Hydrogen Discoveries company blog

(Note #1: This is Hydrogen Fact #7 from “Twelve Hydrogen Facts” which is part of the Hydrogen Manhattan Project.)

(Note #2: I am personally outraged with the lack of leadership and focus on solving the energy crisis despite all of the problems that are a result of our reliance on oil such as high fuel prices, wars, global warming, air pollution, etc.

My feeling is that it is time to stop expecting politicians and corporations to lead.  Instead, we should all become leaders and start a revolution of our own to solve this problem.  YOU must be a catalyst for positive change.

The Hydrogen Manhattan Project is “A movement led by individual Americans to support corporations and elected officials that work towards the goal of having every car on the road in the U.S. powered by hydrogen produced from clean sources of energy by the end of 2020.”  The first step to achieving this goal is to get the government to help build the initial hydrogen fueling stations that the car companies have been pleading for.

The problem is that very few people are even aware of all that is happening with hydrogen cars and how hydrogen can solve the problems we are now facing.  Therefore, I have started a grassroots campaign to spread the word about hydrogen.  If you would like to be added to the e-mail distribution list for the Hydrogen Manhattan Project grassroots campaign, please e-mail me at gblencoe@hydrogendiscoveries.com.)

Hydrogen Fact #7

The following analysis will show that hydrogen could be produced today from wind power (without any subsidies) at a cost less than the equivalent of gasoline at $3 per gallon.  Wind energy has a lot of potential in the U.S. and around the world.

Here is a breakdown of the cost of a kilogram of hydrogen from wind power:

Producing a kilogram of hydrogen by electrolysis with wind power

A kilogram of hydrogen can be produced by electrolysis with 50 kilowatt hours of electricity.  GE Wind says on their website that the cost of wind energy is “approximately 3.5 to 4 cents per kilowatt hour and declining.”

However, this figure includes the Production Tax Credit (PTC) of 1.9 cents per kilowatt hour.  Therefore, the unsubsidized cost of wind power would be 5.4 to 5.9 cents per kilowatt hour.

The wind farms to make hydrogen will be extremely large which will lower the cost significantly.  Therefore, the unsubsidized cost of wind energy used for this analysis will be 5.25 cents per kilowatt hour.  When multiplied by 50 kilowatt hours, this will equal $2.63.

Electrolyzers and hydrogen production facilities

The cost listed above for producing a kilogram of hydrogen by electrolysis with wind power only covers the cost of the electricity.  The cost of the electrolyzers and the facilities where the hydrogen will be produced also needs to be taken into account.

GE and ITM Power (UK) are two leading companies with low-cost electrolyzer technology.  An electrolyzer (at a cost of $400/kW) that produces 1000 kilograms per day and lasts for ten years is estimated to cost $1,220,000.  The payment on a ten-year loan at a 7% interest rate on this amount would equal $14,165 per month or $169,980 over an entire year.

The electrolyzers could produce 365,000 kilograms if they were to run at full capacity over an entire year.  However, it will be assumed that they will operate at an average of 75% of the hours at the large wind facilities.  Therefore, the electrolyzers will produce 273,750 kilograms per year.  This will equal a cost of $0.62 per kilogram of hydrogen.

Regarding the cost of the hydrogen production facilities, the closest comparison that can be made is with oil refineries.  Currently, refinery margins are pretty low with gasoline.  In February 2008, refineries received $0.24 per gallon of gasoline.  However, they received $0.33 per gallon in 2004 and $0.43 in 2005.

Since the cost of the electrolyzers and the electricity needed to produce the hydrogen have already been taken into account, this figure should be much lower than what the refineries are receiving per gallon of gasoline.  Therefore, the cost of the hydrogen production facilities is estimated to be $0.18 per kilogram.

The total for both the electrolyzers and the hydrogen production facilities is $0.80 per kilogram.

Pipelines and storage

The cost to transport gasoline through pipelines and for storage is 4 cents per gallon.  However, the hydrogen pipelines and storage facilities have yet to be built, so the amount must be high enough to pay back loans for them.  Therefore, the cost will be $0.28 per kilogram of hydrogen.

Compression

At the storage facilities, the hydrogen will need to be compressed to higher pressures.  The cost must include both the compressors and the energy required for compression.

The cost for a 1500 kilogram per day compressor that will last ten years is $600,000.  For a ten-year loan at a 7% interest rate, the payment will be $6967 per month or $83,604 over an entire year.  With 547,500 kilograms of hydrogen compressed per year, the cost per kilogram for the compressors is $0.15.

In order to compress hydrogen to 10,000 pounds per square inch (psi), between 10-13% of the energy in a kilogram of hydrogen (which is 39 kilowatt hours of electricity) is required.  A figure of 12% will be used which will equal approximately 5 kilowatt hours.

The average cost of electricity for industrial facilities was 6.16 cents per kilowatt hour in 2006.  Therefore, a figure of 7 cents per kilowatt hour will be used.  This will equal a compression cost of $0.35 per kilogram of hydrogen.

The total cost for both the compressors and the energy required to compress the hydrogen is $0.50 per kilogram.

Trucking

The trucking cost for gasoline is 3 cents per gallon.  This amount must be greatly increased for hydrogen, because the trucks will need to take many more trips to fueling stations.  The reason is that trucks of the same size will hold far fewer kilograms of hydrogen than gallons of gasoline.  Therefore, this amount will be $0.30 per kilogram of hydrogen.

Retail fueling stations

The cost to operate retail fueling stations was $0.17 per gallon of gasoline in 2005.  However, the cost to build the hydrogen fueling stations must be added to this figure.

Although this amount will be much lower in the future, hydrogen fueling stations currently cost about $2 million each to build.  A loan for this amount over 20 years with an interest rate of 7% will have a monthly payment of $15,506.

If each hydrogen fueling station sells an average of 1500 kilograms per day (388.6 million gallons of gasoline are currently sold in the U.S. each day at 170,000 fueling stations which equals an average of 2286 gallons sold per fueling station), the total loan payments would be $186,072 over one year.  This cost must be spread over the 547,500 kilograms of hydrogen sold during the entire year.  This equals $0.34 per kilogram.

Therefore, the cost for the retail hydrogen fueling stations will be $0.51 per kilogram of hydrogen.

Taxes

The average total of federal, state, and other gasoline taxes in January 2008 was $0.47 per gallon.  Since a kilogram of hydrogen in a fuel cell will get twice the mileage of a gallon of gasoline in an internal combustion engine, the taxes must be doubled to $0.94.

Total cost

The total cost of hydrogen produced from wind power (without any subsidies) would be $5.96 per kilogram.

Since a kilogram of hydrogen in a fuel cell will get twice the mileage of a gallon of gasoline in an internal combustion engine, this is equivalent to gasoline at $2.98 per gallon.

A key point to mention is that this cost will be even lower in the future.  Fuel cells will be even more efficient and the cost of clean sources of energy, electrolyzers, compressors, and fueling stations will all go down over the coming years.  It is very likely that hydrogen from clean sources of energy will cost the equivalent of gasoline at levels close to $2 per gallon in 10-15 years.

(Note: Although wind power is used in this analysis, other clean sources of energy could economically produce hydrogen either by electrolysis or other methods now or in the near future.  In particular, hydrogen from solar power by methods other than electrolysis will likely become economical in the next couple of years.  Due to the availability of high-quality solar power at various locations around the world such as the Mojave Desert in the southwestern U.S., hydrogen from solar power has a tremendous amount of potential.)