氢能平准化成本分析-16正式版

JUNE 2021

LAZARD’SLEVELIZEDCOSTOFHYDROGENANALYSIS

LAZARD’S LEVELIZED COST OF HYDROGEN ANALYSIS

Lazard’sLevelizedCostofHydrogenAnalysis—ExecutiveSummary

Overviewof

Analysis

OverviewofHydrogenProductionandApplications

CostAnalysis

LazardhasundertakenananalysisoftheLevelizedCostofHydrogen(“LCOH”)inanefforttoprovidegreaterclaritytoIndustryparticipantsonthepotentiallydisruptiveroleofhydrogenacrossavarietyofeconomicsectors.OurLCOHbuildsupon,andrelatesto,ourannualLevelizedCostofEnergy(“LCOE”)andLevelizedCostofStorage(“LCOS”)studies.Giventhisbreadth,wehavedecidedtofocustheanalysisonthefollowingkeytopics:

Anoverviewofthevariousmethodsforproducinghydrogenandvariousapplicationsofhydrogenacrosseconomicsectors

AdiscussionofFAQspertainingtohydrogengivenitsrelativelynascentpresenceacrossmosteconomicsectors

Alevelizedcostanalysisofgreenhydrogen(i.e.,hydrogenproducedusingwaterandrenewableenergy)basedontwoprimaryelectrolyzertechnologiesandanillustrativesetofelectrolyzercapacities

OuranalysisintentionallyfocusesonakeysubsetofassumptionsforcalculatingtheLCOH.Theadditionalfactorslistedbelowhavebeenintentionallyexcludedbutwouldalsohaveanimpactonthedeliveredcostofgreenhydrogen:

Conversiontootherstatesand/oradditionalpurificationfortheproductionofotherchemicals(i.e.,liquefaction,productionofammonia,methanol,etc.)

Compressionand/orstoragecosts,whetheron-oroff-site

Transmission,distributionandtransportationcosts(e.g.,pipeline,truck,ship,etc.)

Additionalinvestmentand/orretrofittingofend-useinfrastructure/equipmentfortheuseofhydrogenvs.theoriginalfuelsource

Hydrogeniscurrentlyproducedprimarilyfromfossilfuelsusingsteam-methanereformingandmethanesplittingprocesses(i.e.,“gray”hydrogen)

Avarietyofadditionalprocessesareavailabletoproducehydrogenfromelectricityandwater,whichareatvaryingdegreesofdevelopmentandcommercialviability

Givenitsversatilityasanenergycarrier,hydrogenhasthepotentialtobeusedacrossindustrialprocesses,powergenerationandtransportation,creatingapotentialpathfordecarbonizingenergy-intensiveindustrieswherecurrenttechnologies/alternativesarenotpresentlyviable

Greenhydrogeniscurrentlymoreexpensivethantheconventionalfuelsorhydrogenitwoulddisplace—theintentofthiscostanalysisistobenchmarktheLCOHofgreenhydrogenona$/kgbasissuchthatreadersmayconverttotheequivalentcostofagivenenduseofinterest(e.g.,asfeedstockforammoniaproduction,displacingnaturalgasinapowerplant,etc.)

Applicationswhichrequireminimaladditionalsteps(e.g.,conversion,storage,transportation,etc.)toreachtheenduserwillachievecostcompetitivenesssoonerthanthosethatdonot

Thisdynamicisfurtheramplifiedtotheextentthatendusesrequireretrofittingequipmenttoutilizehydrogenvs.theconventionalalternatives

Electricityrepresents~30%–60%ofthecosttoproducehydrogenfromelectrolyzerswithacapacityof20+MW—theLCOHisthereforehighlydependentonthecostoftheavailablesourcesofelectricity

Thenext-mostsignificantdriveroftheLCOHisthecostoftheelectrolyzer,whichisexpectedtodecreaseasaresultofrapidgrowthinindustryscaleandtechnologicaladvancement

Inassessingthecostprofileofgreenhydrogen,therelativecostpositionofgreenhydrogenascomparedtoconventionalfuelsorgrayhydrogenisanobviouscorecomponentoftheanalysisasistherelevantusecasebeingcompared

Acostofcarbon,oravoidanceofsuchcosts,isnotincludedintheLCOHnoraregovernmentsupportmechanisms—bothofthesefactorscouldbeimpactfultoanycost/projectanalysis

Note:

Lazard’sLCOHanalysisisconductedwithsupportfromRolandBerger.Thisanalysisisillustrativeinnatureandshouldnotbeconsideredasabenchmarkforanygivenproject.

1

Copyright2021Lazard

Thisanalysisshouldnotbeconsideredasabasisfromwhichtomakeinvestment,regulatoryorstrategicdecisionsorotherwise.

ThisstudyhasbeenpreparedbyLazardforgeneralinformationalpurposesonly,anditisnotintendedtobe,andshouldnotbeconstruedas,financialorotheradvice.Nopartofthismaterialmaybecopied,photocopiedorduplicatedinanyformbyanymeansorredistributedwithoutthepriorconsentofLazard.

I OverviewofHydrogenProductionandApplications

I OVERVIEW OF HYDROGEN PRODUCTION AND APPLICATIONS

LeadingProcessesforHydrogenProduction

Hydrogenhashistoricallybeenproducedprimarilythroughtheuseoffossilfuels;however,improvementsinthecosteffectivenessofrenewableenergyandelectrolyzertechnologycreateapathforeconomicallyviablegreenhydrogen

ByproductsProcessFeedstock

FossilFuels

NuclearEnergy

Water(H2O)

Water(H2O)

Thermochemical

High-Temperature

Steam-Methane

MethaneSplitting

Reforming

Splitting

SteamElectrolysis

CarbonDioxide

(CO2)Capture

andStorage

CarbonDioxide

Carbon

Oxygen(O2)

Oxygen(O2)

(CO2)

Monoxide(CO)

GrayHydrogen

BlueHydrogen

Yellow

Hydrogen

Notes

Notes

Renewable

Energy

Water(H2O)

Low-Temperature

Electrolysis

Oxygen(O2)

GreenHydrogen

Notes

Steamreforminginvolvesinjectingsteamintonaturalgas,producing“gray”hydrogenandCO2

SubsequentCO2captureandstorageproduces“blue”hydrogen

Methanesplittingutilizesahigh-temperatureplasmatosplitnaturalgasinto“blue”hydrogenandcarbonmonoxide

Thermochemicalsplittingutilizesahigh-temperatureprocesstoproduce“yellow”hydrogenandoxygen

High-temperaturesteamelectrolysisutilizesanelectriccurrentandhigh-temperaturesteamtoproduce“yellow”hydrogenandoxygen

Low-temperatureelectrolysisisanelectrochemicalprocessinwhichacurrentisappliedtowatertoproducegreenhydrogenandoxygen

Alkalineandpolymerelectrolytemembrane(“PEM”)electrolyzersarecurrentlytheprimarytechnologiesutilizedforlow-

temperatureelectrolysis

2

Copyright2021Lazard Source:WorldNuclearAssociation(2020),HydrogenCouncil,InternationalEnergyAgency,FuelCellandHydrogenEnergyAssociationandNationalRenewableEnergyLaboratory.

ThisstudyhasbeenpreparedbyLazardforgeneralinformationalpurposesonly,anditisnotintendedtobe,andshouldnotbeconstruedas,financialorotheradvice.Nopartofthismaterialmaybecopied,photocopiedorduplicatedinanyformbyanymeansorredistributedwithoutthepriorconsentofLazard.

I OVERVIEW OF HYDROGEN PRODUCTION AND APPLICATIONS

HydrogenApplicationsinToday’sEconomy

Theadaptabilityofhydrogentosupplementorreplacegaseousandliquidfossilfuelscreatesnumerousopportunitiestoaddresstheneedsofavarietyofeconomicsectors

Form

Sector

Power

GasDistribution/DistrictHeating

GAS&

OilandGasProduction

FUELCELL

Heavy/SpecialtyIndustry

IndustrialChemicalProduction

Heavy-Duty/IndustrialVehicles

H2

GAS&

Cargoand/orPassengerRail

FUELCELL

MaritimeShippingand/orTravel

Aviation

GAS&LIQUID/

Light-DutyVehicles

SYNTHETICFUEL

Other

Notes

Gaseoushydrogenandammoniacanbeutilizedasfuelsubstitutesinpowergeneration,gasdistribution,andcombinedheatandpower(“CHP”)applications

Hydrogencouldalsoprovideameansforprovidingseasonalstorageforthepowergrid

Hydrogenisusedinrefiningandcanbeintegratedintotheproductionprocessesforcarbon-intensivematerialssuchasaluminum,iron,steelandcement

Theproductionofammonia,methanolandotherindustrialchemicalsrequireshydrogenasaprimaryingredient

Gaseoushydrogencanbecombusteddirectly,orwhenpairedwithfuelcells,canfunctionasasubstituteforconventionalfuels(e.g.,naturalgas,fueloil,etc.)foruseincommercialandindustrialvehicles(e.g.,forklifts,etc.)

Hydrogenfuelcellelectricvehicles(“HFEVs”)competefavorablywithbatteryelectricvehicles(“BEVs”)inindustrialapplicationsthatrequirehighuptime,quickrefuelingandtheabilitytomoveheavyloads

Ammoniaandmethanolareviablesubstitutefuelsforvariousheavy-dutyapplications(e.g.,maritime),wheretheenergydensityandeaseofhandlingofthesefuelsiscompetitivewithconventionalalternatives

Hydrogencanbecombinedwithcarbondioxidetoproducelow-ornet-zeroemissionsaviationandsyntheticfuels,dependingontheinitialsourceofcarbondioxide

HFEVsareaviablealternativetoBEVsforlarger/heavierpassengervehicles(e.g.,sportutilityvehicles),wheretheadditionalcarryingcapacityoffueloffsetstherelativelyheaviervehicleplatform

HFEVsmaintainanadvantageoverBEVstotheextenttheweight-to-powerdensityprofileoflargerpassengervehiclesoffsetsthelowerefficiencyofthegas-to-electricity

conversionprocess

3

Copyright2021Lazard Source:HydrogenCouncil,InternationalEnergyAgency,FuelCellandHydrogenEnergyAssociationandNationalRenewableEnergyLaboratory.

ThisstudyhasbeenpreparedbyLazardforgeneralinformationalpurposesonly,anditisnotintendedtobe,andshouldnotbeconstruedas,financialorotheradvice.Nopartofthismaterialmaybecopied,photocopiedorduplicatedinanyformbyanymeansorredistributedwithoutthepriorconsentofLazard.

II FrequentlyAskedQuestionsPertainingtoHydrogen

II FREQUENTLY ASKED QUESTIONS PERTAINING TO HYDROGEN

HydrogenFAQs—MarketDrivers

LazardhasundertakenastudyoftheLCOHtoanalyzethecurrentunsubsidizedcosttoproducegreenhydrogenthroughelectrolysis.Givenhydrogen’sversatilityasacleanfuelsource,itisviewedasapotentiallydisruptivesolutionfordecarbonizingavarietyofeconomicsectors

WhatIsGreenHydrogenandHowCanItSupporttheDecarbonizationofEconomicActivity?

HowIsGreenHydrogenProduced?

Greenhydrogenisproducedwhenrenewableenergyisusedtosplitwaterintoitscomponentpartsthroughelectrolysis

Theversatilityofgreenhydrogenasaliquidorgaseousfuel,combinedwithitssuitabilityforvariousmodesoftransport,makesitanaturalsubstituteforanumberofexistingfossilfuels(e.g.,naturalgas,gasoline,diesel,coalandoil)

Asaresultofitsversatility,greenhydrogenisapotentialsolutionforreducingcarbonemissionsintraditionally“hard-to-abate”sectorssuchastransportation/mobility,heating,oilrefining,ammoniaandmethanolproduction,andpowergeneration

Therearefourtypesofwaterelectrolysistechnologiesthatareusedtocreategreenhydrogen:

Alkalineelectrolysisisthemostdevelopedandcommercializedprocesstodate

PEMelectrolysisisthenext-mostmatureprocesswithgrowingcommercialization

PEMisadvantageousoveralkalinewithasmallerfootprint,abilitytoloadfollowduetolowerstartupandsystemresponsetimes,lowerminimumloadrequirementsandgreaterloadflexibility(i.e.,optimizeoutputbasedontheavailabilityofintermittentrenewableenergy)

Solidoxideandanionexchangemembrane(“AEM”)electrolysisprocessesarestillinpilot/developmentstages—theseprocessesarenotexpectedtobebroadlycommercializedbeforethemid2020s

Source:InternationalRenewableEnergyAgency,InternationalEnergyAgency,U.S.DepartmentofEnergy,BidenAdministration,EuropeanUnion,nationalgovernmentfilings,National

4

Copyright2021Lazard

RenewableEnergyLaboratoryandCaliforniaEnergyCommission.

ThisstudyhasbeenpreparedbyLazardforgeneralinformationalpurposesonly,anditisnotintendedtobe,andshouldnotbeconstruedas,financialor

otheradvice.Nopartofthismaterialmaybecopied,photocopiedorduplicatedinanyformbyanymeansorredistributedwithoutthepriorconsentofLazard.

II FREQUENTLY ASKED QUESTIONS PERTAINING TO HYDROGEN

HydrogenFAQs—End-UseApplications

Hydrogeniscurrentlyusedprimarilyinindustrialapplications,includingoilrefining,steelproduction,ammoniaandmethanolproduction,andfeedstockforothersmaller-scalechemicalprocesses

WhichSectorsCan

GreenhydrogenisbestpositionedtoreduceCO2emissionsintypically“hard-to-abate”sectorssuchascementproduction,

UtilizeGreen

centralizedenergysystems,steelproduction,transportationandmobility(e.g.,forklifts,maritimevessels,trucksandbuses),

HydrogentoReduce

andbuildingpowerandheatsystems

CO2Emissions?

Naturalgasutilitiesarelikelytobeearlyadoptersofgreenhydrogenasmethanation(i.e.,combininghydrogenwithCO2to

producemethane)becomescommerciallyviableandpipelineinfrastructureisupgradedtosupporthydrogenblends

WhatIsthe

Materialhandlingequipment(e.g.,forklifts)andindustrialusecases(e.g.,oilrefining,ammoniaandmethanolfeedstock)are

currentlyamongthemorewidelyadoptedusecasesforgreenhydrogen

“Integration

Near-term(asthedecadeprogresses),“massmarketacceptability”(i.e.,sales>1%ofthemarket)couldoccurfor

Readiness”ofVarious

applicationssuchasheavy-dutytrucking,citybuses,decarbonizationoffeedstockandhydrogenstorage,amongothers

UseCaseswith

RespecttoGreenH2?

Longer-term(i.e.,beyond2030),commerciallyviablegreenhydrogenapplicationsareexpectedtoexpandtoothermobility

segments(e.g.,drop-insyntheticfuels),steelproduction,blendingwithnaturalgasandheatingapplications

Potentialinfrastructureneedsforthewidespreadadoptionofgreenhydrogen:

Oncegreenhydrogenisproduced,itmustbestored,transportedandpotentiallyconverted,unlessconsumedon-site

Transportandstorage(e.g.,pressurization)aremeaningfulbarriersforgreenhydrogenbeingbroadlycostcompetitive

Mostexistingnaturalgasdistributioninfrastructurecannotaccommodatepureorevenlow-levelblending(i.e.,<20%)of

hydrogenwithnaturalgas

WhatInfrastructure

Refuelingstationsformobilityapplicationswillrequiresophisticatedstoragefacilitiesandeitherlocalordistributed

IsNeededtoSupport

production,withthelatternecessitatingtransmissioninfrastructurefromcentralproductionlocations

Adoption?

Certainexistinginfrastructurecanbeutilizedtosupportthewidespreadadoptionofgreenhydrogen

Injectionofhydrogenintoexistingindustrial(i.e.,welded)pipelineinfrastructureisacost-effectivemeansfortransportationanddistribution

Non-pipelinetransportation(e.g.,shipping,trucking,etc.)issubstantiallymoreexpensive,albeitfacilitateslonger-rangeandmoreflexibletransportation

Methanatedgreenhydrogen(i.e.,greenmethane)isfullycompatiblewithexistingnaturalgasdistributioninfrastructure

Source:Companyfilings,HydrogenCouncil,InternationalEnergyAgency,InternationalRenewableEnergyAgency,FuelCellandHydrogenEnergyAssociation,U.S.

5

Copyright2021Lazard

DepartmentofEnergyandNationalRenewableEnergyLaboratory.

ThisstudyhasbeenpreparedbyLazardforgeneralinformationalpurposesonly,anditisnotintendedtobe,andshouldnotbeconstruedas,financialor

otheradvice.Nopartofthismaterialmaybecopied,photocopiedorduplicatedinanyformbyanymeansorredistributedwithoutthepriorconsentofLazard.

II FREQUENTLY ASKED QUESTIONS PERTAINING TO HYDROGEN

HydrogenFAQs—IndustryLandscape

WhatIstheGreenHydrogenValueChainandWhoAretheKeyPlayers?

Thegreenhydrogenproductionvaluechaincanbedividedintofiveprimarysegments:

Processinputgeneration

Greenhydrogenproduction

Conversion,includingcompressionandstorage

Transportation,includingvesselsandpipeline

Reconversiontogaseoushydrogenasapplicable

Keyendusersinthevaluechainincludeindependentpowerproducers,electricandnaturalgasutilities,oilandgasmajors,electrolyzermanufacturers,theautomotivesector,infrastructureandtransportationproviders,andotherendusers

Theelectrolyzermanufacturerlandscapeissplitbetweenadvancedmanufacturersandsmallerplayerswhosetechnologiesarestillunderdevelopmentorinpilotstages

Downstreamvaluechainparticipantsincludeutilities,oilandgasmajors,transportandstorageprovidersincludingfuelcells,andvariousmunicipalities/governmentsandOEMsdrivingrefuelingstationinvestment

Source:Companyfilings,U.S.DepartmentofEnergy,HydrogenCouncil,InternationalEnergyAgency,FuelCellandHydrogenEnergyAssociationandNational

6

Copyright2021Lazard

RenewableEnergyLaboratory.

ThisstudyhasbeenpreparedbyLazardforgeneralinformationalpurposesonly,anditisnotintendedtobe,andshouldnotbeconstruedas,financialor

otheradvice.Nopartofthismaterialmaybecopied,photocopiedorduplicatedinanyformbyanymeansorredistributedwithoutthepriorconsentofLazard.

II FREQUENTLY ASKED QUESTIONS PERTAINING TO HYDROGEN

HydrogenFAQs—CostEffectiveness

Greenhydrogenisnotyetbroadlycostcompetitiveascomparedtotheconventionalfuelsitwouldreplace

Thiscostdisparityshoulddiminishasthecostofrenewableenergycontinuestodeclineand/orgreenhydrogenprojects

WhatIstheCostof

aredevelopedinsuchawayastoconsumerenewableenergythatwouldotherwisebecurtailed

GreenHydrogen

RelativetoOther

Transportation,conversion,andinfrastructureandend-useupgradecostswillcontinuetobemeaningfuldriversofthecost

Fuels?

structureofgreenhydrogenvs.alternativefuels

Otherformsofhydrogen(e.g.,bluehydrogen)arecurrentlylessexpensivethangreenhydrogen,particularlyintheabsence

ofcarbonpricingorothermechanismsusedtoaccountforemissions

Thecostcompetitivenessofgreenhydrogenshouldincreaseastheindustrygrows,drivingimprovementsintheunderlying

electrolyzertechnologyinconjunctionwithcostimprovementsresultingfrommanufacturingscaleandefficiency

WhatWillBetheKey

Electrolyzerstackcostscurrentlycomprise~33%–45%ofthetotalcapitalcostswhilethecostofelectricityrepresents

DriversofGreen

~30%–60%ofthelevelizedcostofgreenhydrogen

HydrogenCost

Policyaction(e.g.,carbonpricesorincentives)shouldalsoinfluencetherelativecostofgreenhydrogenascomparedto

Competitiveness?

fossilfuelalternatives

Thefuturecostcompetitivenessofgreenhydrogenwillalsodependontheinterplaybetweenenduseandproximityof

production,whichinturninformsthetransportationandstoragecostsassociatedwithagivenapplication

Giventhatthecostofelectricityisakeydriverofthecostofgreenhydrogen,theavailabilityoflow-costrenewableenergyiscritical—theoptimallocationsforgreenhydrogenproductioninthisregardwillbeinareasthat:

HowWillRenewableEnergyProductionandLocationImpactCosts?

Havethecapacitytoproducegreenhydrogenatscaleandwithabundantlow-orzero-cost(i.e.,curtailed)renewableenergyresources

Haveinherentdemandforlocalgreenhydrogen(e.g.,drivenbydecarbonizationregulations/incentives)and/orareequippedwithefficienttransportationinfrastructure,therebyavoidinghightransportationandstoragecosts

Source:Companyfilings,HydrogenCouncil,InternationalEnergyAgency,InternationalRenewableEnergyAgency,FuelCellandHydrogenEnergyAssociation,

7

Copyright2021Lazard

CaliforniaEnergyCommissionandNationalRenewableEnergyLaboratory.

ThisstudyhasbeenpreparedbyLazardforgeneralinformationalpurposesonly,anditisnotintendedtobe,andshouldnotbeconstruedas,financialor

otheradvice.Nopartofthismaterialmaybecopied,photocopiedorduplicatedinanyformbyanymeansorredistributedwithoutthepriorconsentofLazard.

III IllustrativeGreenHydrogenCostAnalysis

III ILLUSTRATIVE GREEN HYDROGEN COST ANALYSIS

Lazard’sLevelizedCostofHydrogen—Methodology

Lazard’sLevelizedCostofHydrogenanalysisisillustrativeinnatureandemploysasimplifiedmethodology.Asaresult,anumberofassumptionsmustbemadetostandardizethevariousparametersofanotherwisecomplexanalysis,including:

TheLCOHiscalculated“asdelivered”byanAlkalineorPEMelectrolyzer—noadditionalconversion,storageortransportationcostsareconsideredinthisanalysis

Theelectricityutilizedasaninputforelectrolysisisproducedbyarenewableenergyfacility,therebymakingthehydrogen“green”—thepotentialintermittencyoftherenewableenergyresourceiscapturedintheutilizationassumptionwhichissensitizedinthesubsequentpages

Theanalysishorizonis15years.Inputcostsaregrownbyafixedescalationrateoverthisterm—seepagetitled,“LevelizedCostofHydrogen—KeyAssumptions”foradditionaldetail

Anavailabilityfactorof98%isassumedacrosstechnologiesandsystemcapacities—adjustmentstoutilizationratesdonotimpacttheoperationalcharacteristics,andassociatedmaintenancecosts,ofaplantbeyondtheconsumptionofinputsandresultinghydrogenproduced

Stackreplacementoccursatanintervaldeterminedbyplantavailability,utilizationandstacklifetime(measuredinhours)—stackreplacementcostsareidenticaltotheoriginalcostofthestack

Thisanalysiscalculatestherevenuerequirement,ona$/kgbasis,neededtoachievea12%levered,after-taxreturntotheprojectinvestor.Seepagetitled,“LevelizedCostofHydrogen—KeyAssumptions”foradditionaldetailsonassumedcapitalstructure

Otherfactorswouldalsohaveapotentiallysignificanteffectontheresultscontainedherein,buthavenotbeenexaminedinthescopeofthisanalysis.Theseadditionalfactors,amongothers,couldinclude:developmentcostsoftheelectrolyzerandassociatedrenewableenergygenerationfacility;conversion,storageortransportationcostsofthehydrogenonceproduced;additionalcoststoproducealternatefuels(e.g.,ammonia);coststoupgradeexistinginfrastructuretofacilitatethetransportationofhydrogen(e.g.,naturalgasdistributionpipelines);electricalgridupgrades;costsassociatedwithmodifyingend-useinfrastructure/equipmenttousehydrogenasafuelsource;potentialvalueassociatedwithcarbon-freefuelproduction(e.g.,carboncredits,incentives,etc.).Thisanalysisalsodoesnotaddresspotentialenvironmentalandsocialexternalities,including,forexample,waterconsumptionandthesocietalconsequencesofdisplacingthevariousconventionalfuelswithhydrogenthataredifficulttomeasure

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Copyright2021Lazard

Note:Seepagetitled,“LevelizedCostofHydrogen—KeyAssumptions”fordetailedmodelingassumptionsforallprojecttypesevaluatedinthisanalysis.

ThisstudyhasbeenpreparedbyLazardforgeneralinformationalpurposesonly,anditisnotintendedtobe,andshouldnotbeconstruedas,financialorotheradvice.Nopartofthismaterialmaybecopied,photocopiedorduplicatedinanyformbyanymeansorredistributedwithoutthepriorconsentofLazard.

III ILLUSTRATIVE GREEN HYDROGEN COST ANALYSIS

CurrentLevelizedCostofHydrogenProduction(1)—1MWElectrolyzer

Greenhydrogenisarelativelyexpensivefuelascomparedtoconventionalalternatives;however,theincreasingpenetrationofrenewableenergyinpowergeneration,technologicalandcostimprovementsinelectrolyzertechnology,andcarbonpricingcollectivelyhavethepotentialtosubstantivelyalterthisdynamic

ThisanalysisevaluatesthesensitivityoftheLCOH,in$/kg,tochangesincapex,costofelectricityandelectrolyzerutilization

Wehavecompiledmarketdatafor“low-”,“medium-”and“high-”efficiencyelectrolyzersacrosscapacitiesof1,20and100MW

Thesensitivitiesbelowandonsubsequentpagesevaluatethe“medium-”efficiencyunitsacrossscaleandtechnology

SensitivitytoElectricityCostandElectrolyzerCapex(2)

($/MWh)EnergyCost

Alkaline(1MW)

ElectrolyzerCapex($/kW)

$/kg

$1,180

$1,310

$1,460

$1,610

$1,770

$10

$1.33

$1.43

$1.54

$1.65

$1.77

$20

$1.60

$1.70

$1.81

$1.92

$2.04

$30

$1.87

$1.97

$2.08

$2.19

$2.31

$40

$2.14

$2.24

$2.35

$2.46

$2.57

$50

$2.41

$2.51

$2.62

$2.73

$2.84

($/MWh)EnergyCost

PEM(1MW)

ElectrolyzerCapex($/kW)

$/kg

$1,420

$1,580

$1,760

$1,940

$2,130

$10

$1.84

$1.97

$2.12

$2.27

$2.43

$20

$2.15

$2.28

$2.43

$2.58

$2.74

$30

$2.45

$2.59

$2.74

$2.89

$3.05

$40

$2.76

$2.90

$3.05

$3.20

$3.36

$50

$3.07

$3.21

$3.36

$3.51

$3.67

$/kg

EnergyCost($/MWh)

$10

$20

$40

$30

$50

Copyright2021Lazard

SensitivitytoElectricityCostandUtilizationRate(3)

Alkaline(1MW)

PEM(1MW)

ElectrolyzerUtilization

ElectrolyzerUtilization

100%

90%

80%

70%

60%

$/kg

100%

90%

80%

70%

60%

$1.54

$1.61

$1.76

$1.93

$2.16

EnergyCost($/MWh)

$10

$2.12

$2.25

$2.39

$2.65

$2.98

$1.81

$1.88

$2.03

$2.20

$2.43

$20

$2.43

$2.56

$2.70

$2.96

$3.29

$2.35

$2.42

$2.57

$2.74

$2.97

$40

$3.05

$3.18

$3.32

$3.58

$3.90

$2.08

$2.15

$2.30

$2.47

$2.70

$30

$2.74

$2.87

$3.01

$3.27

$3.59

$2.62

$2.69

$2.84

$3.01

$3.24

$50

$3.36

$3.49

$3.63

$3.89

$4.21

Source:FuelCellandHydrogenEnergyAssociation,NationalRenewableEnergyLaboratory,PacificNorthwestNationalLaboratory,andLazardandRolandBergerestimates.

Note:

Seepagetitled,“LevelizedCostofHydrogen—KeyAssumptions”fordetailedmodelingassumptionsforallprojecttypesevaluatedinthisanalysis.

9

(1)

TheLCOHanalysisisbasedondatacollectedfromindustryandadiscountedcashflowanalysiswhichcalculatestherevenuerequirementtoachievealeveredequityreturnof12%.

(2)

Sensitivityisbasedona98%electrolyzerutilizationrateforbothtechnologies.

(3)

Sensitivityisbasedonthecapexassumptionformedium-efficiencyelectrolyzersforeachtechnology.

ThisstudyhasbeenpreparedbyLazardforgeneralinformationalpurposesonly,anditisno