appears to offer the potential for significantly improved net electrochemical efficiency, but will require several technical breakthroughs in harnessing solid oxide technology.

Recommendation 8-9. The Department of Energy’s electrolysis technology program should continue to target cost reduction, enhanced system efficiency, and improved durability for distributed-scale hydrogen production from electricity and water. These technology objectives can be advanced through research into (1) lower-cost membranes, catalysts, and other cell and system components; (2) membranes and systems that can operate at higher temperatures and pressures; and (3) improved system design and integration with an eye toward low-cost manufacturing. Specifically, the DOE should increase emphasis on electrolyzer development with a target of $125 per kilowatt and a significant increase in efficiency toward a goal of over 70 percent (lower heating value basis).

Recommendation 8-10. The Department of Energy should emphasize component development and systems integration to enable electrolyzers to operate from inherently intermittent and variable-quality power derived from wind and solar sources.

The production of hydrogen from renewable energy sources is often stated as the long-term goal of a mature hydrogen-based economy (Turner, 1999). Of all renewable energy sources, using wind-turbine-generated electricity to electrolyze water, particularly in the near to medium term, has arguably the greatest potential for producing pollution-free hydrogen. The issues for its successful development and deployment are threefold: (1) further reducing the cost of wind turbine technology and the cost of the electricity generated by wind, (2) reducing the cost of electrolyzers, and (3) optimizing the wind turbine-electrolyzer with a hydrogen storage system. The current study considered only distributed-scale wind-to-hydrogen production systems. For a more in-depth discussion, see Appendix G.

Wind energy is one of the most cost-competitive renewable energy technologies available today, and in some places it is beginning to compete with new fossil fuel electricity generation. A principal parameter determining the economic success of wind turbines is the annual energy output, which is most sensitive to wind speed and the on-stream capacity factor. The current cost of generating electricity from wind at good wind sites falls in the range of 4 to 7 cents per kilowatt-hour (kWh) (without financial incentives), with capacity factors of about 30 percent. Analysts generally forecast that these costs will continue to drop and capacity factors increase as the technology improves further and the market grows.

There are obvious advantages to hydrogen produced from wind energy. It is essentially emission free, producing no CO₂ or criteria pollutants, such as oxides of nitrogen (NO_x) and sulfur dioxide (SO₂), and it is a domestic source of energy. Thus, it addresses both of the main concerns motivating the current drive toward a hydrogen economy. But wind energy is not free of problems. There are environmental, siting, and technical issues that must be dealt with. Wind energy’s most serious drawback continues to be its intermittence and mismatch with demand, an issue both for electricity generation and hydrogen production.

The committee’s analysis considered wind-energy-to-hydrogen systems deployed on a distributed scale, which thus bypasses the extra costs and requirements of hydrogen distribution. For distributed wind-electrolysis-hydrogen production systems, it is estimated that using today’s technologies, hydrogen can be produced at good wind sites (class 4 and above, without financial incentives) for approximately $6.64/kg H₂. The committee’s analysis considers a system that uses grid electricity as backup for when the wind isn’t blowing to alleviate the capital underutilization of the electrolyzer. This hybrid wind-to-hydrogen production system has pros and cons. It reduces the cost of producing the hydrogen, which without grid backup would be $10.69/kg H₂, but it also incurs CO₂ emissions from what would otherwise be an emission-free hydrogen production system.

In the future, the wind-electrolysis-hydrogen system could be substantially optimized. The wind turbine technology will improve, with a resulting decrease in the cost of electricity generated and an increase in the turbine’s capacity factor, and the electrolyzer’s efficiency will increase and its capital costs decrease (see the section above, entitled “Hydrogen from Electrolysis”). With the assumptions used in this study, the committee finds that the wind energy system and the electrolyzer can be designed to be large enough that sufficient low-cost hydrogen can be generated and stored when the wind is blowing, without grid backup. This is a lower-cost option than using a smaller electrolyzer and purchasing grid-supplied electricity when the wind turbine is not generating electricity. With future estimated improvements in the technology, hydrogen produced from wind without grid backup is estimated to cost $2.86/kg H₂, while for a system with grid backup it is $3.38/kg H₂ (all without financial incentives). Furthermore, this stand-alone system has the added advantage of a hydrogen production system that is CO₂-emission-free. The results of the committee’s analysis are summarized in Table 8-2.

Wind-electrolysis-hydrogen production systems are currently far from optimized. For example, better integration of the wind turbine and electrolyzer power control system