The operating cost of electrolysers will fall more steeply under a net zero greenhouse gas (GHG) emissions policy in Australia by 2030 than under current government policies, according to a report from Australia's main scientific research agency.
The GenCost 2021-22 draft report by government agency the Commonwealth Scientific and Industrial Research Organisation (CSIRO) also shows that solar photovoltaic (PV) and wind remain the cheapest power generation sources.
The report focuses on two forms of electrolysers — alkaline and proton-exchange membrane (PEM). PEM electrolysers have a wider operating range, which gives them a small advantage in matching their production to low-cost variable renewable energy generation, the reports states.
Under a net zero GHG emissions by 2050 scenario, the captial cost of an alkaline electrolyser would fall to A$485/kilowatt (kW) ($345/kW) by 2030 from A$1,650/kW in 2021, while that of PEM electrolysers would fall to A$923/kW by 2030 from A$2,770/kW this year. By contrast, the capital costs of alkaline electrolysers would be A$678/kW by the end of the decade and PEM would be A$1,150/kW under current policies.
As the cost of both alkaline and PEM technologies fall, capital costs become less significant in the total cost of hydrogen production, it said. This development could make it increasingly attractive to sacrifice electrolyser capacity utilisation for lower energy costs by reducing the need to deploy storage in order to keep up a minimum supply of generation during the day, the report said.
The report's current cost modelling is based on a 10MW electrolyser. "This scale is far smaller than we would expect to see deployed over the long term where multi-gigawatt renewable zones are being planned to supply hydrogen production hubs", the report said.
The report assumes full-scale electrolysers will be 100MW and after that size they are deployed in 100MW modular units. It adjusts the scale over time for its forecasts.
The Australian government sees cost a one of the main barriers to the development of the country's hydrogen strategy.
Australia plans to achieve its 2050 net zero target by abating 10-20pc of emissions using domestic and international carbon offsets, with a further 15pc reduction through future technological breakthroughs and 40pc from existing plans that include carbon capture and storage (CCS).
The report also states that wind and solar PV, together with storage and transmission costs, remain the cheapest form of electricity generation in Australia. The GenCost 2021-22 report estimates that the levelled cost of electricity using solar PV is A$44-65/MWh, while wind power costs range from A$45-57/MWh, depending on size and location. By contrast, black coal is around A$150/MWh, brown coal is more than A$200/MWh and gas is around A$100/MWh.
"We found that the additional costs to support a combination of solar PV and wind generation in 2030 is estimated at between A$10-15/MWh depending on the variable renewable energy share and region of the national electricity market (NEM)," the report said.
The fuel choice for electricity generation for Australia's burgeoning hydrogen sector has yet to be determined as there are many project proponents looking to fossil fuels with CCS, as well as renewables. The GenCost 2021-22 report estimates that black coal with CCS would cost around A$200/MWh and gas with CCS at around A$150/MWh.
The conclusion that solar PV and wind are the cheapest form of electricity generation in Australia follows a report earlier this month by the Australian Energy Market Operator, where it forecasts that the NEM will operate without black coal power plants by 2043 in its preferred step-change scenario to achieve net zero GHG emissions by 2050. This implies that hydrogen electrolysers are more likely to be powered by renewable energy.
