How Much Is A Gallon Of Hydrogen Fuel?

Hydrogen fuel is a zero-emission fuel that is produced from hydrogen gas. It has gained interest in recent years as a potential alternative to gasoline for powering vehicles. Unlike gasoline, hydrogen fuel does not emit any harmful greenhouse gases when used, making it an environmentally-friendly option. However, a key factor in whether hydrogen fuel can realistically replace traditional fuels is the cost per gallon for consumers. Understanding the current price and future trends of hydrogen fuel is important for assessing its viability as an alternative fuel source.

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Current Cost

As of 2023, the average cost of hydrogen fuel ranges from $12-$16 per kilogram in the United States, which equates to $3.60-$4.80 per gallon of gasoline equivalent. The cost varies significantly based on the source and method of production. Most hydrogen today is produced via steam methane reforming from natural gas, which costs around $3 per gallon of gasoline equivalent. However, ‘green hydrogen’ produced via electrolysis powered by renewable energy can cost $6-$12 per gasoline gallon equivalent.

According to the U.S. Department of Energy, the current cost to produce hydrogen via electrolysis is around $5 per kg, or approximately $1.50 per gallon of gasoline equivalent. However, additional costs for compression, storage, transportation and dispensing at fueling stations bring the retail cost to consumers up to around $16 per kg, or $4.80 per gasoline gallon equivalent.

For comparison, the average retail price for gasoline in the U.S. as of January 2023 is around $3.50 per gallon. So hydrogen currently costs a premium over traditional fuels.

Sources:

[1] U.S. Department of Energy

[2] Techno-economic analysis of underground hydrogen storage for variable renewable energy integration

Factors Affecting Cost

The cost per gallon of hydrogen fuel can vary significantly, depending on numerous factors involved in the production, distribution, and retailing of the fuel. Key factors that influence hydrogen fuel’s cost include:

Production Costs – Extracting hydrogen from natural gas via steam reforming is currently the cheapest production method, but still results in higher costs than gasoline production. Using renewable energy for production via electrolysis can minimize emissions but further increases costs.¹

Distribution Costs – Transporting hydrogen gas is complex and requires high-pressure tankers, pipelines, or onsite production. This distribution infrastructure lacks scale and adds substantial costs versus liquid fuels.¹

Taxes – Hydrogen is subject to road taxes but currently lacks the embedded excise taxes built into gasoline pricing, making it appear artificially lower cost.²

Retail Costs – Few hydrogen stations exist, limiting competition and consumer access to bargain pricing.

These production, distribution, tax, and retail factors all contribute to hydrogen’s high cost compared to incumbent fuels like gasoline.

Historical Trends

The cost per gallon of hydrogen fuel has fluctuated over the past 5-10 years, but has generally been on a downward trend as production methods improve. According to historical price data from Plug Power, a leading hydrogen fuel cell manufacturer, prices have declined from around $13/kg in 2013 to around $6.5/kg in 2022 [1]. This equates to a drop from around $4.90 per gallon to $2.45 per gallon over the past decade.

Other sources show similar trends. Data from Munich BrandHub indicates the price per share for Hydrogen Fuel and EV Charge Solutions, a major hydrogen fuel supplier, has fallen from over €20 in 2013 to around €10 in 2022 [2]. Increased scale and efficiency in production methods, as well as growing demand, are driving down costs over time.

While prices fluctuate year-to-year, the 5-10 year trajectory shows strong declines in hydrogen fuel costs. With continued adoption of hydrogen vehicles and infrastructure, prices are expected to continue falling as economies of scale kick in.

Regional Variations

The cost of hydrogen fuel can vary significantly between regions and countries. Some key factors that impact regional pricing include:

According to the Biden administration, regions with access to low-cost renewable or low-carbon energy are best suited for cost-effective hydrogen production. Areas like the U.S. Mountain West that have abundant solar and wind resources have potential for lower-cost green hydrogen.

Countries with high natural gas reserves and production capacity, like Russia and countries in the Middle East, tend to have lower costs for producing hydrogen from natural gas. However, this grey hydrogen has higher carbon emissions.

Importing hydrogen as ammonia from major exporting countries can lower costs in importing regions like Japan and South Korea. But transportation and reconversion add to the final cost.

Government subsidies and incentives for hydrogen production and use in places like Europe and China help reduce costs in those markets.

Overall, factors like energy prices, transportation costs, subsidies, and technology access underpin significant regional variations in hydrogen pricing globally.

Future Outlook

Expert projections indicate that the cost of hydrogen fuel may decrease substantially in the coming decades as production methods improve and scale increases. However, significant cost reductions are not guaranteed.

According to analysis from CRU Group, projections of green hydrogen costs falling to around $0.50/kg by 2050 may be optimistic [1]. Their models indicate costs are more likely to remain around $1-2/kg through 2050.

PwC analysis suggests a potential 50% decrease in green hydrogen production costs by 2030, with slower ongoing reductions through 2050 [2]. However, their modeling indicates costs are unlikely to fall below $1.50/kg by 2050.

Overall, expert projections agree that substantial cost reductions for green hydrogen are achievable but uncertain. Most analysis indicates costs may fall to around $1-2/kg by 2050, still 2-4x higher than fossil fuel-based hydrogen today.

Comparisons

Hydrogen fuel costs between $13 to $16 per kilogram in 2022, which is equivalent to around $5 to $8 per gallon of gasoline equivalent (gge) (Stillwater, 2022). This makes hydrogen fuel competitively priced with gasoline, which averages around $3.50 to $5 per gallon nationally. However, on an energy-equivalent basis, hydrogen remains more expensive than other fossil fuels like natural gas. The Department of Energy reports that the cost per kilogram of hydrogen is comparable to paying $5 to $7 per gallon for gasoline (DOE). So while hydrogen costs are similar to gasoline per mile driven, hydrogen provides less energy per mass than other fuels.

One analysis shows hydrogen fuel costs about $1 to $1.80 per kg in production, which equates to around $1 to $1.80 per gasoline gallon equivalent (gge) (Hesh Hydrogen). This is far cheaper than current retail hydrogen prices at the pump. However, as a source of energy, hydrogen remains more expensive than other fossil fuels. On an energy-equivalent basis, a kg of hydrogen costs around 2-3 times as much as a gallon of gasoline.

So hydrogen can compete with gasoline for fueling vehicles on a per-mile basis, but remains costlier than other fuels on an energy density basis. As hydrogen production scales up, costs are expected to decline and make hydrogen more cost-competitive across transportation and energy sectors.

Additional Cost Factors

Beyond just the base cost per kilogram or gallon, there are other factors that contribute to the overall price of hydrogen fuel. Two major additional costs are transportation and storage of hydrogen.

Transporting hydrogen from production facilities to fueling stations incurs costs for compression, liquefaction, and distribution via truck or pipeline. These expenses can add $2-4 per kilogram of hydrogen to the final fuel cost (https://www.govtech.com/fs/the-high-cost-of-hydrogen-fuel-is-a-drag-on-adoption). Storing hydrogen also has complexities and expenses associated with it. Hydrogen’s low ambient temperature liquid state requires expensive cryogenic storage tanks and specialized materials that can withstand exposure to hydrogen. These storage costs can account for up to half of a hydrogen fueling station’s capital expenses (https://h2fcp.org/content/cost-refill).

Other factors like taxes, profit margins, and differences in production methods also impact the final price paid by consumers for hydrogen vehicle fuel. But transportation and storage represent two major components that make the delivered cost of hydrogen significantly higher than the base production price.

Conclusions

In summary, the cost of hydrogen fuel is currently quite high compared to gasoline, but is expected to decrease in the future as production methods improve and demand increases. Key takeaways regarding hydrogen fuel costs include:

– Current costs range from $10-$16 per kg of hydrogen, equivalent to $4-$7 per gallon of gasoline.

– Production costs make up the majority of the price, especially for renewable hydrogen from electrolysis.

– Costs have declined slowly over the past decade but remain much higher than gasoline.

– Regional variations exist based on access to low-cost hydrogen sources.

– Experts project costs may fall to $2-$4 per kg as production scales up, making hydrogen cost-competitive with gasoline.

– Fueling infrastructure and onboard storage add to the effective cost per mile for FCEVs.

– Continued research into lower-cost production and distribution will be key to realizing the full potential of hydrogen as a transportation fuel.