Can hydrogen be cheaper than oil?

January 26, 2021 // By Nick Flaherty
Can hydrogen be cheaper than oil?
Nel in Norway has ambitious plans to make hydrogen cheaper than oil

Norwegian hydrogen technology developer Nel has detailed plans to produce hydrogen from renewable sources at $1.50/kg (€1.24/kg) to compete with fossil fuels such as petrol and diesel.

The move would be a dramatic shift in producig power and drive fuel cell technology. Companies such as Bosch are committed to the fuel cell approach for electric vehicles, while hydrogen is proposed as a more effective carbon-free fuel for electric aircraft. Hydrogen fuel cell technology will be a key capacity for electric vehicles in the future says Malcolm Penn of analyst Future Horizons as well as electric aircraft.

“The next step after battery electric vehicles is hydrogen and its good news for semicodnuctors as there more electronics required than in an EV,” said Penn. “It is gaining traction but the big issue is generating the hydrogen. There’s a lot of work going on the EU on that."

The cost reduction would be possible from scaling up of production of the electrolysers that make hydrogen from water to multi-GW scale, says CEO Jon André Løkke.

This is backed up by a major project to convert a coal power station in Hamburg, Germany, into a massive 100MW hydrogen electrolyser. 

"Green renewable hydrogen is set to outcompete fossil alternatives, and Nel is placed in the centre of this transition,” said Løkke at Nel. “We’re launching our target which should enable our customers in certain markets to produce green renewable hydrogen from a large-scale Nel facility at $1.5/kg from low cost renewable power, already within 2025. Achieving this would allow green hydrogen to start to reach fossil parity, representing one of the most significant achievement for zero-emission solutions and a carbon neutral planet.”

To reach the $1.50/kg target, Nel is expanding its electrolysis production with a fully automated manufacturing facility at Herøya, Norway. Test production of the first 500 MW production line will start in the next few months with start of commercial ramp-up in the third quarter 2021. This will be able to produce systems that generate 2GW of hydrogen a year.

Next: Green hydrogen production 

An Airbus concept design of a hydrogen-powered aircraft

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