Green hydrogen is attracting much attention for its potential as a zero-emission alternative to fossil fuels to decarbonise heavy industries. However, considerable challenges influencing the levelized cost of hydrogen (LCOH) must be overcome for this nascent industry to reach a viable commercial level and fulfil its potential.
With emission reduction targets and net zero between 2030 and 2050, time is in short supply for successful solutions to be developed and scaled up. However, Worley is taking on the challenge with a series of measures to accelerate development of the necessary solutions to reduce the LCOH.
LCOH is used to determine the total production costs for hydrogen over the complete lifecycle of operations. There is an urgent need for solutions that address both the capital expenditure (Capex) and operating expenditure (Opex), while maintaining the highest safety standards.
To produce green hydrogen at scale, water must be split into its chemical elements using an industrial-sized electrolyser powered by renewable energy. An estimated 30% of LCOH is from Capex, according to experts at Worley. However, 70% of the LCOH is from Opex - due primarily to the cost of the energy required to run the electrolysis plant.
For any solution to be commercially viable, it must be replicable and scalable. Worley is developing a productised hydrogen solution with a lower capital cost to decrease the LCOH.
Initially, the focus is on smaller hydrogen plants with capacities of 100MW-200MW. However, achievable costs to make a project commercially viable are challenging at these capacities. So, lessons from these smaller assets will be used to scale up facilities and develop larger projects.
As the capacity increases, the results from multiple studies executed by Worley suggests the LCOH curve will trend downwards. The expectation is, the higher the plant capacity, the lower the LCOH.
"We determine the lowest possible cost for a functioning, safe hydrogen plant and design it, using standardisation and modularisation to create a minimum viable product," explains Stock.
From the Capex perspective, the costs of technology are a significant component, accounting for 30%-35% of the total installed cost of a hydrogen plant. There are further expenses with the balance of plant (BOP), which includes components from original equipment manufacturers (OEMs) such as power systems and compression.
To lower costs and increase efficiency throughout the supply chain, Worley is building partnerships with technology providers and key OEMs. The company is working with partners to create a 'supply chain led' solution, which will simplify and reduce the cost of the hydrogen production unit.