Exploring Hydrogen Mobility

Key Points

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What are the different modes of mobility that would be most adequate for hydrogen applications and what a reasonable adoption timeframe would look like for each? RBC Capital Markets is joined by Mark Freymueller, CEO, Hyundai Hydrogen Mobility AG; Daniel Chatterjee, Head of Technology Management & Regulatory Affairs, Rolls Royce; Dr. Tim Lindsey, Senior Advisor, University of Illinois and Anise Ganbold, Project Leader, Global Commodities, Aurora Energy Research to discuss the type of fuel source (ICE, BEV, FCEV) most appropriate for various modes of mobility (Truck, Auto, Rail, Marine).

Four Key Takeaways:

Prices are key to kick off hydrogen mobility

Aurora Energy’s analysis suggests the costs for blue hydrogen, made from natural gas, should stay fairly stable between now and 2050. Anise Ganbold stresses that the biggest costs towards making blue hydrogen now and in the future is the fuel – the price of natural gas, and it will also be necessary to pay for some form of carbon capture storage. “So where blue hydrogen costs will go between now and 2050 is driven by natural gas prices.” The cost of producing blue hydrogen (through steam methane reforming (SMR) and autothermal reforming) is around $2.5-3. Green hydrogen costs, on the other hand, are really variable and depends on how electrolysers are run, she adds. “Running an electrolyser 10% of the time when power prices are really low means the capex component is extremely high and therefore makes little sense. On the other hand, running it 100% of the time means you pay the wholesale power price.” Aurora’s modelling suggests the sweet spot for electrolysers to minimise overall costs is around the 40% mark. “The costs of green hydrogen are still higher currently than blue hydrogen, but capex costs will come down due to efficiency gains and lower power prices will come down with renewables. By 2035-36, we expect green hydrogen will be cheaper than blue, not taking subsidies into account. It will then be a complete change of story.”

The availability of hydrogen is a pre-requisite

Hyundai Hydrogen Mobility has a financially viable business model and can already offer an attractive alternative to diesel trucks, Mark Freymueller points out. “A very special situation in Switzerland, because on the one hand, we have high diesel prices here already, and on the other hand, we have a road tax linked to the weight of vehicle and the annual mileage.” Freymueller remarks that the appetite from other European countries is quite significant, amid ambitious goals and strategy to become the number 1 hydrogen ecosystem and as huge funding is available. Hyundai Hydrogen Mobility has a pay per use model, which includes operations, service warranty and the hydrogen – “so customers don’t need to worry about how much hydrogen is needed and the type.” Freymueller thinks government subsidies are offering a chance to create a sustainable and financially viable alternative especially as the costs generated by Co2 pollution will increase, such as CO2 taxation or penalties. “Currently in Germany, they are discussing EUR25-50 per Co2 ton emission. If you look at the road tax in Switzerland, which is an indirect C02 tax, we’re talking about 800 euros per Co2 ton emission.” A gap that will need to be addressed.

Increasing technology breakthroughs

Dr. Tim Lindsey of the University of Illinois lists a number of technology breakthroughs and commitments from government and the private sector, in terms of both vehicles and fuelling infrastructure, amid some significant cost reductions. “Fuel cell costs have declined by two thirds since 2006, through a combination of cheaper catalysts and better membranes, better durability - they are twice as durable as 15 years ago - the improved power density and better materials for the fuel tanks like carbon fibre, while the cost of renewables to split water through electrolysis has greatly reduced.” He also highlights many opportunities for innovation and government subsidies, from the EU, Japan, South Korea, even the US, all investing in the infrastructure, and collaboration between companies to stabilise the fuelling. “Even industries like the oil & gas sector are getting involved, with commitments from BP, Shell and Repsol.” Lindsey thinks that in the near term, the most appropriate applications of fuel cells are the large ones like trucking, rail, maritime because of the weight advantage associated with storing energy like hydrogen. He thinks hydrogen infrastructure could be built along major traffic arteries, and as the costs of hydrogen begins to decline, it will then make more sense for cars. As for the economics, if hydrogen’s price per kg of energy compared to fossil fuel looks expensive, the hydrogen power train is twice as efficient as that of fuel combustion. “You have to look at the total life cycle.”

Fuel cells not suitable for all types of heavy-load applications currently

Daniel Chatterjee of Rolls Royce believes hydrogen will play a key role in decarbonisation due to its very high-power application. However, energy density is the key. “The main challenge is that diesel still has 70% more energy density than other fuels like hydrogen. We also need fuels made by hydrogen. A large part of our applications are made by synthetic fuels. In all our markets like marine, we will see, besides hydrogen, high density version of synthetic fuels. We also need new power converters.” For Chatterjee, thinking of propulsion systems is key. He sees good first opportunities for applications of fuel cells in marine, when a ship goes to harbour for instance – “the main propulsion will be done by a traditional engine still, and autoload and emission-free could be done with fuel cells.” In the next decade, he expects most propulsion to be done by traditional engines, but synthetic fuels may come into play. Another opportunity, in rail, could be fuel cells in local commuter trains. “They’re not completely dominated by fuel costs and the cost of the fuel cells itself and infrastructure, with one or two central refuelling stations, energy density and the opportunity to refill once or twice a day.” We need to think about this soon. “If you want to make an impact by 2050, you need to have commercially available solutions by 2030. You need to make a technology decision five years from now.”

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