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Estimating Long-Term Global Supply Costs for Low-Carbon Hydrogen

Author

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  • Brändle, Gregor

    (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI))

  • Schönfisch, Max

    (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI))

  • Schulte, Simon

    (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI))

Abstract

As part of the decarbonisation of the global economy, low-carbon hydrogen is expected to play a central role in future energy systems. This article presents a comprehensive approach for estimating the development of global production and supply costs of low-carbon hydrogen from renewable energy sources (RES) and natural gas until 2050. For hydrogen from RES, globally distributed wind and solar photovoltaics (PV) potentials are taken as inputs for low or high temperature electrolysers. A linear optimisation model minimises hydrogen production costs by determining optimal capacity ratios for each RES and electrolyser combination, based on hourly RES electricity generation profiles. For low-carbon hydrogen from natural gas, natural gas reforming with carbon capture and storage (CCS) and pyrolysis are considered. In addition to production costs, this analysis assesses the costs associated with the transportation of hydrogen by ship or pipeline. The combination of production and transportation costs yields a ranking of cost-optimal supply sources for individual countries. Estimation results suggest that natural gas reforming with CCS will be the most cost-efficient low-carbon hydrogen production pathway in the medium term (2020-2030). Production of hydrogen from RES could become competitive in the long run (2030-2050) if capital costs decrease significantly. Optimal long-term hydrogen supply routes depend on regional characteristics, such as RES conditions and gas prices. Imports are cost-effective where domestic production potential is small and/or cost-intensive. Additionally, good import conditions exist for countries which are connected to prospective low-cost exporters via existing natural gas pipelines that can be retrofitted to transport hydrogen. Due to high costs for seaborne transport, hydrogen trade will most likely be concentrated regionally, and markets with different provision schemes could emerge. The results are highly sensitive to capital cost assumptions and natural gas prices.

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  • Brändle, Gregor & Schönfisch, Max & Schulte, Simon, 2020. "Estimating Long-Term Global Supply Costs for Low-Carbon Hydrogen," EWI Working Papers 2020-4, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI), revised 10 Aug 2021.
    • Handle: RePEc:ris:ewikln:2020_004
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    More about this item

    Keywords

    Low-Carbon Hydrogen; Hydrogen Production; Hydrogen Transportation; Levelised Cost;
    All these keywords.

    JEL classification:

    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q49 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Other

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