{"id":42674,"date":"2020-09-07T11:14:22","date_gmt":"2020-09-07T00:44:22","guid":{"rendered":"https:\/\/www.solarquotes.com.au\/blog\/?p=42674"},"modified":"2023-07-31T14:08:10","modified_gmt":"2023-07-31T04:38:10","slug":"anu-cheap-hydrogen","status":"publish","type":"post","link":"https:\/\/www.solarquotes.com.au\/blog\/anu-cheap-hydrogen\/","title":{"rendered":"ANU Claims Hydrogen At $2-3 A KG By 2030 &#8212; I Say Not Bloody Likely"},"content":{"rendered":"<div id=\"attachment_42938\" style=\"width: 1210px\" class=\"wp-caption alignnone\"><img decoding=\"async\" aria-describedby=\"caption-attachment-42938\" class=\"wp-image-42938 size-full\" src=\"https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2020\/09\/hydrogen-car.jpg\" alt=\"Hydrogen vs. emission offset natural gas\" width=\"1200\" height=\"628\" srcset=\"https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2020\/09\/hydrogen-car.jpg 1200w, https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2020\/09\/hydrogen-car-300x157.jpg 300w, https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2020\/09\/hydrogen-car-1024x536.jpg 1024w, https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2020\/09\/hydrogen-car-768x402.jpg 768w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/><p id=\"caption-attachment-42938\" class=\"wp-caption-text\">Hydrogen won&#8217;t be $2-3 per kilogram by 2030. It&#8217;ll be much cheaper!<\/p><\/div>\r\n<p>Hydrogen is the car fuel of the future.\u00a0 Just not our future.\u00a0<\/p>\r\n<p><!--more-->But I&#8217;m sure in some alternate future Jack Nicholson is President and Australians are labouring in underground hydrogen mines to fill the transport blimps of the California Federation.\u00a0<\/p>\r\n<p><div class=\"youtube-wrapper\"><iframe title=\"Jack Nicholson&#039;s Hydrogen Car, 1978: CBC Archives | CBC\" width=\"500\" height=\"375\" src=\"https:\/\/www.youtube.com\/embed\/TjfONpsFvyM?start=26&#038;feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/div><\/p>\r\n<p>The cars in our future will run off boring old electricity stored in batteries rather than the gas that makes up most of the sun.<sup class='endnote'><a href='https:\/\/www.solarquotes.com.au\/blog\/anu-cheap-hydrogen\/#en-42674-1' id='enref-42674-1' onclick='return hhEndnotes_show(42674)'>1<\/a><\/sup>\u00a0 If you want to change my mind about this, just get out there and start producing hydrogen cars.\u00a0 You&#8217;ll only need to make about 2.1 million to match electric vehicles produced last year.\u00a0 Let me know after you&#8217;ve made one every 15 seconds for 12 months so I can blog about it. \u00a0\u00a0<\/p>\r\n<p>Unfortunately, some politicians haven&#8217;t got the message that hydrogen driving isn&#8217;t taking off. They expect Australia to be exporting billions of dollars of hydrogen to Asian car owners in the near future.\u00a0 In reality, we&#8217;ll have better luck powering Asian cars if we lay a transmission line from <a href=\"https:\/\/www.solarquotes.com.au\/blog\/suncable-hvdc\/\">here to Singapore<\/a>.\u00a0<\/p>\r\n<p>This doesn&#8217;t mean Australia won&#8217;t ever export hydrogen.\u00a0 It&#8217;s used in many industrial processes and could be useful for aviation.\u00a0 After all, the only thing lighter than hydrogen is no hydrogen.\u00a0 But there&#8217;s no hope of exporting trillions of litres a day.\u00a0 We&#8217;re not going to end up the Saudi Arabia of hydrogen.\u00a0 We&#8217;ll have to be satisfied with just being the Saudi Arabia of camels.\u00a0<\/p>\r\n<p>For hydrogen exports to take off it will have to beat the competition on price and, given the falling cost of batteries and renewable energy, that looks impossible for road transport.\u00a0 But there is some good news for hydrogen.\u00a0 A working paper by Longden, Jotzo, Prasad, and Andrews of the <a href=\"https:\/\/www.anu.edu.au\/\" target=\"_blank\" rel=\"noopener noreferrer\">Australian National University<\/a> came out last month with the title:\u00a0<\/p>\r\n<blockquote>\r\n<p>&#8220;<a href=\"https:\/\/ccep.crawford.anu.edu.au\/publication\/ccep-working-paper\/17458\/green-hydrogen-production-costs-australia-implications\" target=\"_blank\" rel=\"noopener noreferrer\">Green hydrogen production costs in Australia: implications of renewable energy and electrolyser costs<\/a>&#8220;<\/p>\r\n<\/blockquote>\r\n<p>It says by 2030 hydrogen produced from renewable energy in Australia may cost $2-3 a kilogram.\u00a0 While there&#8217;s nothing drastically wrong with the paper and they clearly explain how they arrived at their conclusions, I do not agree with them.\u00a0 I find the idea of hydrogen costing $2-3 in 10 years time borders on the absurd.\u00a0\u00a0<\/p>\r\n<p>I think it will be much cheaper.\u00a0<\/p>\r\n<div id=\"attachment_42885\" style=\"width: 987px\" class=\"wp-caption aligncenter\"><img decoding=\"async\" aria-describedby=\"caption-attachment-42885\" class=\"wp-image-42885 size-full\" src=\"https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2020\/09\/arnieelectrolyse.jpg\" alt=\"\" width=\"977\" height=\"527\" srcset=\"https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2020\/09\/arnieelectrolyse.jpg 977w, https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2020\/09\/arnieelectrolyse-300x162.jpg 300w, https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2020\/09\/arnieelectrolyse-768x414.jpg 768w\" sizes=\"(max-width: 977px) 100vw, 977px\" \/><p id=\"caption-attachment-42885\" class=\"wp-caption-text\">&#8220;I am from the year 2030. Come with me if you want to electrolyse.&#8221;<\/p><\/div>\r\n<h2>Why So Cheap?\u00a0\u00a0<\/h2>\r\n<p>For two main reasons.\u00a0<\/p>\r\n<ul>\r\n<li>The future cost of renewable energy will likely be lower than their estimates.<\/li>\r\n<li>The average cost of electricity used for hydrogen production will be even less as the electrolysers will be shut down when electricity prices are high and ramped up when they&#8217;re low.\u00a0<\/li>\r\n<\/ul>\r\n<p>To be fair, the authors clearly think the cost of renewable energy could be considerably less than the figures they use.\u00a0 But when you work for a university you&#8217;re expected to base your conclusions on other people&#8217;s work.\u00a0 It is frowned upon if you instead wave your hands in the air and say, &#8220;I think it will be different!&#8221;\u00a0 But I don&#8217;t represent a university, so I&#8217;m free to wave my hands around like Kermit the Frog.<\/p>\r\n<p><img decoding=\"async\" class=\"aligncenter size-full wp-image-42830\" src=\"https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2020\/09\/kermie.gif\" alt=\"\" width=\"500\" height=\"288\" \/><\/p>\r\n<h2>The Cost Of Solar Power Is Falling Fast<\/h2>\r\n<p>The paper uses CSIRO estimates for the <a href=\"https:\/\/en.wikipedia.org\/wiki\/Levelized_cost_of_energy\" target=\"_blank\" rel=\"noopener noreferrer\">levelized cost<\/a> of energy from Australian solar farms built in 2020. These costs range from 4.1 to 6 cents per kilowatt-hour. That&#8217;s a lot cheaper than the cost of new coal power calculated using the same method.\u00a0 And for those who appreciate dark azure fields of blue, big solar has passed rooftop solar power on installed cost per watt.<\/p>\r\n<p>Estimates of the future cost of solar farm electricity are shown in the graph from the paper below.\u00a0 They also looked at wind power, but I&#8217;ll just show the figures for large scale solar energy, since they came in cheaper:<\/p>\r\n<div id=\"attachment_42828\" style=\"width: 852px\" class=\"wp-caption aligncenter\"><img decoding=\"async\" aria-describedby=\"caption-attachment-42828\" class=\"wp-image-42828 size-full\" src=\"https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2020\/09\/pvcostprojections.png\" alt=\"Levelised cost of electricity - solar PV\" width=\"842\" height=\"440\" srcset=\"https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2020\/09\/pvcostprojections.png 842w, https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2020\/09\/pvcostprojections-300x157.png 300w, https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2020\/09\/pvcostprojections-768x401.png 768w\" sizes=\"(max-width: 842px) 100vw, 842px\" \/><p id=\"caption-attachment-42828\" class=\"wp-caption-text\">The Levelised Cost Of Energy (LCOE) figures on the left are given in dollars per megawatt-hour. $25 per megawatt-hour is equal to 2.5 cents per kilowatt-hour.<\/p><\/div>\r\n<p>A major problem with these estimates is they assume an interest rate of 8.5%.\u00a0 This was fine decades ago, but is unrealistically high now.\u00a0 A figure of 3% would be much better and even that may be too much.\u00a0 No one will let me borrow money at that rate, but my friend can despite the fact he looks kind of shifty.\u00a0 Using the old rate keeps things consistent with their past results, but I think they should just bite the bullet&#8230;<\/p>\r\n<div id=\"attachment_42834\" style=\"width: 810px\" class=\"wp-caption aligncenter\"><img decoding=\"async\" aria-describedby=\"caption-attachment-42834\" class=\"wp-image-42834 size-full\" src=\"https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2020\/09\/arnie_eat_bullets.jpg\" alt=\"\" width=\"800\" height=\"530\" srcset=\"https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2020\/09\/arnie_eat_bullets.jpg 800w, https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2020\/09\/arnie_eat_bullets-300x199.jpg 300w, https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2020\/09\/arnie_eat_bullets-768x509.jpg 768w\" sizes=\"(max-width: 800px) 100vw, 800px\" \/><p id=\"caption-attachment-42834\" class=\"wp-caption-text\">&#8220;I EAT bullets for BREAKFAST.&#8221;<br \/>Shut up, Arnie.<\/p><\/div>\r\n<p>&#8230;and use a more realistic interest rate.\u00a0 It will result in significantly lower estimates for renewable energy costs.\u00a0<\/p>\r\n<h2>Real Life Solar Is Cheap<\/h2>\r\n<p>But there&#8217;s no need to rely on estimates of the future cost of big solar.\u00a0 We can look at current costs and see they&#8217;re pretty damn cheap.\u00a0 In the United Arab Emirates, they are building a giant solar farm for only around <a href=\"https:\/\/reneweconomy.com.au\/worlds-biggest-solar-farm-will-also-be-the-cheapest-with-stunning-low-bid-95804\/\" target=\"_blank\" rel=\"noopener noreferrer\">1.9 Australian cents<\/a> per kilowatt-hour produced over 30 years.\u00a0 That&#8217;s less than it costs to squeeze energy out of an Australian coal power station even if the coal is almost free.<sup class='endnote'><a href='https:\/\/www.solarquotes.com.au\/blog\/anu-cheap-hydrogen\/#en-42674-2' id='enref-42674-2' onclick='return hhEndnotes_show(42674)'>2<\/a><\/sup><\/p>\r\n<p>While 1.9 cents is the cheapest I know of, it&#8217;s not a one-off freak event that will never be repeated.\u00a0 These sorts of prices will soon be repeating on us like my girlfriend&#8217;s last attempt at a curry vindaloo.\u00a0 The cheapest solar energy in the US was offered at 2.7 Australian cents per kilowatt-hour but they threw in battery storage as well, so it now comes to around <a href=\"https:\/\/www.pv-magazine.com\/2019\/09\/11\/los-angeles-says-yes-to-the-cheapest-solar-plus-storage-in-the-usa\/\" target=\"_blank\" rel=\"noopener noreferrer\">5.4 Australian cents per kilowatt-hou<\/a>r.\u00a0<\/p>\r\n<p>While it may take Australia a few years to catch up to the rest of the world, we will get there.\u00a0 And by the time we arrive solar power will have fallen even further in price.\u00a0 While there are limits to how cheap it&#8217;s likely to get, I have no problem believing by the time 2030 rolls around, a hydrogen producer will be able to have a solar farm built for under 2 cents per kilowatt-hour generated.<\/p>\r\n<h2>Rooftop Solar Power Also Helps<\/h2>\r\n<p>While big solar is coming down in price, that doesn&#8217;t mean rooftop solar stops making sense.\u00a0 Its output will continue to expand, placing downward pressure on electricity prices during the day.\u00a0 Rooftop solar power has an advantage over solar farms because it still makes sense to install no matter how low the wholesale price of electricity gets &#8212; <a href=\"https:\/\/www.solarquotes.com.au\/blog\/zero-kw-export-solar\/\">even it it&#8217;s zero<\/a>\u00a0.<\/p>\r\n<p>Thanks to big solar, small solar and <a href=\"https:\/\/reneweconomy.com.au\/australias-newest-and-biggest-wind-farm-sets-benchmark-for-lowest-price-94301\/\">wind power<\/a> we can be confident that future daytime electricity prices will be very low.<\/p>\r\n<h2>Production Will Work Around High Electricity Prices<\/h2>\r\n<p>Estimates for energy costs in the paper are for the average amount of money a solar or wind farm needs to be paid per kilowatt-hour to be built.\u00a0 But hydrogen producers won&#8217;t actually pay these prices because they will shut down when electricity is expensive and ramp up when it&#8217;s cheap.\u00a0 A hydrogen production facility could build a solar farm and use most of the generation to make hydrogen, but sell to the grid when its price is high.\u00a0 This could be late in the afternoon, soon after sunrise in winter, on cloudy days, or any other time they can make more money from selling electricity than using it to make hydrogen.\u00a0 So the average cost of electricity used by hydrogen producers will lower than the average cost of electricity.\u00a0\u00a0\u00a0<\/p>\r\n<p>Large industrial users of energy, such as BHP or <a href=\"https:\/\/en.wikipedia.org\/wiki\/Gladstone_LNG\" target=\"_blank\" rel=\"noopener noreferrer\">GLNG<\/a>, pay the wholesale spot price for grid electricity, which is a lot less than we pay on household bills.\u00a0 Large hydrogen producers will be able to get a similar deal and take advantage of periods of low grid electricity prices.\u00a0<\/p>\r\n<h2>Hydrogen Can Offset Emissions From Grid Energy<\/h2>\r\n<p>The drawback of using grid electricity is some may come from fossil fuels, so the hydrogen produced won&#8217;t be entirely green.\u00a0 But this is easily fixed.\u00a0 It&#8217;s not difficult to work out the carbon intensity of grid electricity at the time it&#8217;s used, so all that needs to be done is to purchase carbon credits &#8212; real ones, not fake ones &#8212; to offset the emissions to keep the hydrogen green.\u00a0 All they need to do is get on the phone &#8212; or since it will be the future it&#8217;s more likely to be this internet thing all the cool kids are talking about &#8212; and say:<\/p>\r\n<blockquote>\r\n<p>&#8220;Hey, Vinnie!\u00a0 Ya got some carbon credits for me?&#8221;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&#8220;Yeah, sure.\u00a0 How many ya need?&#8221;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&#8220;About a thousand tonnes.&#8221;\u00a0<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&#8220;I can do that for ya.\u00a0 It&#8217;ll cost ya 70 K.&#8221;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&#8220;Ya <a href=\"https:\/\/www.youtube.com\/watch?v=NewJr7mIrT0\" target=\"_blank\" rel=\"noopener noreferrer nofollow\">breaking my balls<\/a>, Vinnie.\u00a0 Ya <a href=\"https:\/\/www.youtube.com\/watch?v=KwIVc2Zf6-I\" target=\"_blank\" rel=\"noopener noreferrer nofollow\">breaking my balls<\/a> here.\u00a0 You can give me a better deal than that.&#8221;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&#8220;Actually, carbon credits are a commodity and their price is set by a transparent market mechanism, backed up by audits and random inspections of carbon capture projects.\u00a0 So there is no room to move on their price and to keep our fees low we have a fixed, non-negotiable transaction charge.&#8221;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&#8220;I see your point and I appreciate you explaining it to me.\u00a0 You&#8217;re repairing my balls, Vinnie.\u00a0 You&#8217;ve repaired my balls.&#8221;<\/p>\r\n<\/blockquote>\r\n<p>Because hydrogen producers can and will time their grid electricity use for when it is mostly renewable &#8212; or even all renewable &#8212; the total amount of carbon credits they will need to buy won&#8217;t be high.\u00a0\u00a0<\/p>\r\n<h2>Six Different Scenarios<\/h2>\r\n<p>The paper gives the cost of hydrogen production under six scenarios that depend upon:<\/p>\r\n<ul>\r\n<li>\u00a0The capacity factor the hydrogen electrolysers are used at, and&#8230;<\/li>\r\n<li>\u00a0The cost of the electrolysers.\u00a0<\/li>\r\n<\/ul>\r\n<h2>Capacity Factors<\/h2>\r\n<p>The capacity factor is the percentage of time the electrolysers that produce hydrogen are run for.\u00a0 The paper considered three different amounts.\u00a0 These were chosen for stupid reasons, as they are based on capacity factor figures for solar farms, wind farms, and running an electrolyser off the grid but regularly shutting it down for maintenance:<\/p>\r\n<ul>\r\n<li>30% capacity factor based on solar power.<\/li>\r\n<li>45% capacity factor based on wind power.<\/li>\r\n<li>90% capacity factor based on grid power.<\/li>\r\n<\/ul>\r\n<p>In reality, businesses don&#8217;t work that way and the electrolyser capacity factor will be based on whatever makes them the most money.<sup class='endnote'><a href='https:\/\/www.solarquotes.com.au\/blog\/anu-cheap-hydrogen\/#en-42674-3' id='enref-42674-3' onclick='return hhEndnotes_show(42674)'>3<\/a><\/sup>\u00a0 The capacity factor of wind and solar farms would only be an issue for off-grid hydrogen production and that&#8217;s not likely to occur on any large scale.<sup class='endnote'><a href='https:\/\/www.solarquotes.com.au\/blog\/anu-cheap-hydrogen\/#en-42674-4' id='enref-42674-4' onclick='return hhEndnotes_show(42674)'>4<\/a><\/sup><\/p>\r\n<p>While the reasons they used the two lower capacity figures don&#8217;t make a lot of sense, they are still useful.\u00a0 The 30% and 45% capacity factors can represent hydrogen producers that only use the lowest cost electricity available.\u00a0\u00a0<\/p>\r\n<h2>Hydrogen Electrolyser Costs<\/h2>\r\n<p>The paper uses two different costs for hydrogen electrolysers:<\/p>\r\n<ul>\r\n<li>$1,000 per kilowatt of capacity<\/li>\r\n<li>$500 per kilowatt of capacity<\/li>\r\n<\/ul>\r\n<p>I don&#8217;t know enough to have any real opinion about the future cost of electroysers, so I am willing to run with their figures.\u00a0 While the world is not going to produce the vast amounts of hydrogen that would be required for road transport, so much money is going into hydrogen research I have no trouble believing they could get down to $500 a kilowatt.\u00a0\u00a0<\/p>\r\n<h2>The Hydrogen Cost Graph<\/h2>\r\n<p>The cost of hydrogen per kilogram with the three different capacity factors and two different electrolyser costs are shown in a graph below.\u00a0 However, because I believe that in 2030 the cost of electricity used by large hydrogen producers will average around 2 cents per kilowatt-hour or less, I have put a red line through the graph at that point:<\/p>\r\n<p><img decoding=\"async\" class=\"aligncenter wp-image-42861 size-full\" src=\"https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2020\/09\/hydrogencosts.jpg\" alt=\"Production cost of hydrogen\" width=\"1089\" height=\"592\" srcset=\"https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2020\/09\/hydrogencosts.jpg 1089w, https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2020\/09\/hydrogencosts-300x163.jpg 300w, https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2020\/09\/hydrogencosts-1024x557.jpg 1024w, https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2020\/09\/hydrogencosts-768x417.jpg 768w\" sizes=\"(max-width: 1089px) 100vw, 1089px\" \/><\/p>\r\n<p>The paper tentatively says hydrogen prices could approach $2 a kilogram by 2030.\u00a0 If they instead pay an average of around 2 cents per kilowatt-hour for the electricity they use, then the cost of hydrogen per kilogram with an electrolyser capacity factor of 45% would be:<\/p>\r\n<ul>\r\n<li>$1,000 per kilowatt electrolyser cost &#8212; $2 per kilogram<\/li>\r\n<li>$500 per kilowatt electrolyser cost &#8212; $1.40 per kilogram<\/li>\r\n<\/ul>\r\n<p>Since I suspect electrolysers will fall in price and\/or have higher efficiency than the 69% assumed in the paper,<sup class='endnote'><a href='https:\/\/www.solarquotes.com.au\/blog\/anu-cheap-hydrogen\/#en-42674-5' id='enref-42674-5' onclick='return hhEndnotes_show(42674)'>5<\/a><\/sup> I think the lower price is more likely.\u00a0<\/p>\r\n<h2>My Hydrogen Price Prediction<\/h2>\r\n<p>I also think it&#8217;s possible by 2030 that the electricity used by hydrogen producers &#8212; which is different from the average wholesale spot price &#8212; will average significantly under 2 cents per kilowatt-hour, further reducing the cost of hydrogen.\u00a0 However, there is a lot of uncertainty because prediction is difficult, especially when it comes to the future, so I am going to add a lot of wriggle room into my prediction, which is:<\/p>\r\n<blockquote>\r\n<p><strong>For large industrial hydrogen production that gets underway around 2030, the maximum production cost of hydrogen will be around $2 per kilogram in today&#8217;s money.\u00a0 The actual production cost is likely to be under $1.50 and &#8212; if we&#8217;re lucky &#8212; it will be around $1 per kilogram.<\/strong><\/p>\r\n<\/blockquote>\r\n<h2>Cheaper Than Hydrogen From Coal<\/h2>\r\n<p>The paper says the CSIRO cost estimate for hydrogen produced from coal in the future is at least $2.27 a kilogram, so no one should want to do that if my prediction is right.\u00a0 But note the CSIRO figure is pretty low considering a trial coal-to-hydrogen plant in Victoria is producing it for <a href=\"https:\/\/www.solarquotes.com.au\/blog\/coal-to-hydrogen\/\">$165,000 per kilogram<\/a>.<\/p>\r\n<h2>Is $1-2 A Kilogram Hydrogen Cheap Enough?<\/h2>\r\n<p>My prediction for the cost of hydrogen is low, but it won&#8217;t matter if there are even cheaper alternatives available.\u00a0<\/p>\r\n<p>If hydrogen is $2 per kilogram then since it contains 120 megajoules of energy,<sup class='endnote'><a href='https:\/\/www.solarquotes.com.au\/blog\/anu-cheap-hydrogen\/#en-42674-6' id='enref-42674-6' onclick='return hhEndnotes_show(42674)'>6<\/a><\/sup> the cost per gigajoule is $16.68.\u00a0 If the cost of hydrogen is $1 per kilogram then it comes to $8.34 per gigajoule.\u00a0\u00a0<\/p>\r\n<p>The reason why I am giving the cost per gigajoule is that it&#8217;s how natural gas is sold.\u00a0 At the moment it&#8217;s $4.24 per gigajoule in Sydney:<\/p>\r\n<p><img decoding=\"async\" class=\"aligncenter wp-image-42868 size-full\" src=\"https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2020\/09\/sydneygasprice.jpg\" alt=\"Natural gas cost per gigajoule\" width=\"500\" height=\"488\" srcset=\"https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2020\/09\/sydneygasprice.jpg 500w, https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2020\/09\/sydneygasprice-300x293.jpg 300w\" sizes=\"(max-width: 500px) 100vw, 500px\" \/><\/p>\r\n<p>That&#8217;s almost half the cost of hydrogen at $1 per kilogram.\u00a0\u00a0<\/p>\r\n<p>Despite the fact Australia is a major natural gas exporter, current prices overseas are even lower than this:<\/p>\r\n<ul>\r\n<li>\u00a0Europe <a href=\"https:\/\/ycharts.com\/indicators\/europe_natural_gas_price\" target=\"_blank\" rel=\"noopener noreferrer\">$3.90 per gigajoule<\/a><\/li>\r\n<li>\u00a0Singapore <a href=\"https:\/\/www.indexmundi.com\/commodities\/?commodity=natural-gas&amp;currency=sgd\" target=\"_blank\" rel=\"noopener noreferrer\">$2.40 per gigajoule<\/a><\/li>\r\n<\/ul>\r\n<p>If you are wondering why we have higher prices here in Australia, there is a good reason why large companies charge us more for gas.\u00a0 It&#8217;s because they can.<sup class='endnote'><a href='https:\/\/www.solarquotes.com.au\/blog\/anu-cheap-hydrogen\/#en-42674-7' id='enref-42674-7' onclick='return hhEndnotes_show(42674)'>7<\/a><\/sup><\/p>\r\n<h2>High Gas Prices May Never Return<\/h2>\r\n<p>As the world economy recovers from our inability to keep cooties to ourselves, we can expect the price of natural gas to rise.\u00a0 But I think its average price is likely to remain under $10 per gigajoule and we are unlikely to return to the days of high world gas prices we saw earlier this century for two main reasons:<\/p>\r\n<ol>\r\n<li>\u00a0There is now far more international gas export capacity than in the past, increasing supply and competition.<\/li>\r\n<li>The falling cost of renewable energy &#8212; especially solar energy &#8212; is reducing the demand for natural gas.\u00a0 Not just for electricity generation, but also heating and industry. \u00a0\u00a0<\/li>\r\n<\/ol>\r\n<p>By the time 2030 rolls around I suspect natural gas will be cheap compared to the average over the past 10 years, so hydrogen may have a hard time competing with it.<sup class='endnote'><a href='https:\/\/www.solarquotes.com.au\/blog\/anu-cheap-hydrogen\/#en-42674-8' id='enref-42674-8' onclick='return hhEndnotes_show(42674)'>8<\/a><\/sup><\/p>\r\n<h2>Natural Gas Emissions Can Be Offset<\/h2>\r\n<p>A major drawback of burning natural gas is it creates CO2 and we have too much of that in the atmosphere already.\u00a0 Also, natural gas is mostly <a href=\"https:\/\/en.wikipedia.org\/wiki\/Methane\" target=\"_blank\" rel=\"noopener noreferrer\">methane<\/a>, which is a greenhouse gas around 34 times more powerful than CO2 when measured over a century.\u00a0 If just 1% of natural gas leaks into the atmosphere before it&#8217;s burned it is a serious problem.\u00a0<\/p>\r\n<p>A gigajoule of natural gas weighs 18 kilograms.\u00a0 When burned it combines with oxygen to create 50 kilograms of CO2.\u00a0 It&#8217;s possible to remove this CO2 from the atmosphere and sequester it long term to make natural gas as green as renewably produced hydrogen.\u00a0 So for hydrogen to be competitive it would have to be cheaper than the cost of natural gas plus the cost of offsetting its emissions by capturing and sequestering the CO2 released &#8212; plus extra to make up for methane leaks.<\/p>\r\n<h2>The Cost Of Emission-Offset Natural Gas<\/h2>\r\n<p>I think a reasonable estimate of what it may cost to remove CO2 from the atmosphere long-term on a large scale is around $70 a tonne.<sup class='endnote'><a href='https:\/\/www.solarquotes.com.au\/blog\/anu-cheap-hydrogen\/#en-42674-9' id='enref-42674-9' onclick='return hhEndnotes_show(42674)'>9<\/a><\/sup>\u00a0 That&#8217;s 7 cents a kilogram, so removing the CO2 produced by burning one gigajoule of CO2 will cost $3.43.\u00a0 If 1% of natural gas leaks into the atmosphere<sup class='endnote'><a href='https:\/\/www.solarquotes.com.au\/blog\/anu-cheap-hydrogen\/#en-42674-10' id='enref-42674-10' onclick='return hhEndnotes_show(42674)'>10<\/a><\/sup> then compensating for that raises the cost to $3.87.\u00a0<\/p>\r\n<p>If we add the cost of offsetting greenhouse gas emissions to the current cost of natural gas in Sydney it comes to $8.11 per gigajoule which is less than a gigajoule of hydrogen that costs only $1 per kilogram to produce. \u00a0<\/p>\r\n<p>If the cost of producing hydrogen is $2 a kilogram then the price of natural gas can be $12.80 a gigajoule and it will still be cheaper to use it instead and offset its emissions.\u00a0 I think there&#8217;s an excellent chance the price of natural gas will never have an annual average that high ever again.\u00a0<\/p>\r\n<p>Alternatively, if you think my estimate of the cost of offsetting CO2 emissions and methane leakage is way too optimistic and believe it will be twice as high, then natural gas at $8.93 a gigajoule will still be cheaper than hydrogen that costs $2 per kilogram to produce.\u00a0<\/p>\r\n<p><img decoding=\"async\" class=\"aligncenter wp-image-42901 size-full\" src=\"https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2020\/09\/hydrogen_vs_natural_gas.jpg\" alt=\"Hydrogen and natural gas cost per gigajoule\" width=\"1000\" height=\"527\" srcset=\"https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2020\/09\/hydrogen_vs_natural_gas.jpg 1000w, https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2020\/09\/hydrogen_vs_natural_gas-300x158.jpg 300w, https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2020\/09\/hydrogen_vs_natural_gas-768x405.jpg 768w\" sizes=\"(max-width: 1000px) 100vw, 1000px\" \/><\/p>\r\n<h2>Hydrogen Has Some Challenges<\/h2>\r\n<p>To be competitive with emission offset natural gas, hydrogen not only has to be cheaper per gigajoule it also has to be cheaper after other disadvantages are factored in.\u00a0 These include:<\/p>\r\n<ol>\r\n<li>Hydrogen is more difficult and costly to liquefy for transport &#8212; on the other hand, once that&#8217;s done it&#8217;s much lighter.<\/li>\r\n<li>Due to <a href=\"https:\/\/en.wikipedia.org\/wiki\/Hydrogen_embrittlement\" target=\"_blank\" rel=\"noopener noreferrer\">hydrogen embrittlement<\/a> and corrosion, most existing natural gas infrastructure can&#8217;t use hydrogen and only a modest amount can be added to natural gas before it starts causing problems.\u00a0<\/li>\r\n<li>Some safety issues, including hydrogen burning with a <a href=\"https:\/\/youtu.be\/6lK8vi3FGRY?t=96\" target=\"_blank\" rel=\"noopener noreferrer\">mostly colourless flame<\/a> that can make it hard to see.<sup class='endnote'><a href='https:\/\/www.solarquotes.com.au\/blog\/anu-cheap-hydrogen\/#en-42674-11' id='enref-42674-11' onclick='return hhEndnotes_show(42674)'>11<\/a><\/sup><\/li>\r\n<li>If used to reduce iron in steelmaking, one gigajoule of hydrogen will remove 67 kilograms of oxygen from iron ore while one gigajoule of natural gas will remove 72 kilograms of oxygen, giving natural gas a modest advantage.\u00a0<\/li>\r\n<li>Hydrogen that leaks into the atmosphere reduces the breakdown rate of methane and so acts as a mild greenhouse gas.\u00a0 Because hydrogen is the leakiest of all gases this can&#8217;t realistically be stopped and can only be minimized.<\/li>\r\n<\/ol>\r\n<p>Given how cheap electricity is likely to be, I expect homes and businesses will give up using burnable gas altogether, rather than line up to buy hydrogen stoves and Hindenberg hot water systems.\u00a0 When it comes to electricity generation, rather than buy hydrogen tolerant turbines or use hydrogen fuel cells, it should usually make more economic sense to use low-cost batteries combined with cheap renewables.\u00a0<\/p>\r\n<h2>We Should Export Emission-Offset Natural Gas<\/h2>\r\n<p>Even though I think hydrogen may be produced at a much lower cost than the sensible people who wrote the paper suggest, it still may not compete with the cost of natural gas plus offsetting its greenhouse gas emissions.\u00a0 If hydrogen may have trouble competing even if it comes in at my optimistic estimate, then why the hell is our government funding hydrogen research when could start exporting emission offset natural gas right now? \u00a0\u00a0<\/p>\r\n<p>The answer to that is, the government would rather sink vast amounts of money into researching a possible solution than admit that our third largest export kills people.\u00a0 Since our second-largest export &#8212; coal &#8212; also kills people, I think we should really be cutting back on the amount of killing the stuff we sell causes.\u00a0 We put warnings on cigarette packets and charge taxes to cover its health costs, so I don&#8217;t see why fossil fuels should be any different.\u00a0<\/p>\r\n<h2>Australia Can Be A Low-Cost Producer Of &#8220;Green&#8221; Natural Gas<\/h2>\r\n<p>At the moment there appear to be 5 main things that give a country an advantage when it comes to capturing and sequestering carbon emissions.\u00a0 These are:<\/p>\r\n<ol>\r\n<li>Stable and trustworthy government.<\/li>\r\n<li>A large agricultural sector.<\/li>\r\n<li>Transportation networks such as roads, railways, ports, and navigable rivers &#8212; we have the first three.<\/li>\r\n<li>Land<\/li>\r\n<li>Ocean<\/li>\r\n<\/ol>\r\n<p>I know it&#8217;s hard to believe, but Australia actually has number 1.\u00a0 While the place seems like a nuthouse from the inside, when you look at the rest of the world we&#8217;re actually doing quite well.\u00a0 In the southern hemisphere the competition basically comes down to New Zealand and we have more of the other numbers.\u00a0<\/p>\r\n<p>There are methods of capturing and sequestering carbon Australia can start immediately and we can also use renewable energy certificates (LGCs) currently created as part of our Renewable Energy Target scheme to offset emissions.<sup class='endnote'><a href='https:\/\/www.solarquotes.com.au\/blog\/anu-cheap-hydrogen\/#en-42674-12' id='enref-42674-12' onclick='return hhEndnotes_show(42674)'>12<\/a><\/sup>\u00a0 Australia could easily become the Saudi Arabia of &#8212; no, that&#8217;s not right &#8212; Australia could easily become the Australia of emission offset natural gas.\u00a0<\/p>\r\n<p>We have been stupid to spend so much money researching hydrogen which only has the potential to be low carbon energy export in the future, when we could be exporting emission offset natural gas right now.\u00a0 Instead of paying money to research hydrogen production, we should be encouraging other countries to pay us for carbon-neutral natural gas.\u00a0<\/p>\r\n<p>If selling 100% emission offset natural gas is difficult at first, we can start off easy:<\/p>\r\n<blockquote>\r\n<p>&#8220;Hey, Japan!\u00a0 You want 10% of your natural gas imports to be carbon neutral, don&#8217;t you?&#8221;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&#8220;Yo!\u00a0 South Korea!\u00a0 You&#8217;re not going to let the Japanese beat you, are you?\u00a0 You&#8217;ll go for 15% emission offset natural gas, right?&#8221;<\/p>\r\n<\/blockquote>\r\n<p>That&#8217;s how you do business.\u00a0 Exploit lingering hostility and racism.\u00a0<\/p>\r\n<p>I&#8217;m not saying we shouldn&#8217;t produce and export hydrogen if it looks like a moneymaker, but we can let other countries spend the money developing it.\u00a0 It&#8217;s not as if getting a head start is going to help us.\u00a0 It will be produced where large companies believe it will make them the most money.\u00a0<\/p>\r\n<p>Emission-offset natural gas is cheaper than hydrogen right now and, if predictions by people who aren&#8217;t crazy are correct, it may be cheaper for decades to come.\u00a0 The infrastructure required for its transport and use already exists, so there&#8217;s no chicken and egg problem as with hydrogen.\u00a0 We should take advantage of the opportunity that emission-offset natural gas exports offer and shouldn&#8217;t waste time and money on something that may be a pipe dream.\u00a0 Specifically, a <a href=\"https:\/\/en.wikipedia.org\/wiki\/Fluorinated_ethylene_propylene\" target=\"_blank\" rel=\"noopener noreferrer\">fluorinated ethylene propylene<\/a> pipe to prevent hydrogen embrittlement.\u00a0<\/p>\r\n\n\n","protected":false},"excerpt":{"rendered":"<p>Hydrogen is the car fuel of the future.\u00a0 Just not our future.\u00a0<\/p>\n","protected":false},"author":10,"featured_media":42938,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[56],"tags":[],"class_list":["post-42674","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economics","entry"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.2 (Yoast SEO v27.2) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>ANU Claims Hydrogen At $2-3 A KG By 2030 -- I Say Not Bloody Likely<\/title>\n<meta name=\"description\" content=\"ANU researchers claim by 2030 hydrogen produced from renewable energy in Australia may cost $2-3 a kilogram.\u00a0I think it will be much cheaper.\u00a0\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.solarquotes.com.au\/blog\/anu-cheap-hydrogen\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"ANU Claims Hydrogen At $2-3 A KG By 2030 -- I Say Not Bloody Likely\" \/>\n<meta property=\"og:description\" content=\"ANU researchers claim by 2030 hydrogen produced from renewable energy in Australia may cost $2-3 a kilogram.\u00a0I think it will be much cheaper.\u00a0\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.solarquotes.com.au\/blog\/anu-cheap-hydrogen\/\" \/>\n<meta property=\"og:site_name\" content=\"SolarQuotes Blog\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/SolarQuotes\/\" 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