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EXECUTIVE SUMMARY As more countries pursue deep decarbonisation strategies, hydrogen will have a critical role to play. This will be particularly so where direct electrification is challenging and in harder-to- abate sectors, such as steel, chemicals, long-haul transport, shipping and aviation. In this context, hydrogen needs to be low carbon from the outset and ultimately green (produced by electrolysis of water using renewable electricity). In addition to regulations and market design, the cost of production is a major barrier to the uptake of green hydrogen. Costs are falling – largely due to falling renewable power costs – but green hydrogen is still 2-3 times more expensive than blue hydrogen (produced from fossil fuels with carbon capture and storage) and further cost reductions are needed.1 The largest single cost component for on-site production of green hydrogen is the cost of the renewable electricity needed to power the electrolyser unit. This renders production of green hydrogen more expensive than blue hydrogen, regardless of the cost of the electrolyser. A low cost of electricity is therefore a necessary condition for producing competitive green hydrogen. This creates an opportunity to produce hydrogen at locations around the world that have optimal renewable resources, in order to achieve competitiveness.2 Low electricity cost is not enough by itself for competitive green hydrogen production, however, and reductions in the cost of electrolysis facilities are also needed. This is the second largest cost component of green hydrogen production and is the focus of this report, which identifies key strategies to reduce investment costs for electrolysis plants from 40% in the short term to 80% in the long term. These strategies range from the fundamental design of the electrolyser stack to broader system-wide elements, including: Electrolyser design and construction: Increased module size and innovation with increased stack manufacturing have significant impacts on cost. Increasing the plant from 1 MW (typical today) to 20 MW could reduce costs by over a third. Cost, however, is not the only factor influencing plant size, as each technology has its own stack design, which also varies between manufacturers. The optimal system design also depends on the application that drives system performance in aspects such as efficiency and flexibility. Economies of scale: Increasing stack production to automated production in GW- scale manufacturing facilities can achieve a step-change cost reduction. At lower manufacture rates, the stack is about 45% of the total cost, yet at higher production rates, it can go down to 30%. For Polymer Electrolyte Membrane (PEM) electrolysers, the tipping point seems to be around 1 000 units (of 1 MW) per year, where this scale-up allows an almost 50% cost reduction in stack manufacturing. The cost of the surrounding plant is as important as the electrolyser stack and savings can be achieved through standardisation of system components and plant design. 8 1 2 In the context of decarbonisation, hydrogen produced from fossil fuels without capturing most of the CO2 emissions does not fulfil the criteria of renewable energy, although it represents the vast majority of hydrogen production today. The trend over the last decade of falling renewable electricity prices is expected to continue; 82%, 47% and 39% for solar photovol- taic (PV), offshore and onshore wind respectively (IRENA, 2020a).PDF Image | GREEN HYDROGEN SCALING UP ELECTROLYSERS
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