The hydrogen economy is nearing "the trough' of a 10-year cycle of boom and bust, experts said during a recent conference conducted by the University of Texas at Austin Energy Institute, but the surviving projects are promising.

"The reality is right now, hydrogen is not taking off the way that people wanted it to," said Trevor Best, CEO of Syzygy Plasmonics, a company that uses nanotech catalysts to electrolyze hydrogen and other chemicals.

"If you go back to 2022, there are a lot of big headlines about the potential behind hydrogen," Best said Oct. 8 during the institute's Hydrogen Day, gathering academic researchers and energy industry officials to discuss current advances and strategies. "But if you actually look at what's happening in the market today, many of those projects that were really excitedly announced are not moving forward. And some of these even managed to achieve final investment decision -- and when you have something achieving FID and then getting canceled, that's a pretty bad sign."

Best estimated more than 95% of hydrogen announcements since 2020 have been canceled.

Green hydrogen costly

The problem started in 2020 when the US Department of Energy set a target of $1/kg for green hydrogen, Best said, but electrolyzing water into a kilogram of hydrogen takes 50 to 60 kWh.

"If you just take your cost of electricity and times it by how much electricity is needed, you'll see that pretty much every model that assumed $1/kg green hydrogen also assumed one cent/kWh electricity," Best said. "The average electricity price around the world is 10 cents, and that has been pretty steady for decades. And so essentially, what was being predicted was that the average electricity price globally ... would go down to one cent/kWh, and I just never heard a good justification for why that would happen."

And as the momentum for artificial intelligence-driven data center power demand has grown, electricity costs have been increasing, Best said.

"That was kind of the death knell for the recent hydrogen push, but not all hope is lost," Best said. "We're in the trough right now, but we are going to go through it. That estimate of 96 % of projects that got canceled means 4% didn't. It can change the world."

One way the hydrogen economy can be revived is by concentrating activivity in low-cost centers for derivative products, mainly in industrial cities, Best said.

"There's a few places on earth like Texas, Brazil, Chile, Africa, Sweden, Australia," Best said. "These areas can achieve very, very low prices for the green hydrogen needs, and you couple that with the right kind of derivative product -- ammonia, methanol, sustainable aviation fuel or synthetic natural gas -- and you can make these things work."

Another way is for policy to drive demand.

"Especially, Europe has a very, very strong mandate, and prices in Spain and upper Scandinavia can get where you want," Best said. "In the US, I think there's still a lot of regulatory uncertainty."

Cooperation is key

Allen Toweill, hydrogen delivery manager at Chevron, said collaboration is key to unlocking the hydrogen economy's contribution to the energy transition.

"We believe that no single entity can act alone -- be it government, be it the company or anything else -- in order to achieve what's going to be needed for the energy transition," Toweill said. "There will be an energy transition, and they're going to have to cooperate."

Chevron's hydrogen processes operate within the Chevron New Energies unit, which also includes carbon capture, utilization and storage, carbon offsets and renewable natural gas processes, Toweill said.

"We believe that the role of hydrogen can be very large as a decarbonization vector, especially where electrification of demand is not feasible," said Toweill, whose company produces about 1 million tons/year of "unabated hydrogen."

Any "credible net zero forecast in 2050 or beyond includes hydrogen as a decarbonization vector," Toweill said.

"Ultimately, what do you want?" Toweill said. "You want hydrogen to be traded as a commodity like an energy vector that it can be. That's a future that we believe in."

Hydrogen can make much more economic sense than electrification for decarbonizing heavy truck transportation, Toweill said, because a hydrogen-burning drive train can weigh about a quarter of a comparable battery electric vehicle.

"Heavy-duty is really where we think it makes the most sense," Toweill said.

Firming up renewables

In power generation, hydrogen can help by decarbonizing thermal generation needed to compensate for solar and wind generation's intermittency, Toweill said."We see a lot of activity in the market there, especially in Asia," Toweill said.

At the ACES Delta joint venture in Utah with Mitsubishi Power Americas, Chevron is using power from wind and solar to electrolyze hydrogen stored in salt caverns 3,000 feet below the surface, which will be online by late 2025 or early 2026, Toweill said.

"Once the hydrogen is brought back up, it's going to be burned in up to a 30% blend with 70% being natural gas, to make electricity for local sale and for export to California," Toweill said.

Another factor that may enhance the hydrogen economy's chances is AI-driven power demand hype, Best said.

"You're starting to see all these articles about like, 'Is AI in a bubble?'" Best said. "Trust me, it is. The AI bubble is driving the nuclear bubble and driving all demand in renewable power. The AI hype cycle started in 2022, and around 2027 or 2028, they're going to get in the second half of their [venture capital] fund life, so they're going to need to start pulling that money out."

This could cut the cost of electricity and thereby the cost of producing hydrogen, he said.