Costs of Hydrogen Production with Carbon-based Fuels
Other carbon-based fuels can be transformed into hydrogen for use in the niche markets that
have been mentioned previously. Electrical power serves as the intermediary between the two,
with the energy losses inherent in the transformation contained within the resulting electrical
power cost. Estimates of the cost of production of hydrogen through electrolysis are
straightforward to make, although there are a series of assumptions that are involved. An
example is given here (Ivy 2004) for three systems designed for different output levels: a small
20 kg/day output, a larger 100 kg/day level, and a very large 1,000 kg/day production. These
systems span the range from a neighborhood, four cars per day output to a 1,000 kg/day fueling
system servicing a couple of hundred cars per day.
The cost breakdown for hydrogen production in these scenarios is given in Figure 71 in 2005
dollars (Ivy 2004). All three levels have been derived using the same financial analysis for a
40-year system lifetime, which includes, among other considerations, a 7-year depreciation
schedule, a common tax treatment, siting and labor costing, and maintenance, contingency,
decommissioning, and insurance costs, much of which are proportionate to the total capital cost
of the electrolyzer unit. Electrolyzer lifetimes range from 7 to 10 years before replacement. A
final assumption is an industrial electricity cost of 4.83 cents/kWh, which is decidedly unrealistic
for small-volume production, and is unlikely even at the 1,000 kg/day level.
The analysis reveals a cost that ranges from $4.15/kg to $19.01/kg. A similar National Academy
of Engineering (NAE) analysis derives a cost of $6.56 for a 480 kg/day unit (NRC and NAE
2004). The cost of electricity is a driving factor in all three cases, with the capital costs of the
small production units forming the major cost. If properly designed, the overhead and
2.80 3.15
4.43
13.90
1.93
2.41
1.32
0.80
0.37
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
20.00
Hydrogen Market$/kg HydrogenOverhead and Maintenance
Capital Cost
Water and Electricity Cost$4.15/kg
1000 kg/day$8.09/kg
100 kg/day$19.01/kg
20 kg/dayFigure 71 Hydrogen selling costs for carbon-based power (assumes price of $.0483/kWh)