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Charley Rattan's picture
World Hydrogen Leader Charley Rattan Associates

UK based offshore wind & hydrogen corporate advisor and trainer; Faculty member World Hydrogen Leaders. Delivering global hydrogen and offshore wind corporate investment advice, business...

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  • Jul 11, 2020

Goldman Sachs on the hydrogen value chain proposition.

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Roger Arnold's picture
Roger Arnold on Jul 11, 2020

Thanks for posting that, Charley. The Goldman Sachs report is pretty good, and quite readable. It seems reasonably objective and focused on bottom-line issues. Some RE advocates will take exception to its analysis having blue hydrogen as substantially cheaper than green for the next few decades, and its conclusion that renewables will have a hard time pushing beyond 90%.

There are criticisms that be raised against the report, and things I'd like to have seen better addressed. But I don't think the shortcomings lean heavily in one direction or the other as far as the blue vs. green hydrogen debate is concerned.

  • On the one hand, it considers only current PEM and alkaline electrolysis technologies. It projects them forward, with no effort to factor in likely cost reductions from increased production levels as green hydrogen is deployed. It posits no major advances in cell efficiencies.
  • On the other hand, it treats blue hydrogen the same way. It projects current mainstream technology forward, and ignoring more efficient processes that have been demonstrated at pilot scale.
  • In its cost projections for electrolytic hydrogen, it speaks of the levelized cost of electricity (LCOE) independent of any considerations of availability and duty cycle. The LCOE it uses appears to be that of as-available electricity. I couldn't see that any allowance was made for the impact of intermittent operation on the capital cost of equipment. I can't be sure, however. The LCOE it shows as necessary to bring the cost of electrolytic hydrogen below that of blue hydrogen is lower than I'd have expected, if the authors were simply assuming 100% duty cycle for the electrolyzers.
  • I'd like to have seen some discussion of battery storage technology and the likely use of batteries to enable better utilization of electrolysis in an intermittent power environment. I believe we're getting close to the point that storage for 24 hours of steady supply will add only about $10 per MWh to the LCOE for baseload power.
Bob Meinetz's picture
Bob Meinetz on Jul 12, 2020

"I believe we're getting close to the point that storage for 24 hours of steady supply will add only about $10 per MWh to the LCOE for baseload power."

Two years ago the average capacity-weighted capital cost of baseload, grid-battery storage was $1.2 million per MWh. To provide 24 hours of the 850 MW of dispatchable power a gas plant might provide would require a capex of $24.5 billion. The storage would need to be recycled and replaced every 10-12 years.

Or, we could write off the tens of $billions wasted on solar panels, wind turbines, transmission, batteries, and land to put them on, and spend $25 billion on an "expensive" 2.2 GW nuclear plant (might need to be replaced every century, though).

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