Cost Competitiveness of Electrolytic Hydrogen

Hydrogen is often considered an energy carrier of the future in part because of the costs to implement a hydrogen-based system. However, using 7,182 industrial and commercial US retail electric utility rates, this study dynamically simulates electrolyzer operations under different utility rate structures and shows that electrolysis units can already provide cost-competitive fuel in 20 states operating under 81 retail electricity rates. Our analysis shows that current hydrogen production costs range from US$2.6 to US$12.3 kg(-1) and can be significantly reduced through flexible operation if dynamic tariffs are used. Hydrogen production costs for the 81 utility rates in 20 states are already less than US$4.0 kg(-1) and competitive with the fuel cost of gasoline vehicles. Thus, under the right conditions, hydrogen fuel is already cost competitive in the US energy sector and has several interesting possible roles to play in future energy and transportation systems.