Hydrogen Economics: Bridging the Cost Gap

Cost of hydrogen production is influenced by two main factors: the price of electrolyzers and the cost of electricity. While electrolyzer prices have decreased owing to government subsidies and design improvements, electricity costs remain variable regionally. In areas rich in wind and solar resources, like the US heartland, hydrogen can be produced for about $3 to $3.50 per kilogram, significantly higher than the $1.50 cost from natural gas, highlighting a $2 gap. The pressing question is who will cover this difference. Historically, hydrogen has struggled to find its place in the energy market, and despite emerging applications, the industry has yet to demonstrate its value effectively to justify its existence.