Cost of Production vs smr
The only input cost of significance to the Hazer process is the cost of the natural gas
feedstock. The iron-ore catalyst costs are inconsequential (with 1kg of catalyst consumed
for every 15kg of methane feedstock, iron-ore costs approximately 4c per kg of hydrogen
produced in the Hazer process). The process heat can be supplied by burning unreacted
natural gas. Given that the Hazer process has an approximate 60% conversion efficiency,
6-7kg of natural gas will be required to produce 1kg of hydrogen and 3kg of graphite.
Given that 1 tonne of natural gas is equivalent to 56GJ of energy, and assuming that the
price of natural gas is $8/GJ (current average industrial price on the East Coast), the cost
of natural gas feedstock is 45c per kg. Therefore, the cost of the Hazer process is
approximately $2.90 per kg of hydrogen produced or $975 per tonne of graphite produced
(ignoring credits for unused by-products). The produced graphite needs to be purified
through an acid-based process to qualify as ‘battery grade’.
Steam methane reforming, by comparison, consumes 4kg of natural gas for every kg of
hydrogen. Using the above assumptions for the price of natural gas, steam methane
reforming can produce hydrogen at a cost of $1.70 per kg (ignoring the potential cost of
CO2 emissions). The cost of hydrogen is highly dependent on its intended end use and
where it is produced relative to its site of end-use. If produced remotely, the storage and
transportation costs of hydrogen can be up to $6 to $7 per kg.

PRODUCTION COSTvs green

In the US market, and to a lesser extent in Europe, comparatively low feedstock cost for natural gas will likely make the SMR method of producing hydrogen more viable, at least in the near term.

According to Platts Analytics, SMR gray hydrogen can be produced at a cost under $1/kg, even assuming a natural gas price at $3.50/MMBtu. Adding carbon capture to make blue hydrogen raises the cost to roughly $1.40/kg. Making the fuel green through a PEM (proton exchange membrane) electrolysis production method, though, more than triples that cost to an estimated $4.42/kg – assuming a renewable power cost of $65/MWh.

All three calculations exclude the cost of transportation, storage and distribution – part of what has made hydrogen fuel so costly in light-duty transportation markets like California – and another factor that could slow the market's development in the US and Europe.

At fuel stations across the state, owners of fuel cell cars models, such as the Toyota Mirai and the Honda Clarity, pay roughly $16 to $17/kg. According to Platts Anlaytics, the 21.6 cents per mile cost of the fuel makes it a tough sell compared to the 2017 new gasoline vehicle average at 14 cents per mile.

Fuel Cell Refuelling Revenue
In the case of fuel cell electric vehicle refuelling stations, current installed stations in
California sell hydrogen for $14-16 per kg. To be on level-pegging with petrol, one kg of
hydrogen needs to be priced at the equivalent of approximately 7-8 litres of petrol. In
different countries, this will mean a different price per kg of hydrogen. To compete with
petrol the approximate price per kg hydrogen in the US is US$6/kg (A$7.80/kg), in Europe
is €10/kg (A$13.80/kg) and in Australia is A$12/kg. This indicates that hydrogen refuelling
stations will offer relatively high margins for the Hazer process.??

OUTLOOK

Globally, production capacity of blue hydrogen is expected to grow significantly over the next decade, dramatically outpacing planned capacity for its more costly alternative, green hydrogen.

By 2028, blue hydrogen production should reach about 3.3 million metric tons per year, up from its current capacity 0.6 million mt/yr, according to data from Platts Analytics' Hydrogen Market Monitor. A majority of that production is expected to come from Europe, followed by the US in a distant second place.

Over the same period, green hydrogen is only expected to grow to about 0.6 million mt/yr globally, up from roughly 0.2 million mt/yr currently. Capacity additions are expected to come mostly in Europe, more closely followed by the US market's buildout.

• ELECTRIC POWER
• 19 Mar 2020 | 20:55 UTC
• New York

Cost, logistics offer 'blue hydrogen' market advantages over 'green' alternative

•