Hydrogen Production via Electrolysis

Cost forecasts for ‘clean’ hydrogen — where clean hydrogen is generally understood to mean hydrogen produced using electrolysis powered by low-carbon electricity — are an important consideration for many industries as they seek to develop strategies for decarbonizing their operations in the future. Currently, some optimistic outlooks predict that production costs for clean hydrogen will fall below $1 per kilogram (kg). These forecasts are incomplete, however, because they focus (incorrectly) on reductions in electrolyzer capital costs as the main driver of future production cost declines.

This paper summarizes the results of a recent Clean Air Task Force (CATF) analysis showing that even with projected improvements in electrolyzer efficiencies and reductions in capital costs, average production costs for clean hydrogen are highly unlikely to fall below $3/kg (Real 2022 USD) in the foreseeable future. In fact, CATF’s analysis indicates that, among the factors that influence production costs for electrolytic hydrogen, the most important is the cost of electricity. This factor alone accounts for 50%–75% of the overall cost of hydrogen produced via electrolysis.