Green Hydrogen and Battery in the Utility scale Energy Storage

The extent to which green hydrogen production equipment can replace lithium-ion batteries in large-scale energy storage projects for peak shaving primarily depends on the duration of energy storage. While the unit price of electrolytic hydrogen production equipment (approximately $1000/kW) is higher than that of lithium-ion batteries (approximately $200-400/kW or $100-200/kWh), the cost of hydrogen storage tanks (5-15$/kWh) is significantly lower than that of batteries when considering the storage component for hydrogen production. Therefore, when the duration of energy storage exceeds a certain threshold, battery storage requires additional scale to overcome its storage bottleneck, whereas electrolytic hydrogen production only needs the addition of extra hydrogen storage tanks to expand its storage capacity.

The graph below illustrates a comparison of the average energy storage cost crossover point between lithium-ion batteries and electrolytic hydrogen production. Due to the lower initial cost of lithium-ion batteries, they can achieve energy storage at a relatively lower cost for shorter durations. However, when the energy storage duration exceeds 2.5 hours (corresponding to lithium-ion battery prices of $600/kW or $300/kWh), 3.5 hours (corresponding to lithium-ion battery prices of $400/kW or $200/kWh), and 7 hours (corresponding to lithium-ion battery prices of $200/kW or $100/kWh), electrolytic hydrogen production begins to demonstrate a scale advantage.

In scenarios with higher equipment utilization, assuming that the energy storage equipment is utilized not only for photovoltaic energy storage but also for grid peak regulation, achieving a 24-hour (100% Capacity Factor) equipment utilization, the costs of both energy storage systems reach equilibrium. At this point, the unit cost of lithium-ion battery storage is approximately 5 cents/kWh, while the unit cost of electrolytic hydrogen storage is approximately 2 cents/kWh.

However, it's worth noting that the energy storage form of electrolytic hydrogen is hydrogen gas rather than electrical energy. This implies that if hydrogen cannot be directly used for other applications, then this form of energy storage cannot be directly compared to battery storage. Converting hydrogen back to electricity incurs additional losses, and if considering such Power-to-Power conversion, the advantage of electrolytic hydrogen may be further diminished.

Other assumptions in the calculations are listed in the table below. Readers are encouraged to adjust the baseline prices of different equipment according to their specific situations.