The cost analysis of hydrogen life cycle in China

The cost analysis of hydrogen life cycle in China

international journal of hydrogen energy 35 (2010) 2727–2731 Available at www.sciencedirect.com journal homepage: www.elsevier.com/locate/he The co...

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international journal of hydrogen energy 35 (2010) 2727–2731

Available at www.sciencedirect.com

journal homepage: www.elsevier.com/locate/he

The cost analysis of hydrogen life cycle in China Fei Yaoa,*, Yuan Jiaa, Zongqiang Maob,** a

College of Economics and Management, Beijing University of Chemical Technology, Beijing 100029, PR China Institute of Nuclear and New Energy Technology, Tsinghua University, Beijing 100084, PR China

b

article info

abstract

Article history:

Currently, the increasing price of oil and the possibility of global energy crisis demand for

Received 10 April 2009

substitutive energy to replace fossil energy. Many kinds of renewable energy have been

Received in revised form

considered, such as hydrogen, solar energy, and wind energy. Many countries including

23 April 2009

China have their own plan to support the research of hydrogen, because of its premier

Accepted 24 April 2009

features. But, at present, the cost of hydrogen energy production, storage and trans-

Available online 13 June 2009

portation process is higher than that of fossil energy and its commercialization progress is slow. Life cycle cost analysis (LCCA) was used in this paper to evaluate the cost of hydrogen

Keywords:

energy throughout the life cycle focused on the stratagem selection, to demonstrate the

Hydrogen energy

costs of every step and to discuss their relationship. Finally, the minimum cost program is

Life cycle

as follows: natural gas steam reforming – high-pressure hydrogen bottles transported by

Life cycle cost analysis

car to hydrogen filling stations – hydrogen internal-combustion engines. ª 2009 Professor T. Nejat Veziroglu. Published by Elsevier Ltd. All rights reserved.

1.

Introduction

Hydrogen is one of the best renewable energies in the future. It can be made from coal, natural gas and other energies [1–3]. It is an environmentally friendly fuel. Water is the only product formed when hydrogen burns. The hydrogen fuel cell and internal-combustion engine in automotive industry have a very broad market because of its substitutability for fossil energy. However, nowadays, the cost of hydrogen production, storage and application is higher than that of fossil energy. So it is still backward in commercial competition. China, the biggest developing country, is also a big energy consuming country; its energy structure will bring large impact to the global energy structure. That is mainly because Chinese hydrogen energy market possesses tremendous potential for development and application, attaches great importance to the international cooperation which can effectively reduce the life cycle cost of hydrogen energy and

consequently accelerates the hydrogen energy commercialization process. The hydrogen energy research and development of China can be traced back to the early 1970s. In order to promote the sustainable development stratagem, Chinese government has made significant efforts to impulse the exploitation and application of clean energy including hydrogen. Large research progress and a number of patents in hydrogen energy have been worked out. At present, with the support of relevant national departments, China has a professional research rank composed by many high-level researchers, carried out 973 projects for hydrogen energy, ‘‘The basic research of hydrogen energy’s size preparation, storage, transportation and fuel cell’’. And the hydrogen energy technology has been ranked in ‘‘Chinese 11th FiveYear Plan’’ and ‘‘2015s perspective program (energy field)’’ [4]. The researches about hydrogen energy system, namely, hydrogen energy system estimate, which is chiefly focused on fuel cell car hydrogen energy system, have just been started

* Corresponding author. Tel./fax: þ86 10 64454291. ** Corresponding author. Tel.: þ86 10 62780537; fax: þ86 10 62792648. E-mail addresses: [email protected] (F. Yao), [email protected] (Z.Q. Mao). 0360-3199/$ – see front matter ª 2009 Professor T. Nejat Veziroglu. Published by Elsevier Ltd. All rights reserved. doi:10.1016/j.ijhydene.2009.04.076

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a short time ago. In 2000, Mao and his collaborators discussed basically the developmental route of Chinese fuel cell car hydrogen energy system [5,6].

2. Life cycle, life cycle cost and life cycle cost analysis Life cycle is the whole process of a product throughout the raw material acquisition, production, application and eventually abandonment. Life cycle cost (LCC) concept first appeared in the 1960s, which is used to calculate all the products’ expenses throughout the life cycle [7]. In the 1980s and 1990s, to find out the ways to reduce costs, researchers analyzed the cost of the product from its raw material acquisition, product processing, product being sent to the market for application and eventually its abandondment. When people began to pay attention to the importance of the global environmental issues, they imported the environmental cost into the life cycle cost. In this paper, the life cycle cost is abstracted like this: the whole cost happened in the supply and application phases and the environmental cost happened during this time were included. What is called ‘‘the environmental cost’’ is the sum of all the effects brought about by the product manufacture and consumption processes on the environment [8]. The formula denotation is as follows: The cost of lifecycle CSUM ¼

X

ðCS þ CA Þ

CS and CA indicate the costs of the supply and application phases separately. The cost of supply phase includes the expenses that occurred due to raw material acquisition, product manufacture, storage and transportation and the manpower fare as well as the management expense that occurred during this time. The cost of using phase includes the expenses that occurred when the client redo or maintain the products in the process of using them, as well as the expenses for dealing with the effect brought about by the product on environment in all of the phases. Life cycle cost analysis (LCCA) is one kind of a method to estimate the program from the beginning to the end in which we can figure out the cost benefit of various alternative investments and commercial decision-making projects by calculating the direct cost and cash float of income brought by the program to the decision-maker according to the economic decision-maker’s point of view, because in this method that, all the cost happened because of possessing, operating, maintenance or mending the products, and the final

disposition, is considered as the decision-making related cost [9]. In this paper, life cycle cost analysis (LCCA) is established in the whole life cycle of production, analyses all the cost happened in the life cycle including the effect on environment during the whole life cycle and calculates them in currency, to figure out the linchpin in hydrogen energy’s life cycle with the purpose of cutting down the cost.

3. The framework of hydrogen energy life cycle cost analysis Combining the concepts of life cycle cost and life cycle cost analysis, we bring forward the steps of hydrogen energy life cycle cost analysis, as shown in Fig. 1. Step 1: Confirm the range and phases of hydrogen energy life cycle We compartmentalize hydrogen energy life cycle into 3 phases: hydrogen production, hydrogen storage and hydrogen application. The so-called hydrogen production phase also includes retaining raw material, transportation, and machining and hydrogen production. Hydrogen storage means its storage and transportation. Hydrogen application phase mainly refers to the conditions that use hydrogen in different forms and in different environment. Step 2: Identify the cost of different phases and make lists of the analysis According to the direction of material flow and energy flow in the life cycle, list all the possible costs in the 3 phases, effects on the environment that occurred in each phase are also included. Step 3: Set up the cost breaking structure of hydrogen energy life cycle Gather all possible costs listed in Step 2, and then set up cost breaking structure in the light of sort to make every cost have specific relationship between each other. Step 4: Choose the cost estimate model Choose the appropriate cost estimate model to estimate each phase of hydrogen energy life cycle. Step 5: Hydrogen energy life cycle cost analysis Analyze the relationship between each cost elements in cost model of the life cycle.

Fig. 1 – Hydrogen energy LCCA framework.

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Fig. 2 – Hydrogen energy life cycle and phases buildup.

4. The range and phases of hydrogen energy life cycle According to the concepts summarized previously, hydrogen energy life cycle is divided into providing phase, which is composed of hydrogen production and storage, and using phase (Fig. 2). In this paper, hydrogen was produced by coal gasification, natural gas and storm reforming and water electrolysis. There are 3 methods of hydrogen storage and transportation, carting high-pressure hydrogen bottle, tanker transportation and pipe transportation. Combined with the international attention to energy crisis and environmental protection, hydrogen energy is mainly used as an energy substitute, e.g., internalcombustion engine and fuel cell in automotive industry. On making a comprehensive view, in this paper, there will be 14 different programs to form a final cost estimate. Table 1 depicts the results.

5.

Hydrogen life cycle cost analyses

The particular model method of analyzing is adopted in this paper. This model estimates direct costs of product and activities according to the manufacturing time, consumption and price of materials; other indirect and daily expenses will be converted in this model as well. Particular model takes the estimating method from the bottom to the acme, which requires extremely detailed cost estimate [10]. Data sources stem from a variety of published papers or reports and on-site collection mainly focus on China. In this paper, the final cost unit is the Yuan/kg H2($/kg H2). From the list analysis, every section cost of each program can be concluded, as shown in Table 2. According to the analysis of life cycle cost lists and its decomposition and summary, Fig. 3 shows the result of the cost and following conclusions can be achieved:

Table 1 – The different composing proposals of hydrogen energy life cycle cost. Program

Production of hydrogen

1

Coal gasification

2

Coal gasification

3

Coal gasification

Transport hydrogen to the filling station by carting high-pressure bottles Transport hydrogen to the filling station by carting high-pressure bottles Transport hydrogen to the filling station by tankers

4 5

Coal gasification Coal gasification

Transport hydrogen to the filling station by tankers Transport hydrogen to the filling station by pipelines

6 7

13

Coal gasification Natural gas steam reforming Natural gas steam reforming Natural gas steam reforming Natural gas steam reforming Natural gas steam reforming Natural gas steam reforming Electrolysis of water

Storage in the filling station

14

Electrolysis of water

Storage in the filling station

8 9 10 11 12

Storage and transportation of hydrogen

Transport Transport bottles Transport bottles Transport

hydrogen to the filling station by pipelines hydrogen to the filling station by carting high-pressure hydrogen to the filling station by carting high-pressure hydrogen to the filling station by tankers

Transport hydrogen to the filling station by tankers Transport hydrogen to the filling station by pipelines Transport hydrogen to the filling station by pipelines

Application of hydrogen Hydrogen internal-combustion bus Hydrogen fuel cell car Hydrogen bus Hydrogen Hydrogen bus Hydrogen Hydrogen bus Hydrogen

internal-combustion fuel cell car internal-combustion fuel cell car internal-combustion fuel cell car

Hydrogen internal-combustion bus Hydrogen fuel cell car Hydrogen internal-combustion bus Hydrogen fuel cell car Hydrogen internal-combustion bus Hydrogen fuel cell bus

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Table 2 – Life cycle costs of all parts. Program

Production costs

Proportion

Yuan/kg H2 $/kg H2 1 2 3 4 5 6 7 8 9 10 11 12 13 14

8.34 8.34 8.34 8.34 8.34 8.34 6.82 6.82 6.82 6.82 6.82 6.82 12.16 12.16

Storage and Proportion transportation costs Yuan/kg H2 $/kg H2

1.22 1.22 1.22 1.22 1.22 1.22 1.00 1.00 1.00 1.00 1.00 1.00 1.78 1.78

20% 14% 20% 14% 19% 14% 17% 12% 17% 12% 16% 11% 28% 20%

3.22 3.22 3.40 3.40 4.27 4.27 3.22 3.22 3.40 3.40 4.27 4.27 0.00 0.00

0.47 0.47 0.50 0.50 0.63 0.63 0.47 0.47 0.50 0.50 0.63 0.63 0.00 0.00

Total cost ($/kgH2) 8.84

9.00

8.99

8.87

8% 5% 8% 6% 10% 7% 8% 5% 8% 6% 10% 7% 0% 0%

6.36

6.23

5.98

6.29

6.14

6.01

5.00 4.00 3.00 2.00 1.00 0.00

1

2

3

4

5

6

7

8

9

10

11

12

4.51 7.15 4.51 7.15 4.51 7.15 4.51 7.15 4.51 7.15 4.51 7.15 4.51 7.15

Yuan/kg H2 $/kg H2 73% 81% 72% 81% 71% 79% 75% 83% 75% 83% 74% 81% 72% 80%

42.38 60.39 42.56 60.57 43.43 61.44 40.86 58.87 41.04 59.05 41.91 59.92 42.98 60.99

6.20 8.84 6.23 8.87 6.36 8.99 5.98 8.62 6.01 8.64 6.14 8.77 6.29 8.93

gas, the price of coal are relatively cheaper. The hydrogen produced by water electrolysis requires huge amounts of electricity. Carting high-pressure hydrogen bottles and tanker transportation of hydrogen are better than hydrogen transported by pipelines, the main reason is that so far there are no pipelines for hydrogen transportation, and the transportation cost by pipelines for hydrogen is calculated from that of the natural gas. If we want to reduce the pipeline transportation cost, we have to further investigate whether we can transport the hydrogen by current pipelines for natural gas transportation or make some changes to the pipelines we have, and thus we can leave out a proportion of cost. Hydrogen internal-combustion engines are superior to hydrogen fuel cell vehicles, the main reason is that hydrogen internal-combustion engines only require a few refits to internal-combustion engine systems, and the costs are almost the same compared with the normal internalcombustion engines in the case of mass manufacturing, while the hydrogen fuel cell vehicles require much more input for manufacturing. It is believed that the cost of cell vehicle will be reduced gradually along with further investigation and development of fuel cell technology.

6.

8.00 7.00 6.20 6.00

30.82 48.83 30.82 48.83 30.82 48.83 30.82 48.83 30.82 48.83 30.82 48.83 30.82 48.83

Total costs

Conclusions

8.93

8.77

8.64

8.62

Proportion

Yuan/kg H2 $/kg H2

1 Overall economic orders are arrayed as follows: 6-14-4-212-10-8-5-13-3-1-11-9-7. Among the 14 programs, the highest cost is for program 6, which is coal gasification – pipeline transported to hydrogen filling station – hydrogen fuel cell vehicles; the lowest cost is for program 7, natural gas steam reforming – high-pressure hydrogen bottles transported by car to hydrogen filling station – hydrogen internal-combustion bus, 40.86 Yuan/kg H2(5.98$/kg H2). 2 From the proportion of each stage cost to total cost, the usage phase of hydrogen accounts above 70%, which is much higher than the other phases. Hydrogen internalcombustion engines and hydrogen fuel cell have not been commercialized so far, especially because of the excessive high cost of fuel cell vehicles, and this is why the cost of hydrogen life cycle keeps in high level all the time. 3 Considered the 3 steps of production, storage and application in 3 preparation methods, respectively, the hydrogen production of natural gas steam reforming costs is superior to the other two, mainly because of the complicated equipment and relatively high capital cost of coal gasification and water electrolysis however, the raw material phase of coal gasification making hydrogen is in the ascendant, just because China belongs to the energy structure which is rich in coal while deficient in oil and

10.00

Usage costs

13

14

Total cost ($/kgH2)

Fig. 3 – Comparison of 14 programs’ total costs.

The energetic development of hydrogen energy is significant to the improvement of energy structure and economic structure of China. According to the analysis of hydrogen energy life cycle cost, the lowest cost is for program 7, natural gas steam reforming – high-pressure hydrogen bottles transported by car to hydrogen filling station – hydrogen internalcombustion bus, 40.86 Yuan/kg H2 (5.98$/kg H2). It is discovered that the key point of investigation in Chinese hydrogen energy research field is to reduce the cost of production equipment for coal-made hydrogen, with the purpose of reducing the total cost of production processes ultimately, to continuously improve the hydrogen production to meet the needs of Chinese hydrogen energy situation and to reduce the

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cost of fuel cell and forward the hydrogen energy economy which is symbolized by the hydrogen filling station and by the construction of hydrogen pipeline.

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