Most analysis of the role of hydrogen in the global economy uses numbers that are not immediately translatable into conventional measurements. The purpose of this article is to offer some simple rules of thumb that help place hydrogen alongside other parts of the energy system.

1, A kilogramme of hydrogen - the unit most often used – has an energy value of about 33.3 kWh.[1] So a tonne of hydrogen delivers about 33 MWh and a million tonnes about 33 terawatt hours (TWh). To provide a sense of scale, the UK uses about 300 TWh of electricity a year.

2, Estimates vary, but about 70 million tonnes of pure hydrogen is made today, mostly for the fertiliser and oil refinery industries. This has an energy value of about 2,300 TWh, or roughly the same amount as the EU’s electricity consumption (excluding the UK, of course).

3, Many estimates of the eventual demand for hydrogen centre around a figure of about 500 million tonnes.[2] This will have an energy value of about 16,500 TWh, or about 40% of the world’s current consumption of natural gas.

4, How much electrical energy does it take to make a kilogramme of hydrogen in an electrolyser? A survey of the major manufacturers suggests a figure of about 50 kWh at present for both Alkaline and PEM electrolysers. Put an energy value of 50 kWh of electricity in and get hydrogen out with an energy value of 33.3 kWh, or 67% efficiency. Alkaline and PEM electrolysers offer performance of this level but Solid Oxide electrolysers already offer 80% conversion of electricity to hydrogen. But they need substantial sources of external heat.

5, Will the efficiency of electrolysers rise? Yes. The assumption in the industry is that Alkaline and PEM electrolysers will rise to an efficiency of about 75% (44 kWh in, 33.3 kWh out) within five years.

6, Many observers say that green hydrogen made from the electrolysis of water will be fully cost competitive with fossil hydrogen when it costs less than $1.50 per kilogramme.[3] This is equivalent to 4.5 US cents per kWh of energy value, or $45 per MWh. As at today’s date (June 11th 2021), unrefined crude oil costs about the same amount per kWh.

7, What will it take to get H2 to $1.50 per kilogramme. Low electricity prices are, of course, utterly critical, followed by falling electrolyser prices. Hydrogen is little more than transformed electricity. NEL, the world’s largest electrolyser manufacturer, says that it believes $1.50 is achievable in 2025, based on $20 per megawatt hour electricity. It is coy about the prices it expects for its own products, but I guess that it projects about $500 per kilowatt of capacity by mid-decade.[4]

8, How much renewable electricity will need to be generated to satisfy the demand for hydrogen? At the current efficiency level of about 67%, the world will need about 50 terawatt hours for each million tonnes of green hydrogen.

9, At the prospective efficiency level of about 75%, this number falls to about 44 TWh. A world that requires 500 million tonnes of hydrogen will therefore need to produce 22,000 TWh of green electricity a year just for this purpose. Today’s global production from all wind and solar farms is a little more than 10% of this figure. To meet the need for hydrogen we need a sharp acceleration in renewable installations to several terawatts a year.

10, 22,000 TWh is roughly equivalent to 15% of total world primary energy demand.

11, How large a wind farm is needed to make a million tonnes of hydrogen? If we assume a capacity factor of 50% for a well-sited North Sea wind farm, each gigawatt of capacity will provide about 4,400 GWh a year, or 4.4 TWh. At the future efficiency level of about 75%, this will produce about 100,000 tonnes of hydrogen. Therefore most of the UK’s current North Sea wind output from 13 GW of wind would be needed to make one million tonnes of H2.

12, The amount of electrolysis capacity required to make 500 million tonnes of hydrogen a year depends on how many hours a year that the electrolysers work. If we assume the average is 5,000 hours a year, or about 60% of the time, then the world will need around 4,500 gigawatts of electrolysis capacity - about five hundred times what is currently in place - at the prospective 75% efficiency level. This is an important conclusion because it points to the necessity of creating a massive new industry. My figures suggest the investment in electrolysers may exceed the cost of building the renewables necessary to provide the electricity for making hydrogen. Those of us who look at the stock market valuations of the existing electrolyser manufacturers and recoil in disbelief may not being sufficiently imaginative.

[1] Lower Heating Value (LHV)

[2] E.g. Energy Transitions Commission (680 million tonnes) and the International Energy Agency (320 million tonnes), Chris Goodall work for CLSA in Hong Kong (562 million tonnes)

[3] Whether this is true or not strongly depends on the region of the world in which the comparison is being made.

[4] https://nelhydrogen.com/wp-content/uploads/2021/05/Nel-ASA-Q1-2021-presentation.pdf See page 15.