When Plug Power Inc. hosted its grand opening of a fuel cell and electrolyzer manufacturing plant in Rochester, N.Y this year, it explicitly said that hydrogen produced from clean energy would be the next big thing — and something just around the corner. Indeed, the Plug Power Innovation Center will ramp up production of its electolyzers that are critical to decarbonizing the global economy.
What makes this possible is the falling cost of solar and wind energy. And now the hardware is also becoming more affordable — especially the electrolyzers, which are central to hydrogen production: they split apart the hydrogen and oxygen from water. Meanwhile, governments around the globe see hydrogen as a catalyst to net-zero and are targeting monies to research and development.
“We have made solar more competitive than coal,” says Andy Marsh, chief executive of Plug Power, in a conversation with this writer. “So how do you make green hydrogen competitive with natural gas? Governments are accelerating it,” he says, noting that the hardware portion is not that problematic. “The Department of Energy thinks you can cut the cost of an electrolyzer by two-thirds by 2030.”
Today 99% of all hydrogen is produced in reactions involving coal and natural gas, and is considered “grey hydrogen” that does nothing to limit CO2 emissions. The goal is to produce hydrogen from low-carbon energy sources — “green hydrogen” — and expand its use into the transportation and power generation sectors.
In its Hydrogen Economy Outlook, Bloomberg New Energy Finance says that the gas could supply 24% of the world’s energy demands by 2050 while cutting CO2 levels by 34%. But that requires proactive policies and new investment. If all the pieces fall into place, hydrogen produced from wind and solar could cost between $0.8 and $1.6 a kilogram. That is roughly the cost of natural gas.
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Hydrogen-powered cars have advantages over electric vehicles, says Marsh. Delivery trucks, for example, offer fast fueling and double the range of a battery: “If you move a vehicle 150 kilometers, you want to carry packages, not batteries.” Besides the giga-factory to make electrolyzers, Plug Power has more than 165 refueling stations. It is also constructing multiple green hydrogen production plants to produce 500 tons of liquid green hydrogen a day by 2025; liquid hydrogen is easier to transport to its customers, including Amazon, Home Depot, and Walmart.
Green Lights Ahead
CEO Marsh says that the company is on track to build out 70 metric tons of green hydrogen per day by the third quarter of next year. That compares to the current capacity of 300 metric tons that is produced from fossil fuels. So almost 20% of hydrogen production next year will come from clean sources, he says: green hydrogen will follow a similar cost reduction trajectory to renewable energy, and ultimately, it will be the lowest cost fuel for transportation.
Toyota Motor Corporation and Hyundai Motor Company are betting big on it. Meantime, FedEx Express has a delivery truck running on hydrogen in New York State. It has a range of 240 kilometers on a full tank. Generally, a hydrogen station can service 400 cars a day with fill-ups lasting three minutes.
The advantages of hydrogen are that it is abundant, renewable, and non-polluting. Water vapor is the only byproduct of a fuel cell car that runs on hydrogen. But it is about 30% more expensive to move it via pipelines than carrying natural gas, although the hydrogen can be stored in a tank and used to create electricity for longer durations.
Furthermore, the International Renewable Energy Agency says that when hydrogen is produced, about 70% of the energy content is lost. However, that inefficiency is irrelevant if hydrogen is created from solar power that is abundant and free and it wold become cheaper than prevailing fuel sources. The agency notes that hydrogen supply costs are now 1.5 times to 5 times that of natural gas per unit of energy.
It adds that the learning curve linked to creating hydrogen is steep but worth it — no matter the fuel that is used: pipelines are getting built to carry the fuel to where it is consumed. That will reduce the need for new infrastructure investment, accelerating the transition from “grey hydrogen” to “green hydrogen.”
The market for hydrogen technology is global. Plug Power is expected to join with Fortescue Future Industries to build a giga-factory in Queensland, Australia, to produce electrolyzers. Meantime, Plug Power is likely to work with Egypt’s OCI NV and the Abu Dhabi National Oil Company to make green hydrogen with its electorlyzer. And Plug announced a joint venture with South Korea’s E&S to accelerate the use of hydrogen for power generation in Asian markets.
“Walmart told us that if we wanted to scale this, we had to take over the whole value chain,” says Plug’s Marsh. “This has driven Plug Power” — driven the company to expand from fuel cells into electrolyzers and fueling stations.
Hydrogen could, indeed, become the gateway to a decarbonized planet. Here in this country, the U.S. Infrastructure, Investment and Jobs Act authorizes and appropriates $9.5 billion for clean hydrogen research, development, and demonstration programs. The law includes a $1 billion program to cut the cost of producing hydrogen using electrolyzers. And the U.S. Build Back Better Act, which is currently in review by the U.S. Senate, includes a hydrogen production tax credit of $3 per kilogram.
At COP26, 42 countries endorsed the ‘Breakthrough Agenda.’ The goal is to ensure affordable low-carbon hydrogen is globally available by 2030. To that end, the European Commission will target $1 billion to the effort.
In the meantime, the United Arab Emirates and Germany are expected to grow their cooperation on green hydrogen. The UAE separately announced its ‘Hydrogen Leadership Roadmap’ and targets a 25% global market share of low-carbon hydrogen by 2030. And Japan announced a $100 million investment to convert fossil-fired plants into ammonia- and hydrogen-based plants while South Korea has set aside $40 billion to expand its hydrogen infrastructure by 2040 — from production tools to fuels cells to filling stations.
If Plug Power’s Adam Marsh is right, producing hydrogen from green energy is within sight. A lot of progress has occurred over two decades: cheaper wind and solar prices along with improved electrolyzer engineering. And favorable public policies are attracting capital. Hopeful signs are everywhere — as long as they are not obfuscated by complacency.