs still pose challenges. A systematic and effective transition to a hydrogen economy requires comprehensive policy and financial support mechanisms, including incentives, subsidies, tax measures, and funding for research and development of pilot projects. Additionally, the paper discusses hydrogen's role in advanced storage technologies such as hydrides and Japan's ENE-FARM solution for residential energy, emphasizing the need for strategic investments across the hydrogen value chain to enhance HES competitiveness, reduce LCOH, and advance the learning rates of hydrogen production technologies.

Suggested Citation

  • Nyangon, Joseph & Darekar, Ayesha, 2024. "Advancements in hydrogen energy systems: A review of levelized costs, financial incentives and technological innovations," Innovation and Green Development, Elsevier, vol. 3(3).
    • Handle: RePEc:eee:ingrde:v:3:y:2024:i:3:s2949753124000262
    DOI: 10.1016/j.igd.2024.100149
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S2949753124000262
    Download Restriction: Open-access
    File URL: https://libkey.io/10.1016/j.igd.2024.100149?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Carley, Sanya & Nicholson-Crotty, Sean & Miller, Chris J., 2017. "Adoption, reinvention and amendment of renewable portfolio standards in the American states," Journal of Public Policy, Cambridge University Press, vol. 37(4), pages 431-458, December.
    2. Nemet, Gregory F. & O’Shaughnessy, Eric & Wiser, Ryan & Darghouth, Naïm & Barbose, Galen & Gillingham, Ken & Rai, Varun, 2017. "Characteristics of low-priced solar PV systems in the U.S," Applied Energy, Elsevier, vol. 187(C), pages 501-513.
    3. Gunther Glenk & Stefan Reichelstein, 2019. "Publisher Correction: Economics of converting renewable power to hydrogen," Nature Energy, Nature, vol. 4(4), pages 347-347, April.
    4. Venkatasubramanian Viswanathan & Alan H. Epstein & Yet-Ming Chiang & Esther Takeuchi & Marty Bradley & John Langford & Michael Winter, 2022. "Author Correction: The challenges and opportunities of battery-powered flight," Nature, Nature, vol. 603(7903), pages 30-30, March.
    5. Gunther Glenk & Stefan Reichelstein, 2019. "Economics of converting renewable power to hydrogen," Nature Energy, Nature, vol. 4(3), pages 216-222, March.
    6. Frondel, Manuel & Schubert, Stefanie A., 2021. "Carbon pricing in Germany's road transport and housing sector: Options for reimbursing carbon revenues," Energy Policy, Elsevier, vol. 157(C).
    7. Falko Ueckerdt & Christian Bauer & Alois Dirnaichner & Jordan Everall & Romain Sacchi & Gunnar Luderer, 2021. "Potential and risks of hydrogen-based e-fuels in climate change mitigation," Nature Climate Change, Nature, vol. 11(5), pages 384-393, May.
    8. Yue, Meiling & Lambert, Hugo & Pahon, Elodie & Roche, Robin & Jemei, Samir & Hissel, Daniel, 2021. "Hydrogen energy systems: A critical review of technologies, applications, trends and challenges," Renewable and Sustainable Energy Reviews, Elsevier, vol. 146(C).
    9. Joseph Nyangon & John Byrne, 2023. "Estimating the impacts of natural gas power generation growth on solar electricity development: PJM's evolving resource mix and ramping capability," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 12(1), January.
    10. Gorre, Jachin & Ruoss, Fabian & Karjunen, Hannu & Schaffert, Johannes & Tynjälä, Tero, 2020. "Cost benefits of optimizing hydrogen storage and methanation capacities for Power-to-Gas plants in dynamic operation," Applied Energy, Elsevier, vol. 257(C).
    11. Stöckl, Fabian & Schill, Wolf-Peter & Zerrahn, Alexander, 2021. "Optimal supply chains and power sector benefits of green hydrogen," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 11.
    12. Joseph Nyangon & John Byrne & Job Taminiau, 2017. "An assessment of price convergence between natural gas and solar photovoltaic in the U.S. electricity market," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 6(3), May.
    13. Venkatasubramanian Viswanathan & Alan H. Epstein & Yet-Ming Chiang & Esther Takeuchi & Marty Bradley & John Langford & Michael Winter, 2022. "The challenges and opportunities of battery-powered flight," Nature, Nature, vol. 601(7894), pages 519-525, January.
    14. Jason Moore & Bahman Shabani, 2016. "A Critical Study of Stationary Energy Storage Policies in Australia in an International Context: The Role of Hydrogen and Battery Technologies," Energies, MDPI, vol. 9(9), pages 1-28, August.
    15. Alexandru Cernat & Constantin Pana & Niculae Negurescu & Gheorghe Lazaroiu & Cristian Nutu & Dinu Fuiorescu, 2020. "Hydrogen—An Alternative Fuel for Automotive Diesel Engines Used in Transportation," Sustainability, MDPI, vol. 12(22), pages 1-21, November.
    16. Simonas Cerniauskas & Thomas Grube & Aaron Praktiknjo & Detlef Stolten & Martin Robinius, 2019. "Future Hydrogen Markets for Transportation and Industry: The Impact of CO 2 Taxes," Energies, MDPI, vol. 12(24), pages 1-26, December.
    17. Thema, M. & Bauer, F. & Sterner, M., 2019. "Power-to-Gas: Electrolysis and methanation status review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 112(C), pages 775-787.
    18. Buttler, Alexander & Spliethoff, Hartmut, 2018. "Current status of water electrolysis for energy storage, grid balancing and sector coupling via power-to-gas and power-to-liquids: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 82(P3), pages 2440-2454.
    19. Löbberding, Laurens & Madlener, Reinhard, 2019. "Techno-economic analysis of micro fuel cell cogeneration and storage in Germany," Applied Energy, Elsevier, vol. 235(C), pages 1603-1613.
    20. Liu, Yang & Yao, Xilong & Wei, Taoyuan, 2019. "Energy efficiency gap and target setting: A study of information asymmetry between governments and industries in China," China Economic Review, Elsevier, vol. 57(C).
    21. van der Roest, Els & Snip, Laura & Fens, Theo & van Wijk, Ad, 2020. "Introducing Power-to-H3: Combining renewable electricity with heat, water and hydrogen production and storage in a neighbourhood," Applied Energy, Elsevier, vol. 257(C).
    22. Martin Robinius & Simonas Cerniauskas & Reinhard Madlener & Christina Kockel & Aaron Praktiknjo & Detlef Stolten, 2022. "Economics of Hydrogen," Springer Books, in: Manfred Hafner & Giacomo Luciani (ed.), The Palgrave Handbook of International Energy Economics, chapter 0, pages 75-102, Springer.
    23. John Byrne & Job Taminiau & Kyung Nam Kim & Joohee Lee & Jeongseok Seo, 2017. "Multivariate analysis of solar city economics: impact of energy prices, policy, finance, and cost on urban photovoltaic power plant implementation," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 6(4), July.
    24. Alessandra Perna & Mariagiovanna Minutillo & Simona Di Micco & Elio Jannelli, 2022. "Design and Costs Analysis of Hydrogen Refuelling Stations Based on Different Hydrogen Sources and Plant Configurations," Energies, MDPI, vol. 15(2), pages 1-22, January.
    25. Zhang, Jian & Zhang, Wei & Song, Qi & Li, Xin & Ye, Xuanting & Liu, Yu & Xue, Yawei, 2020. "Can energy saving policies drive firm innovation behaviors? - Evidence from China," Technological Forecasting and Social Change, Elsevier, vol. 154(C).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Qu, Chunzi & Bang, Rasmus Noss & Sandal, Leif K. & Steinshamn, Stein Ivar, 2025. "Hydrogen in Renewable-Intensive Energy Systems: Path to Becoming a Cost-Effective and Efficient Storage Solution," Discussion Papers 2025/1, Norwegian School of Economics, Department of Business and Management Science.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Schlund, David & Theile, Philipp, 2021. "Simultaneity of green energy and hydrogen production: Analysing the dispatch of a grid-connected electrolyser," EWI Working Papers 2021-10, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
    2. Schlund, David & Theile, Philipp, 2022. "Simultaneity of green energy and hydrogen production: Analysing the dispatch of a grid-connected electrolyser," Energy Policy, Elsevier, vol. 166(C).
    3. Qi, Meng & Park, Jinwoo & Landon, Robert Stephen & Kim, Jeongdong & Liu, Yi & Moon, Il, 2022. "Continuous and flexible Renewable-Power-to-Methane via liquid CO2 energy storage: Revisiting the techno-economic potential," Renewable and Sustainable Energy Reviews, Elsevier, vol. 153(C).
    4. Speckmann, Friedrich-W. & Keiner, Dominik & Birke, Kai Peter, 2020. "Influence of rectifiers on the techno-economic performance of alkaline electrolysis in a smart grid environment," Renewable Energy, Elsevier, vol. 159(C), pages 107-116.
    5. Blanco, Herib & Leaver, Jonathan & Dodds, Paul E. & Dickinson, Robert & García-Gusano, Diego & Iribarren, Diego & Lind, Arne & Wang, Changlong & Danebergs, Janis & Baumann, Martin, 2022. "A taxonomy of models for investigating hydrogen energy systems," Renewable and Sustainable Energy Reviews, Elsevier, vol. 167(C).
    6. Ruhnau, Oliver & Schiele, Johanna, 2023. "Flexible green hydrogen: The effect of relaxing simultaneity requirements on project design, economics, and power sector emissions," Energy Policy, Elsevier, vol. 182(C).
    7. Gunther Glenk & Stefan Reichelstein, 2022. "Reversible Power-to-Gas systems for energy conversion and storage," Nature Communications, Nature, vol. 13(1), pages 1-10, December.
    8. Zaiter, Issa & Ramadan, Mohamad & Bouabid, Ali & Mayyas, Ahmad & El-Fadel, Mutasem & Mezher, Toufic, 2024. "Enabling industrial decarbonization: Framework for hydrogen integration in the industrial energy systems," Renewable and Sustainable Energy Reviews, Elsevier, vol. 203(C).
    9. Lim, Dongjun & Lee, Boreum & Lee, Hyunjun & Byun, Manhee & Lim, Hankwon, 2022. "Projected cost analysis of hybrid methanol production from tri-reforming of methane integrated with various water electrolysis systems: Technical and economic assessment," Renewable and Sustainable Energy Reviews, Elsevier, vol. 155(C).
    10. Kim, Jeongdong & Qi, Meng & Park, Jinwoo & Moon, Il, 2023. "Revealing the impact of renewable uncertainty on grid-assisted power-to-X: A data-driven reliability-based design optimization approach," Applied Energy, Elsevier, vol. 339(C).
    11. Hidalgo, D. & Martín-Marroquín, J.M., 2020. "Power-to-methane, coupling CO2 capture with fuel production: An overview," Renewable and Sustainable Energy Reviews, Elsevier, vol. 132(C).
    12. Abadie, Luis Mª & Chamorro, José M., 2023. "Investment in wind-based hydrogen production under economic and physical uncertainties," Applied Energy, Elsevier, vol. 337(C).
    13. Shaojie Song & Haiyang Lin & Peter Sherman & Xi Yang & Chris P. Nielsen & Xinyu Chen & Michael B. McElroy, 2021. "Production of hydrogen from offshore wind in China and cost-competitive supply to Japan," Nature Communications, Nature, vol. 12(1), pages 1-8, December.
    14. Chauvy, Remi & Dubois, Lionel & Lybaert, Paul & Thomas, Diane & De Weireld, Guy, 2020. "Production of synthetic natural gas from industrial carbon dioxide," Applied Energy, Elsevier, vol. 260(C).
    15. Corey Duncan & Robin Roche & Samir Jemei & Marie-Cécile Péra, 2022. "Techno-economical modelling of a power-to-gas system for plant configuration evaluation in a local context," Post-Print hal-03692975, HAL.
    16. Pan, Guangsheng & Gu, Wei & Chen, Sheng & Lu, Yuping & Zhou, Suyang & Wei, Zhinong, 2021. "Investment equilibrium of an integrated multi–stakeholder electricity–gas–hydrogen system," Renewable and Sustainable Energy Reviews, Elsevier, vol. 150(C).
    17. Rosa, Lorenzo & Mazzotti, Marco, 2022. "Potential for hydrogen production from sustainable biomass with carbon capture and storage," Renewable and Sustainable Energy Reviews, Elsevier, vol. 157(C).
    18. Fiammetta Rita Bianchi & Barbara Bosio, 2021. "Operating Principles, Performance and Technology Readiness Level of Reversible Solid Oxide Cells," Sustainability, MDPI, vol. 13(9), pages 1-23, April.
    19. George, Jan Frederick & Müller, Viktor Paul & Winkler, Jenny & Ragwitz, Mario, 2022. "Is blue hydrogen a bridging technology? - The limits of a CO2 price and the role of state-induced price components for green hydrogen production in Germany," Energy Policy, Elsevier, vol. 167(C).
    20. Martin, Jonas & Neumann, Anne & Ødegård, Anders, 2023. "Renewable hydrogen and synthetic fuels versus fossil fuels for trucking, shipping and aviation: A holistic cost model," Renewable and Sustainable Energy Reviews, Elsevier, vol. 186(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ingrde:v:3:y:2024:i:3:s2949753124000262. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.journals.elsevier.com/innovation-and-green-development .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.