SPECIAL REPORT | NUCLEAR HYDROGEN
Price shift boosts prospects for nuclear hydrogen
Almost all clean energy transition scenarios give hydrogen a key role in our future. With geopolitical impacts on gas prices accelerating the economic case for hydrogen produced from nuclear power, the sheer scale of the opportunity for nuclear is breathtaking
TODAY, SOME 90 MILLION TONNES of hydrogen are generated worldwide annually but the drive to achieve net zero is expected to see demand for the gas soar over the coming decades. According to a recent analysis by the International Energy Agency (IEA) demand for hydrogen could reach 500 million tonnes or more by 2050, pushed by the need for alternatives to fossil fuels. The vast majority of hydrogen produced today is derived
Contributor Sarah Curtis
from steam reformation of natural gas, making most of the hydrogen available in today’s market essentially a fossil fuel. However, the low-carbon alternatives – so-called green hydrogen produced from electrolysis powered with renewables or pink hydrogen derived from nuclear powered electrolysis – is prohibitively expensive. At least it was. With the geopolitical impact of the
conflict in Ukraine pushing global gas prices sky high and redoubling the focus on both low-carbon alternatives and security of energy supply, the opportunity for nuclear- powered hydrogen is bigger than ever. Even before the Ukraine debacle and events such as the
sabotage of the Nord Stream gas pipelines, a 2021 report from the IAEA had concluded that if “natural gas prices rise above US$20 per million British Thermal Units (BTUs), the optimal method of hydrogen production is electrolysis powered by a mix of nuclear and renewables.” More recently though, an analysis from the OECD’s
Nuclear Energy Agency (NEA) and titled ‘The Role of Nuclear Power in the Hydrogen Economy: Cost and Competitiveness’ concludes that, given current gas price volatility and overarching policy ambitions, with the right initiatives
in place the prospects for nuclear power in a hydrogen economy represent a significant opportunity.
The nuclear cost opportunity The NEA’s report highlights the changed cost differential as a key factor in the emergence of competitive nuclear- generated hydrogen. Certainly steam reformation of methane had been cheaper prior to the conflict, but now that position has not only reversed but is likely to remain so for the foreseeable future. According to the NEA, the competitive gap between steam
reformation of fossil fuels and water electrolysis is expected to close by 2025 as the water-splitting technology continues to improve and reaches maturity. However, given the current market dynamics this economic gap may be bridged far sooner than previously anticipated. Even though the NEA argues that “electrolytic hydrogen will be
production at large scale below US$2.5 per kg H2
hard to achieve in most places in the world by 2035” they point to the extreme volatility in gas prices. Assuming a gas price of US$100 per MWh, actually below the prices in certain regions of the world in Q2 2022, they conclude that the cost of hydrogen production from steam methane reformation is expected to significantly increase. The NEA analysis concludes that “hydrogen production costs from steam methane reforming with carbon capture, utilisation and storage (CCUS) is estimated at US$5.87 per kg H2
, or 65%
more expensive than the least competitive option”. Although is this analysis the least cost option is identified as offshore wind, they note that the hydrogen market is likely to
Above: Huge industrial centres like the Grangemouth refi nery in Scotland could be an attractive market for locally-produced nuclear hydrogen
16 | December 2022 |
www.neimagazine.com
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