Electrolysers powered by nuclear generation capacity could deliver hydrogen more cheaply in the United States than green H2 facilities hooked up to renewable energy, according to new analysis from French bank Lazard.

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The bank’s regular levelised cost of energy report estimated that hydrogen made with electricity sourced from nuclear power plants — known as pink hydrogen — could deliver a levelised cost of hydrogen (LCOH) for as little as $0.48/kg using a 100MW alkaline electrolyser, with subsidies granted under the US’s Inflation Reduction Act (IRA).

By comparison, subsidised green hydrogen could deliver a best-case LCOH of $0.83/kg with an alkaline electrolyser, based on average levelised cost of energy of an onshore wind plant, oversized for the purpose of electrolyser operation.

According to analyst Platts, the cheapest hydrogen to produce in the US today is grey H2 made in the US Gulf from unabated natural gas, which it prices at $0.85/kg.

Significantly, the Lazard document showed that green hydrogen made using proton exchange membrane (PEM) electrolysers came in with a higher cost than alkaline in both cases — despite their marketed prowess at adapting to variable power flows.

Without subsidies, the LCOH for pink hydrogen would be in the range of $2.75-5.29/kg, depending on the size of the hydrogen plant (within a range of 20-100MW) and the electrolyser technology used, and $3.47-7.37/kg for green hydrogen.

The difference in LCOH 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 H2 facility, according to Lazard’s modelling.

But a question mark remains over the impact electricity costs have on the equation. Lazard’s analysis suggests similar subsidised power costs of $30.31/MWh and $30.56/MWh for pink and green hydrogen respectively.

But if electricity were to be unsubsidised, pink hydrogen would be at a significant advantage, enjoying power costs some 27% lower than green H2.

However, Lazard did not make clear exactly how it calculated subsidies in the analysis, whether they are derived from production tax credits (PTC) awarded to clean hydrogen facilities, or subsidised electricity prices.

Both pink and green hydrogen producers will be eligible for the maximum PTC 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.