Electrolysers powered by nuclear generation capacity could deliver hydrogen — known as pink hydrogen — more cheaply in the United States than green hydrogen facilities hooked up to renewable energy, according to new analysis from French bank Lazard. How energy efficiencies and tax credits stimulate pink hydrogen production in the United States.
The difference is almost entirely down to the higher capacity factors achievable with nuclear power — which Lazard assumed for this analysis to be derived from an existing nuclear power plant.
Green hydrogen plants were only able to achieve capacity factors of 55%, compared to 95% for pink hydrogen facilities, due to the steady baseload power profile of nuclear power compared to the variable and intermittent power supply from renewables.
This means that a pink hydrogen plant would be able to produce around 63% more hydrogen per installed kWh of electrolyser capacity than a green hydrogen facility, according to Lazard’s modelling. Pink hydrogen would therefore benefit from a significant advantage, enjoying power costs some 27% lower than green Hydrogen.
Cheaper than grey hydrogen
On top of this, the bank estimates that upcoming tax credits – subsidies granted under the US’s Inflation Reduction Act (IRA) – will enable electrolysers powered by atomic power to deliver Hydrogen at an even cheaper price than grey hydrogen (hydrogen which is currently produced from fossil fuel energy generation).
According to analyst Platts, the cheapest hydrogen to produce in the US today is grey Hydrogen made in the US Gulf from unabated natural gas, which it prices at $0.85/kg. Lazard’s regular levelised cost of energy report estimated that hydrogen made with electricity sourced from nuclear power plants could deliver a levelised cost of hydrogen (LCOH) for as little as $0.48/kg, with subsidies granted under the US’s Inflation Reduction Act (IRA).
Both pink and green hydrogen producers will be eligible for the maximum Production Tax Credits of $3/kg, a potentially game-changing subsidy that is expected to drive investment in US electrolysis, and has already prompted the EU to scramble to deliver a similar subsidy scheme.
