In a thoughtful and somehow prophetic analysis33 of photovoltaic – assisted water electrolysis dating back to 1982, Carpetis concluded that:
There are three interconnected subsystems (solar array, electrolysis unit and hydrogen storage unit) which should be optimized for minimum hydrogen costs, according to the local conditions and to the hydrogen utilization schedule…
The cost optimization and the break-even conditions will depend not only on the solar array and electrolyzer performance improvement, but also on the location of the production and the hydrogen utilization schedule.
Observing that, at that time, the electrolysis unit costs contributed ‘‘a relatively low part’’ of the total costs, he continued that, in the near future, the cost reduction for hydrogen produced by solar electrolysis had to be expected as a consequence of the PV array cost reduction (Figure 2.17).
However, in the long term, further cost reduction could be expected owing to the use of more efficient solar cells and electrolytic units. With lower production costs, low cost storage methods for solar hydrogen will become more important.
The forecast of Carpetis turned out to be correct. Following a true collapse in the cost of solar electricity, a rapid and concomitant decrease
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Figure 2.17 Consecutive steps in the cost reduction trend of hydrogen produced by solar water electrolysis.
(Created according to Ref. 28.)
Figure 2.18 How hydrogen cost varies with electricity price. The linear relationship between electricity price in $kWh-1 and hydrogen cost in $kg-1. (Reproduced from Ref. 34, with kind permission.)
in cost and technology improvement are currently affecting the electrolyzer. Significant improvements have been made, making it possible to reach improved cell efficiencies and higher current densities at far lower cost compared with previous technologies.
The graph in Figure 2.18 displays three scenarios of how the calculated price of hydrogen varies according to electricity price,34 as well as with the cost of electricity (including capital, operating and maintenance costs) for electricity prices up to $0.15kWh-1. The solid line displays how the cost of hydrogen changes with electricity prices using
technology and prices available in 2004. The longer-dashed line shows the effect a 15% reduction in capital costs would have on hydrogen cost (as a consequence of mass production, or a simplification of the auxiliaries); whereas the shorter-dashed line shows the effect of a 15% capital cost reduction plus a 10% increased system efficiency (from improvements in electrolysis). Decreasing the capital costs changes the intercept of the line, while increasing the efficiency changes the slope of the line.
The same plots, in Figure 2.18, clearly show that to be competitive with gasoline prices, electrolyzers need not only to obtain inexpensive electricity, but also to reduce capital costs and improve the efficiency of the systems. Indeed, to produce $2.00 kg-1 hydrogen, electricity prices will need to be available for 0.007, 0.011 and 0.012 $kWh-1 with, respectively, 2004 technologies, a 15% capital cost reduction, and a 15% capital cost reduction plus a 10% improvement in efficiency.