Greensight
Hydrogen

Electrolyser CAPEX & Efficiency - How should it be measured?

Daniel Janzen |

Measuring electrolysers in cost per kW rewards poor efficiency. Electrolysers should be measured in CAPEX per unit of production capacity such as capital cost per kilogram or tonne of daily capacity.

Actors in both commercial, and research instituitions continue to refer to electrolyser CAPEX in terms of cost per kW effect, as evidenced in the figure adapted from NREL. This is not only a confusing metric, but also a misleading one for decision makers.

Case in Point:

Lets look at 2 electrolysers. Both have a calculated cost per kW of $600 USD, but similarities end there. The first electrolyser has an efficiency of 4,4 kWh/Nm3, or 49 kWh/kg and the second has an efficiency of 4,9 kWh/Nm3 or 54,5 kWh/kg. Both electrolysers sound like they have the same cost, and they do... when looked at a cost per kW of effect. 

When looked at from the perspective of hydrogen output, the first electrolyser has a cost of $1,2 MUSD for 1 000 kg of daily output capacity, while the second electrolyser has a cost of $1,35 MUSD for the same amount of daily output capacity. This would give identical costs per kW since they have different efficiencies (or total kW used).

This deception is misleading, because when it comes to efficient electrolysers – the cost per kW formula is actually penalizing higher efficiency:

Total System Cost / Total kW

So two systems might have the same total cost, same production capacity, but different efficiencies and therefore on a Cost/kW the better (more efficient) electrolyser will actually look worse! Not only is the better electrolyser actually cheaper in terms of CAPEX, but it is also cheaper in terms of OPEX as it consumes less electricity per unit of hydrogen produced.

Why we believe this is the right move:

In electrolysis, the goal is to produce hydrogen, not to consume electricity.

Try out our conversion tool below to compare electrolysers:

Author

Daniel Janzen

Energy Economist & Business Developer, Greensight

Daniel is Greensight’s economical expert. He is educated from University of Manitoba, NHH and St. Gallen, and has experience from Deloitte and DOF prior to joining Greensight. He is responsible for Greensight’s economical models and business case development.

Ready to talk?

Want to stay ahead of the energy transition?