Splitting the Difference | Reducing the Cost of Electrolytic Hydrogen
By its very nature, hydrogen production is an energy intensive process, but it is a process that will reduce economy-wide emissions by replacing fossil fuels in industry, heat, transport and power. However, its production is subject to the same taxes and levies as other energy industries, including carbon-intensive industries, which are designed to reduce emissions. This is counterproductive, and adds unnecessary costs to the production of green or electrolytic hydrogen.
These levies need to be removed. Making these changes will lower electricity and system costs overall and enable lower cost green hydrogen to be produced. However, the hydrogen requires transportation to get to where it is needed. It is critical that the network infrastructure to carry this hydrogen around the country is designed and delivered as a matter of urgency to drive further investment in this market.
Taken together, the recommendations in this report could reduce the cost of electrolytic hydrogen from £241/MWh achieved in the HAR1 process to less than £100/MWh, making it competitive with natural gas, and thus the fuel of choice for the future
