Hydrogen price to the customer is dependent on several factors such as demand and supply and also transportation cost. However, at a bare minimum, the fundamental cost of Hydrogen production is typically the largest contributor for determination of price to the customer. We look at these various elements in detail below.
- Equating with the price of Fossil Oil / Gas Fuel, freely available at the point of use. This is the least possible sales price, even from the point of view of any Hydrogen gas supplier.
- Transport and logistics cost of delivering Hydrogen to the point of use.
- Demand supply situation in and around the point of use of Hydrogen gas
- Competition from Hydrogen gas delivered by any other competing technology
Serial number 1 determines the least price of Hydrogen gas from an Chlor-Alkali plant, which delivers largest amount of Hydrogen gas in any market. Immediately thereupon other factors add in to also participate in the price discovery. Here an example is helpful.
Hydrogen is available at least price in India, in the Mumbai and Gujarat region. This is because this area has the maximum number of Chlor Alkali plants, and also has least cost Fossil fuel – Natural gas. Here, the Equivalent energy is making the base price of Hydrogen. The logic being that the Chlor Alkali plant will be loathe to sell Hydrogen gas at a price cheaper than cost of equivalent energy quantity of Natural gas.
The HHV (Higher Heating Value) of Hydrogen is 141 MJ/Kg., and that of Methane (predominant constituent in Natural gas) is 55 MJ/Kg.
In Gujarat region Natural gas is available at Rs. 24/Kg. Thus Hydrogen price cannot be lower than 24 x 141 / 55 = Rs. 62 per kg. (1 NM? of Hydrogen weighs 85 grams), i.e., Rs. 5.30 per NM?.
In North India, around Delhi, closest Chlor Alkali plant is at Alwar ? Rajasthan. Natural gas is not available here, and cheapest Fossil fuel is LSHS whose price is approximately Rs. 44 per kg. The HHV of LSHS is about 48 MJ/Kg. Thus this Chlor Alkali plant will without doubt base their price (44 x 141/48) Rs. 129 per Kg., equivalent being Rs. 11.00 per NM?.
Author: Mr. Rajeev Bhalla (V.P., Marketing, MVS Engineering Ltd.)
About the author: Rajeev is a technology evangelist and also a leading authority in on-site gas generation solutions. Hydrogen is a passion for Rajeev and he takes an all encompassing view when it comes to generation of Hydrogen. He takes a lot of interest to review Hydrogen from the user’s standpoint and hence is able to guide customers in selection of best-of-breed technologies.
About MVS Engineering Limited
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MVS Engineering is a turnkey supplier of Gas generation equipment, Air and liquid drying equipment. MVS was founded in 1977 and has supplied nearly 7000 Skid mounted units worldwide. Read more about the company in the About Us section of our website.
For OnSite Hydrogen gas generation, we offer multiple technologies including:
Ammonia Cracking
Methanol Cracking
Natural Gas (SMR) Reforming
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