December 06, 2024 • 5 mins read
Using digital solutions to drive down green hydrogen costs
Green hydrogen is a key enabler in the global energy transition. While high production costs have been a major obstacle to scaling up production, advancements are on the horizon. New digital solutions are emerging as tools to help lower costs and optimize operations for green hydrogen facilities.
Examining the high cost of green hydrogen
Currently, green hydrogen is made from renewable energy sources through electrolysis. This process is estimated to be four times more expensive to produce than grey hydrogen, which is derived from fossil fuels, and twice as high as blue hydrogen, which uses carbon capture technology to reduce emissions. However, experts suggest producing green hydrogen will become cheaper in time.
According to projections by the International Energy Agency (IEA), the levelized cost of hydrogen (LCOH) could fall from US$5 per kg to US$1.5 per kg by 2030. Some regions may even reach cost parity by 2027, though subsidies alone will not do the trick. Achieving that goal will require substantial reductions in production costs without decreasing output.
“To compete with fossil fuels, production costs must decrease,” says Fritz Hagen, Engineering Director, Green Hydrogen Center of Excellence. “However, cutting costs can also reduce production levels, which could affect the overall financial stability of hydrogen facilities.
“We need solutions to maintain or increase production while simultaneously reducing costs.”
Designing a digital solution to drive down costs
For green hydrogen production to compete on the market, producers need to scale up more advanced technologies. The traditional systems to manage production and operational costs are no longer sufficient. Digital solutions, such as real-time data analytics, are now vital for optimizing efficiency and reducing LCOH.
Developed in partnership with IBM and ABB, our Asset Optimization Center (AOC) advances the use of digital technology to optimize green hydrogen production. It integrates real-time data from operational control systems, weather forecasts, and energy market information, providing actionable insights to reduce production costs.
The platform addresses several challenges for green hydrogen production, including:
- Intermittent renewable power supply: Forecasting energy availability, the AOC helps adjust operational settings in real time to optimize energy use and reduce costs.
- Electrolyzer degradation: Predictive analytics help identify decreasing performance in electrolysis systems, extending their life and minimizing downtime. The platform helps ensure that production remains efficient and cost effective by predicting maintenance needs and scheduling repairs before issues escalate.
- Sustainability certification: An integrated certification solution tracks the amount of renewable energy used to comply with sustainability standards and enable carbon trading.
Because renewable energy prices and supply conditions vary throughout the day, the AOC incorporates a real time energy management and modeling solution that helps ensure hydrogen facilities operate at the lowest possible energy cost.
“The energy transition requires flexibility, and digital solutions must evolve with the industry’s innovations,” says Hagen. “The AOC is designed to capture this flexibility, allowing facilities to optimize operations and improve efficiency as the sector evolves.
By integrating data from various sources, we can optimize production and reduce LCOH, making green hydrogen more competitive with grey hydrogen.
Fritz Hagen
Engineering Director, Green Hydrogen Center of Excellence
Preparing for the future of green hydrogen production
The green hydrogen industry is still in its infancy, with the first industrial scale assets just coming online. With limited reference data available on these systems’ operational performance, producers should compare notes where possible.
“Data sharing across the green hydrogen sector is essential,” says Hagen. “The ability to aggregate and share operational data across projects can drive insights that lower LCOH for future projects and help stakeholders make informed decisions.”
While the learning continues, digital solutions will be increasingly important to achieve the green hydrogen industry’s cost reduction goals. Contemporary tools like the AOC will help increase efficiency and ensure that hydrogen facilities can meet the growing demand for low-carbon energy.
“The energy transition is rapidly evolving, and the key to success lies in adapting to these changes with innovative digital solutions that drive efficiency and reduce costs,” says Hagen.
“With platforms like the AOC, we can ensure that green hydrogen reaches its full potential, contributing to a more sustainable energy future.”
