Nov 2, 2022
Hydrogen production: concentrate or decentralize?
Some thoughts
A hydrogen economy resembles our current fossil economy in one aspect.
Fossil fuels require an infrastructure for their physical transport as a gas or a liquid.
Hydrogen production cost decreases with scale. It makes more sense to centralize its production. However, greater hydrogen concentration leads to higher storage and transportation costs.
On the opposite pole lies decentralization, with a vast and widespread network of small hydrogen production plants. It would entail a higher hydrogen production cost with lower storage and transportation costs.
Either pole has its problems. In one extreme, there would be a single hydrogen production plant worldwide. On the other, small micro plants would produce hydrogen at the point of consumption.
The one single-world H2 plant scenario seems doubtful. With diminishing cost returns, it would require too much water, storage, and transport. It would create several security risks — fire risks with much hydrogen packed together and a single point of failure for the world H2 economy.
Imagine a bemouth hydrogen plant at the Amazon river (20% of the world’s freshwater) wreaking havoc on the ecosystem. Besides, the war in Ukraine reduces the appetite for centralized energy systems.
A widespread decentralization increases the resilience of hydrogen production while lowering transportation costs. However, resource availability for hydrogen production varies around the globe. Some places are too dry, while white hydrogen depends on the existence of deposits.
It would also risk higher prices and lower capacity use. If each point of consumption has its small H2 plant, what happens when production meets that single demand?
If a homeowner has a small H2 plant to make hydrogen for their car: What happens after filling the car’s tank with hydrogen? Why should the H2 plant be on until the vehicle needs hydrogen again? The H2 plant would stay off for long periods.
On the other hand, if the homeowner’s H2 plant could just meet the average car demand. The H2 plant makes a day more or less the same amount of hydrogen as the car spends daily; when the tank nears empty, the H2 deposit near full.
But what happens when the car drives more than the average? The tank gets empty when hydrogen production at the H2 plant lags. (This thought experience is largely conceptual: hydrogen car sales seem increasingly slimmer, despite some companies still investing)
So both poles have their pros and cons. The hydrogen economy will converge in some balance between these extremes. So what factors play out in reaching balance?
Some factors:
- Hydrogen production cost;
- Hydrogen transport and storage cost;
- Synergies with renewable energy generation;
- Synergies with other industries.
Green hydrogen cost production leads to some concentration of H2 plants in locations with better conditions. The production cost of green hydrogen varies. Places that combine abundant water and renewable energy sources deliver lower prices to produce green hydrogen.
The exception, white hydrogen, does not rely on water as much but still concentrates at specific locations.
So production also favors a certain degree of concentration when comparing better and less suited regions.
But what about within better-suited regions for H2 production? With equal low-cost access to water and renewable energy, how much size matters in the final price? Smaller H2 plants may benefit from mass production compared with one-of-a-kind larger plants.
The literature proposes several options for hydrogen transport. A study compared 32 alternatives and concluded that gasoducts present a lower transport cost for high volume over longer distances (over 1000 Km and 3000 Km).
But gasoducts require high investments to build. They serve when high production meets distant high consumption. On the other hand, gasoducts reduce the need for storage.
In places with low consumption and population density, producing hydrogen close to its consumption costs less. Also, higher costs in hydrogen pipeline construction will make decentralization more economically viable.
Sunny, windy coastlines with low population density may present more decentralized hydrogen production. Or inland areas all year rivers with ample micro hydropower resources to feed and power hydrogen production.
Hydrogen generation can serve as an alternative to solar or wind curtailment. It makes more sense to lose some energy to power electrolysis and store it than lose it all with curtailment.
Finally, there is the potential for synergies with other industries. Particularly when considering using saltwater or brackish water as feedstock for hydrogen generation. The synergies can lead to saltwater desalinization for drinking or wastewater management and brine mining.
A final request: I write out loud to learn and understand. This article is such a case. Please share your opinion and share research, study cases, or any other information you deem relevant.
This article is part of a series on hydrogen and energy that you can read here.
