Cleantech Market Intelligence
Hydrogen Infrastructure: Sharing the Risks and Rewards
People often ask how much it costs to build a hydrogen fueling station. It is impossible to give a simple answer to this question, as looking at the constituent parts of the capital costs will show.
First, to be clear, hydrogen stations are built to fuel very different types of vehicles. Passenger cars, transit buses or other large fleet vehicles, and warehouse forklifts are the three main types of hydrogen stations built at present. These have very different engineering requirements. But most people want to know about retail stations for passenger cars – something comparable to today’s gas stations. The cost of building these stations vary broadly and include:
- Station equipment: This will vary depending on how the hydrogen is produced. If it is centrally produced and then trucked in, the station equipment will include storage tanks, heat exchangers, and compressors. If the hydrogen is being produced on-site, then add in the production equipment – most likely either a natural gas reformer or an electrolyzer. This is all in addition to the dispensing equipment.
- Installation: This can vary dramatically based on the amount of hydrogen being produced and stored, as well as the station site. Is it the station a “new build” or is it a retrofit of an existing retail station? If it is a retrofit, how much construction is needed to accommodate the hydrogen equipment? Permitting can be another major cost, especially given that hydrogen fueling is still quite new. Codes and standards for hydrogen stations are still being developed and local permitting officials are unlikely to be familiar with the technology.
Hydrogen infrastructure providers are inclined to be cagey about the total cost of a building a station, but looking at some recent California Energy Commission (CEC) infrastructure awards gives some insight. The CEC recently announced $15.7 million in awards for 11 stations. The CEC provided 65-75% cost share for all but one of the stations. Calculating from that, the stations are around $2 million apiece, with just a couple that are up to $3.15 million. Hydrogen throughput at each station must be at least 100 kg/day, with 20 kg/hr peak fueling capacity (a typical fuel cell car today will have tanks holding 4 to 7 kilograms of hydrogen). It is likely that some of these stations’ capacity is higher than that. The stations should be designed to be modular. There is no incentive to massively overbuild capacity while California’s fuel cell vehicle fleet is still in the hundreds, but these stations will be prepared to ramp up fueling volume when automakers ramp up vehicle volume.
It’s fair to say that the upfront costs for hydrogen stations are daunting, although they are not unexpected given that these stations are being built without the benefit of a complete high volume supply chain. For now, while stations are heavily subsidized by governments, the big industrial gas companies are willing to play in this market. But without government support, this investment would constitute a major risk, since the capital costs must occur upfront and in anticipation of future demand from a successful fuel cell car market. Meanwhile, automakers are clearly trying to put the onus of a widespread commercial introduction of FCVs onto the hydrogen providers, essentially noting that the OEMs will make fuel cell cars but won’t roll them out in large numbers unless they can be readily refueled. Germany’s H2Mobility program is one innovative way to address this issue. With H2Mobility and the accompanying OEM Letter of Understanding, the automakers and infrastructure companies made a joint commitment to roll out commercial vehicles by 2015 and build stations in advance of this date. In essence, the two sides have linked hands and agreed to move into the uncertain future together, which reduces the risk for both parties. This is an innovative model for car refueling; Japan has adopted a similar concept. It would be exciting to see something similar adopted in California since continued government funding at the level the CEC is providing now is hardly certain given the state’s current budget crisis.