The dream of the hydrogen economy persists. Proponents say that hydrogen, potentially one of the densest energy sources available to us, can provide our transport fuels and the energy needed in the home. But progress has been far slower than expected over the last few decades so I visited two leading UK innovators to try to understand why.
ITM Power in Sheffield makes a mobile electrolyser that can make hydrogen by splitting water into its two constituent elements. The business sees hydrogen replacing petrol in cars, either by using fuel cells to create electricity to drive a motor or by burning the hydrogen in an engine. AFC Energy, a company based in Surrey, produces low cost fuel cells that use hydrogen and the oxygen in the air to generate electricity. Its partners include the supermarket chain Waitrose, which is interested in using fuel cells to make the electricity for shops.
Both companies have excellent technology and first-rate manufacturing skills. But if I understood the economics of their products correctly, I believe neither can hope to compete with other sources of energy, except in a few very unusual circumstances. The problem is that making hydrogen will always use energy, and that energy could always be more productively used instead to directly generate electricity in a higher efficiency process.
Let’s consider ITM Power’s proposition first. ITM uses electricity to split water into hydrogen and oxygen. Its electrolysis (separation of water into its constituent elements) is about 70% efficient. That is to say, it uses 10 units of energy to break the chemical bonds between the atoms of hydrogen and oxygen compared to a maximum of 7 units of energy, either in the form of heat or electricity, gained by then recombining the two gases to make water. This maximum of 7 units can never be actually achieved. Hydrogen burnt in a car engine (yes, petrol/gasoline engines can be modified to use H2 as a fuel) might generate about 2 units of useful energy. The rest is lost as heat. Hydrogen pumped into a fuel cell, which then generates electricity, can push this figure up to about 4 units. The implications of these numbers are simple. Use 10 units of electricity to split water, store the hydrogen and then use it later to convert back into electricity and you get only 4 units back.
Compare this to other means of storing electricity: use cheap power to pump water uphill and then releasing it through turbines is about 70% efficient (electricity out compared to electricity in). Modern batteries work at about 80% and newer technologies like compressed air storage (use the power to compress air, then release it through turbines) can eventually hope to achieve similar levels of success.
This wouldn’t necessarily be the end of the story if the equipment needed to make hydrogen was inexpensive. At times when electricity is very cheap, such as on windy summer nights when demand is low, hydrogen could be used to store electricity for sale at peak prices the following day. However ITM Power quote a cost of about £700,000 for its extremely impressive H2 manufacturing and storage system, housed in two standard freight containers. This unit will generate about 2 kilogrammes of H2 an hour, with an approximate energy value of about 80 kilowatt hours. At best, the system might hope to store energy for twelve hours a day, spending the rest of the time creating and selling electricity. Each day the kit might therefore store about a megawatt hour of electricity, buying power for part of the day, and selling the megawatt hour at peak times.
Compare this to a large rack of batteries with a similar capacity. A 2010 Deutsche Bank study (1) suggested that current prices from lithium-ion batteries are about $450 per kilowatt hour, or $450,000 (less than £300,000) per megawatt hour. This figure was for automotive use – larger scale industrial power storage units should be a bit cheaper. So battery storage – which operates at 80% efficiency is less than half the price of hydrogen storage, which has a typical output-input ratio of 40% today.
The unfortunate truth is that hydrogen is a poor way of storing electricity and the differences between H2 and batteries will probably widen because of the huge amounts of cost-reducing R+D going into lithium-ion batteries. I’m sure ITM Power knows this. It has focused instead on serving the vehicle fuel market. The rise in the price of oil means that mobile power is much more expensive than stationery energy. A UK household pays 12 or 13 pence per kilowatt hour for electricity and slightly more than this for petrol. (For US readers, the price of petrol (gasoline) in the UK is about $2.20 per litre or over $8 a US gallon). But a standard car gets only about 3 units of useful work for each 10 units of energy put in the tank with the rest lost as heat. However if we power a car with electric motor, this ratio is about 8 to 10, better than twice as good. It really makes sense to drive an electric car.
However the sad fact is that this doesn’t mean we should use hydrogen to make that electricity. (In a fuel cell car the hydrogen pumped into the tank generates electricity which then turns an electric motor). Remember the crucial calculation above – if we make hydrogen using electricity and then use it to regenerate electricity in a fuel cell, we get 4 kilowatt hours out for every 10 we put in. But if we just take electricity and store it in battery in the car we get 8 units out for every 10 we put in. And, crucially, the batteries are far cheaper than the fuel cell. A fuel cell car using hydrogen will cost more and deliver half the number of miles of travel for each unit of energy employed when compared to a battery car. The implication is that hydrogen isn’t very useful as a mobile power source.
Thus far we’ve looked at the value of using hydrogen as a way of storing electricity and as a way of moving a car. What about the third opportunity, as a means of generating stationary power? This is where AFC Energy’s technology comes in. AFC’s low cost fuel cells, using clever catalysts and cheap materials, can take hydrogen and generate electricity for shops, factories or office buildings. The problem is making the hydrogen in the first place. Certainly it is true that some industrial processes have hydrogen as a by-product. This hydrogen will generally then used for the manufacture of ammonia for fertiliser, but it could instead be inserted into a fuel cell to make electricity. AFC Energy have a prototype fuel cell going into a plant making chlorine in Germany with abundant supplies of waste hydrogen. I haven’t done the sums necessary to work out whether the hydrogen would be worth more as an input to fertiliser manufacture than for making electricity but I suspect the latter is more valuable. However the worldwide chlorine manufacturing sector will only generate enough hydrogen, AFC Energy says, to provide about 3 gigawatts of continuous energy. This is the equivalent of two very large power stations.
But for most of the potential applications of AFC’s beautifully designed technology, there won’t be cheap hydrogen available. It will have to be made on-site. Making H2 using electrolysis, and thus using electricity, in order to run a fuel cell to then generate electricity is clearly wasteful. We’d get about 4 units of electricity out for ever one we put in. AFC believes the alternative should be steam reforming of natural gas, which is largely methane (CH4). High temperature steam and a catalyst will split methane into hydrogen and carbon monoxide/dioxide. This is a well understood technology.
Think for a second about what is really going on here. Natural gas is being split at the fuel cell site, with a high energy cost. The hydrogen produced is then fed into a fuel cell, which will get about 6 units of electricity for every 10 units of hydrogen energy used. The overall efficiency will – once again – be about 4 units of electricity out for every 10 units of energy in. Compare this to a conventional modern gas-fired power station, which burns methane and uses some of the waste heat for a second turbine cycle. This gives up to 60% efficiency. Some electricity, perhaps 6%, is lost in the transmission across the grid, meaning a total efficiency of somewhere above 50%. Unless I am missing something, it is therefore better to burn natural gas in a power station than to crack it using steam and then use the resulting hydrogen in a fuel cell. Importantly, the carbon emissions will also be lower from a modern gas plant because less methane is burnt to create the equivalent quantity of electricity.
AFC responds to this point by saying that a fuel cell gives the owner security of electricity supply. In some senses, this is true. If the power fails at a site, the fuel cell will continue to produce electricity, provided there is gas available. But other than temporary outages, the primary reason that power cuts might happen is a shortage of fuels for electricity generation. If there is gas available in the UK, then the large power stations will use it for electricity generation. If there isn’t natural gas, then neither the power stations nor the AFC fuel cell site will have it. The power from an AFC fuel cell will only be as secure as its natural gas supply.
The second argument AFC makes is that when the technology is mature local electricity generation by a steam reformer and an adjacent fuel cell will produce electricity at a price of 12p per kilowatt hour, only perhaps a third more than is currently being charged by electricity suppliers to large users. The numbers to support this assertion are not available. But it would be extremely surprising if the electricity were ever cheaper than standard generation. AFC quotes a cost of about £1.2m for a 180 kilowatt system. This means over £6,000 per kilowatt, compared to about £1,000 for an equivalent share of a new CCGT gas plant. Operating costs are also likely to be much higher than at a conventional power station. Lastly, a conventional gas plant will find it far easier to fit carbon capture and storage. These are the arguments against seeing hydrogen as a important source of cost savings or carbon reduction. Fuel cells may work in specific applications, such as where the waste heat can be used in a domestic home or where the high levels of nitrogen leaving the system are useful for reducing fire risk, such as in a datacentre. But as far as I can see the fundamental energy economics of creating H2, with the associated heat losses, and then using the gas either in a combustion engine or in a fuel cell (with a maximum of about 60% efficiency) must mean that hydrogen has a very limited role in the future low carbon world.
(With many thanks to the people at ITM Power and AFC Energy for their help. Errors are mine.)
(1) The DB report is available here: http://bioage.typepad.com/files/1223fm-05.pdf
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Most of the economics of electricity generation are fraught with the reality that electricity generation is energy hungry. In the age of abundant fossil fuels and no perceived carbon costs this meant that electricity, usually on a one to one basis was the default power of choice. As both the costs of the energy sources and their now apparent carbon costs rise can electricity still flourish?
Attacking the profligacy of its use has to be one way forward, so greater visibility of usage and costs. The electricity that we generate may well have to work harder in heat pumps say where it becomes a generator itself. Or we may find that the economics of natural energy comes back to the fore with wind, wave and hydro being the only pure generators where although efficiencies are low there are no consumed resources going in.
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That figure of £6,000 per kW? I thought afc energy were targeting a price of £500 reducing to £400 per kW as mass production kicks in. The fuel cell has four possible revenue streams, electricity, heat, pure water, low oxygen air.
They seem to believe that their fuel cell is a disruptive technology to turbines.
I also thought that it requires as much if not more energy to remove the carbon post combustion as pre combustion. When comparing efficiency it seems you have included the energy cost of stripping out the carbon for the fuel cell power station but ignored it for the ccgt power station. Sorry if I have misunderstood.
By having lots of small fuel cell power stations instead a large ccgt power station means CHP becomes practical. The system is very robust, each cell being only 50kW. and no requirement for any spinning reserve for renewables balancing.
My view is that there is no place for large fossil fuel power stations in the low carbon economy but millions of small CHP plants running on biogas whenever possible for renewables balancing.
I have investments in afc energy and ceres power as well as wind and solar of course. -
Dear John Goldsbrough,
Thank you for your comment.
The figure of £6,000 per kw (in 2014) came from company founder Howard White at our meeting. This number covers the fuel cell and the steam reformer.
I do see the arguments that fuel cells have multiple potential outputs. So a domestic fuel cell, used for electricity and heat, will be more financially viable than one that just makes electricity. I don’t dismiss for one second the possible importance of Ceramic Fuel Cells’ 2 kw unit for the home, which uses methane or other hydrocarbons. (By the way I did contact Ceres Power but it did not respond to my request for an interview).
The key point I try to make in the piece above is that the process of making hydrogen adds an unavoidable extra cost to the operation of a fuel cell. Since a CCGT plant is as efficient as the best fuel cells on the market, this means that they can never compete in mass markets as electricity generation or storage devices. Therefore when we finally start to create large amounts of biogas, we would be better advised to burn it in a conventional plant than in a small fuel cell. If we need storage or grid balancing, I suggest above that batteries will be cheaper and more efficient.
Chris Goodall
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Chris,
Like John Goldsborough I think that you have ignored the extent to which the need to decarbonise electricity generation is changing/will change the economics of power generation. DECC has identified three legs to the UK’s strategy going forward; Renewables (which will mainly be offshore wind), CCS and Nuclear. All those routes are going to be very expensive to the electricity consumer.
I will concentrate on CCS as I am very much involved in that activity; I was responsible for the financial modelling of what is now the Don Valley IGCC Project which is one of the 13 CCS entries into the NER300 Competition. In an IGCC with CCS the gas being burnt in the CCGT is basically hydrogen (it has to be diluted with nitrogen from the ASU).
Like every other method currently available for decarbonising conventional power generation an IGCC with CCS is very expensive. One of the other entries into the NER300 Competition is the Peterhead CCGT power station with post combustion capture. I have been told that the post combustion plant required for this project will be bigger than the rest of the power station! There will also be a massive efficiency penalty associated with it.
What the developers of the second generation of CCS projects will be looking for is ways of reducing the cost of the first generation of CCS projects. I believe that the Don Valley IGCC will be built. It will include a CCGT which burns hydrogen. For the next generation of coal gasification based CCS projects will it be cheaper to replace the hydrogen burning CCGT with banks of hydrogen fuel cells? That is the question you should be asking.
In summary comparing a methane burning CCGT with hydrogen consumimg fuel cells is of no relevance; one produces a lot of CO2, the other doesn’t.
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Hi Chris, Ive read your article with interest. A couple of questions
Please can you write a paragraph on Linc energy’s Underground Coal gasification route of hydrogen production? Clearly Linc have a view on the AFC fuel cell which is that it is commercially viable to set up a supergreen powerstation running on Hydrogen from UCG syngas, so I’m very interested to here your view on this.
You focus on Steam reforming for Hydgrogen production from natural gas. This is a very costly and dated way of reforming natural gas into Hydrogen. There are new efficient and cheap reforming technologies becoming available such as the Calix technology which only has a 6% energy drop versus a 40% energy drop with the steam reforming technology you focus on. Also I understand that the carbon is captured during the Calix reforming process which is clearly another advantage. Please can you comment on this and the economics of using the Calix reforming technology versus steam reforming.
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Chris, I think that this article is very badly researched.
The persistence or not of hydrogen economy dreams is irrelevant to what hydrogen technology companies are doing; it’s misleading to imply these companies are dreamers.
As far as your efficiency comments are concerned the ‘well to wheel’ efficiency of Hydrogen vehicles, electric vehicles and hybrids has been extremely well documented by the EU, US DoE and all the major car companies and very clearly shows hydrogen vehicles as the best option. Practical factors such as 3min filling times (compared to many hours charging an EV) and ranges of 400 miles (rather than 100 miles for EV’s) make the hydrogen vehicle compelling. Add to this the fact that electrolysers can be demand side managed by power companies to balance against intermittent power generation and the case for hydrogen gets even better.
Today at ITM we can make Hydrogen on-site using our HFuel product at a lower cost than the petrol equivalent but with a zero carbon footprint. We have trials organised with 21 hardnosed commercial companies.
The mass introduction of hydrogen vehicles missed the 2010 target because of a chicken and egg problem i.e. cars need refuelling infrastructure. Germany and US have signed binding deals with the major car companies to break this problem and Japan has just joined. Toyota, Nissan and Honda made a joint press release saying that their strategies are based on hydrogen cars.
Germany is spending $2.6bn on 1000 refuelling stations over the next 4 years and every major OEM has rolled out a hydrogen car. The volumes needed for cost reduction will be achieved by 2015.
The existing early adoption market is the commercial fleet market. In 2010 $350m of fuel cells were shipped into this market with a CAGR of 27% (Pike Research).
You also underestimate the market for stationary fuel cells in your discussion regarding AFC. In 2010 $450m of fuel cells were shipped into this market also with a CAGR of 27% (Pike Research).
Do you think that these markets are just ‘dreamers’ having fun?
Dr Graham Cooley, CEO, ITM Power plc
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Chris,
Further to my previous message I suggest you google, “burning hydrogen in gas turbines”. You might then might begin to appreciate how much work is going on in this field in pursuit of reducing carbon emissions. I have included a link below to a US DOE webpage which was identified by that search which also refers to the use of fuel cells.
http://www.fossil.energy.gov/programs/powersystems/gasification/index.html
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Thank you very much for the interesting comments from John England, Graham Cooley and Jeremy.
John England.
I am sure I put this badly, but I was trying to suggest that if we have hydrogen, perhaps from underground coal gasification (UGC), we are probably better burning it in a CCGT than pushing it through a fuel cell. Efficiencies are similar and the capital cost of CCGT is lower. If UGC ends up as the dominant route to carbon capture, which I can see that it might, then my view is that on current costs, hydrogen combustion is a cheaper way of creating electricity.
If others think differently, I’d be delighted to debate this.
The big problem, of course, is that without UGC or some other pre-combustion CCS technique, we don’t have much a supply of hydrogen.
Jeremy,
Thank you for your information about the Calix technology. I will follow this up to try to understand it. My reference to steam reforming arose because AFC Energy said that this would be its technology of choice for decentralised hydrogen production. AFC said it would be the cheapest way of creating hydrogen at, for example, Waitrose stores. If Calix is better, then the disadvantages of the fuel cell route would be less, as you correctly suggest.
Linc: UGC is an important avenue to explore. No doubt about this whatsoever. But so far UGC has no appealed to policymakers, perhaps because of the inherently difficulties of controlling a gasification process a long way below ground. In densely populated places like the UK, the risks of groundwater comtamination also look high. But I can see the potentially huge advantages of gasifying coal and then separating off the carbon monoxide/dioxide for storage. Asked to guess I would suggest that UGC might end up as the low cost route for CCS. But persuading politicians of the advantages of ‘burning’ coal underground is going to be tricky, here or anywhere else in the world. (I do understand the advantages of Linc’s experience in Australia).
Graham Cooley,
I don’t think I suggested that hydrogen companies were composed of dreamers. I do believe that the creation of hydrogen from electrolysis is a process that is likely to be always less energy efficient than using the electricity to store power in a battery.
You suggest that EVs take a long time to charge and have limited range and this will eventually make hydrogen the fuel of choice. EVs charged at a DC charging station, such as might be installed at a motorway service station can actually be recharged in a matter of minutes. EVs only take a long time if they are recharged at home using a 240 volt standard connection. Range: today’s EV ranges are limited. But almost all driving trips are less than 100 miles. I haven’t gone back to the UK National Travel Survey but my memory is that the average person takes less than 10 trips a year of more than 100 miles in a car. For these journeys, a shared car parked in a local street (a car-club car) will be far cheaper than the cost of a hydrogen fuel cell car.
So far, and this may change of course, fuel cell cars have bee hugely expensive ($1m a vehicle is often mentioned) and with low durability. Battery cars work – not perfectly – and seem to me to have far higher energy efficiency. At the risk of being boring, hydrogen from electrolysis is 70% efficient in the ITM process and a fuel cell is 60% efficient in the AFC (stationary) cell. This means overall 42% efficiency compared to about 80% in the grid to battery route. There is simply no contest here.
Last point: fuel cells are struggling everwhere in the world, except in places like Korea where there are huge subsidies.
Chris Goodall
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Chris,
I think that it was this comment that irritated everybody that read it,”(and probably never will)”. You do not know enough and are not in a position to make a comment like that. I could give you hundreds of links that demonstrate that your article was complete nonsense but haven’t got the time. I will, however, suggest a few lines of future enquiry for you:
1. Have a look at the Air Products website and their development of hydrogen pipelines, plasma gasification of waste to produce hydrogen and the development of a hydrogen filling station in California that will be fed directly from one of their pipelines.
2. Get in touch with the UCG Association and ask them to explain why they believe that UCG represents possibly the cheapest form of power generation. Ask yourself why Linc Energy, possibly the most advanced UCG Company in the world, has bought 10% of AFC Energy.
3. Look at how many coal gasification based power projects and coal to liquids plants are being built in China. All of these represent a huge potential market for hydrogen fuel cells. China Huaneng have actually stated that they intend to experiment with fuel cells at their flagship Tianjin IGCC project.
4. Centrica have signed an agreement with AFC for fuel cells for use at a “flagship” project. My guess is that project is connected with their offshore wind projects off the east coast of England.
5. Finally AFC believe that they can eventually produce their fuel cells at about £400/kW. That is far, far cheaper than a CCGT (comparing the pictures of fuel cells which are all static parts with the high speed rotating machinery that is a CCGT should give you a clue as to why that is). Furthermore CCGTs can only burn hydrogen when it is diluted with something like nitrogen and they come in specific sizes; with fuel cells hydrogen could be tapped from a pipeline to produce a power station of any size without the need to provide diluents.
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John England,
Thank you very much again for your very helpful comments.
Your point is that underground coal gasification will provide an inexpensive source of hydrogen that rescues the economics of fuel cells. You may be right about this.
As you very well know, UCG is a technology with promise. But – so far – it has not proved to be a successful means of extracting the energy from coal. Linc Energy is the world leader in UGC but the focus of its business is on using the syngas (including the hydrogen) for conventional power generation in a turbine, not fuel cell use. I presume that this is because Linc believes that this is the most economically efficient use of the syngas. Although it is an investor in AFC, it is not devoting the majority of its attention to the fuel cell option.
To believe that fuel cells are the route forward one has to believe a) that hydrogen from UCG will be readily available and b) that it can be readily separated from the rest of the syngas and c) that fuel cells will eventually become a better value alternative than combustion technologies for using the hydrogen.
I fully accept, as mentioned in the original article, that AFC might produce fuel cells that are cost competitive with CCGT at very large (hundred of MW) scale. But to believe in the value of investing in hydrogen economy companies one has to believe a large number of trends will all work in favour of businesses like AFC, particularly as regards the availability of cheap hydrogen.
That is why I suggested in the title of the article that the economics of hydrogen will ‘probably’ never work.
Best wishes,
Chris Goodall
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Chris,
“To believe that fuel cells are the route forward one has to believe a) that hydrogen from UCG will be readily available and b) that it can be readily separated from the rest of the syngas and c) that fuel cells will eventually become a better value alternative than combustion technologies for using the hydrogen.”
a) and b) are established processes i.e. you do not have to believe it!. To produce diesel at Chinchilla they have to separate out hydrogen and carbon monoxide from the syngas from their UCG facility. These are processes that have been established for decades.
Diesel from above ground coal gasification has been carried out in significant quantities for the last 70 years (i.e. in Germany during WWII and South Africa in more modern times. In is now also being done to a growing extent in China because of the price of conventional oil.
We should have a better idea if fuel cells are a better option in the next year or two. If AFC can produce them for £400/kW and 60% efficiency then they definitely will be the cheaper option.
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Chris,
If you really want to learn about coal gasification and coal to liquids plants then I suggest you get in touch with somebody like Peter Fagiano.
I know him very well from when he worked at Jacobs and he also knows AFC Energy very well. He will be able to give you an expert’s view of the potential of hydrogen fuel cells for power generation when the primary energy source is either coal or gas.
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Chris,
This summarises Linc’s plans and explains why they made the investment.
http://www.lincenergy.com/data/media_news_articles/LNC-Media_Coverage-572.pdf
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Chris,
I will make this my last comment. I am a shareholder in AFC Energy and have also got to know them quite well. I have introduced them to various people in the coal gasification industry and I was aware of certain things happening with regard to Altona which was why I gave you the link to the Peter Fagiano appointment. However, I was constrained by a confidentiality agreement that I have in place with AFC. However, this RNS has been issued this morning .
As I am sure you aware the extract below refers to Linc and AFC.
“Altona has relationships with the holder of exclusive rights to proprietary fuel cell technology for application in China for the generation of direct current (‘DC’) electricity using hydrogen produced from the gasification of coal. The production of DC electricity has the significant advantage in that it can be transmitted to users via buried cable as opposed to conventional transmission tower systems”
If you knew anything at all about China (and if you look at our website you will see that we do) you will know that it is going into coal gasification and coal to liquids plants in a big way. The potential market for AFC’s fuelcells in China alone is massive.
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John England,
you are ignoring what the company founder has said about costs, and are talking about a figure less than 10% of the true costs.
His patronising comments to Mr Goodall (basically saying “If you knew anything about this subject…….you would know I’m right!), avoiding answering key questions, and the classic “I could prove you wrong but haven’t got time”……..before going on to spend lots of time posting, in an increasingly panicky way……..hmmmm!
I’m not saying that AFC energy are a bad company, but wanted to make people aware of this.
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That’s interesting, I’ve been looking into Helius energy recently.
My apologies for calling it wrong, but there has been been a concerted online effort to ramp up certain stocks in this industry, and your syle of writing reminded me of someone.
But again, my apologies.
I still think the author’s got this one right though, and the company founder stating those costs recently shows the problem. The technology is still in it’s infancy however, and no doubt there will be developments over the next few years which will increase efficiency and lower costs
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James Thompson,
Your apologies are accepted.
Chris’ original article was about the hydrogen economy in general rather than AFC in particular. In my opinion he dismissed the hydrogen economy without appearing to know much about what is going on in the world.
As you can see from my website I have been involved with what is now called the Don Valley Power Project for almost 9 years. It is generally recognised as one of the most advanced CCS projects in the world and it is a hydrogen economy project. If you and Chris do nothing else I suggest that you both do a lot of research into the number of coal gasification (both overground and underground) and coal to liquids plants already built or in the course of construction in China. These alone will probably be enough to launch a substantial hydrogen economy.
I assume you saw this news at the weekend:-
This project will produce a lot of hydrogen.
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