NREL is a national laboratory of the U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, operated by the Alliance for Sustainable Energy, LLC.

Hydrogen Infrastructure Expansion: Consumer Demand and Cost-Reduction Potential

Hydrogen Infrastructure Investment Forum—Palo Alto, California

Dr. Marc MelainaSenior Engineer

April 16, 2014

NREL/PR-5400-61966

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Presentation Overview

• How much do consumers value hydrogen station availability?

• How much will station costs decline with volume?

• What kind of market growth is needed to ensure station cost reductions (and adequate return on investment, or ROI)?

How much do consumers value hydrogen station availability?

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Discrete Choice Consumer Survey• Received ~500 responses

from each city: • Los Angeles, CA• Atlanta, GA• Minneapolis, MN• Seattle, WA

• Two choices:1. Conventional vehicle2. “Alt fuel” vehicle

Results are a “vehicle price equivalent” penalty against the price of a vehicle during the purchase decision.

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Visual Maps Were Used to Convey AvailabilityDiscrete choice algorithm varies coverage variables among 10 choices

Local Regional Interstate

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Results Suggest Value of Stations to Consumers

Results• Lack of stations at the local and regional

level can incur a penalty of $4,000–$6,000 against the vehicle price.

• Lack of stations along interstates between major cities (500+ miles) can also incur a penalty of $4,000–$6,000.

• Sufficient station availability may be comparable to an approximate $5,000–$10,000 per vehicle price reduction.

• Analytic “cost-of-time” models suggest much lower penalties.

How much will station costs decline with volume?

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Quantitative Results from the Hydrogen Station Cost Calculator (HSCC)

HSCC Screenshot

• HSCC was administered anonymously by IDC Energy Insights.

• Results were analyzed by NREL staff to develop a generic station cost equation:• Economies of scale

(station size)• Industry experience

(cumulative installed capacity)• Results for state-of-the-art costs and

three future costs

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Quantitative Results: Capita per Capacity ($/kg/d)

Survey results and recent Energy Commission Awards suggest a 70% reduction in station capital costs by 2017–2020.

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It’s Not Only Volume: Qualitative Workshop Results Indicate “How” to Pursue Cost-Reduction Opportunities

Cost-Reduction Opportunities1. Expand and enhance supply chains

for production of high-performance, lower cost parts

2. Reduce cost of hydrogen compression

3. Develop high-pressure hydrogen delivery and storage components

4. Harmonize/standardize dispensing equipment specifications

5. Develop “type of approvals” for use in permitting

6. Improve information and training available to safety and code officials

7. Develop methods for planning station rollouts and sharing early market information

Full report: http://www.nrel.gov/docs/fy13osti/56412.pdf

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0 10 20 30 40 50 60 70

Opp

ortu

nitie

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egor

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Number of Points

Stanardize, streamlineand facilitate permitting

Alternative and improvedstation designs

Financial, policy orpartnership support

Sharing of informationand analysis

Leverage or synergywith existing systemsand resources

Compressionsystems

Infrastructure planning & integration

Standardizestation designs

Increase supplier base

Improve station utilization

Modular Stations Large capacity stations and components

Prioritizing OpportunitiesMarket Readiness Workshop, Feb. 2011

What kind of market growth is needed to ensure station cost reductions (and adequate ROI)?

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Approximately 400,000–800,000 FCEVs Needed by ~2025–2030 to Achieve Cost-Reduction Opportunities

GrowthComparing HSCC results to other

estimates

Assumed demand scenario

Slower growth would result in lower ROI.

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Cluster Strategy Focuses on High-Density Areas of Likely Early Adopters

Early Adopter Metric (EAM)

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Cluster Strategy Focuses on High-Density Areas of Likely Early Adopters

Existing, Planned, and Proposed Station Locations

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How Do Cash Flows Resolve Locally and Regionally?

Regions are based on America 2050 Map:

www.america2050.org

Interactive visualization toolis in development

Cumulative cash flow @ $8/kg

Break even in 2021

Conceptualand example results only

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Summary of Key Points

• Station availability is critical to consumer choice and therefore market success.

• With volume, station capital cost reductions may be on the order of 70% below current costs.

• Volumes (demand) required are on the order of 400,000 to 800,000 FCEVs deployed by 2025–2030.

Questions?

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Characterization of Cost-Reduction Opportunity Priorities

Opportunities clustered and ranked according to workshop attendee votes on priorities

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0 10 20 30 40 50 60 70

Opp

ortu

nitie

s pe

r Cat

egor

y

Number of Points

Stanardize, streamlineand facilitate permitting

Alternative and improvedstation designs

Financial, policy orpartnership support

Sharing of informationand analysis

Leverage or synergywith existing systemsand resources

Compressionsystems

Infrastructure planning & integration

Standardizestation designs

Increase supplier base

Improve station utilization

Modular Stations Large capacity stations and components

1) Station designs, 2), Streamlining of the permitting process,3) Systems planning and analysis

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Infrastructure Expansion Models Have Both Technical Detail and Financial Analysis Capability

• Costs developed with “bottom-up” estimates at the component level, validated with real projects (CEC) and expert surveys

• Detailed spatial and temporal modeling across hydrogen supply chain

• Early adopter consumer data (demographics, etc.)

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New FCEVs

Hydrogen Demand

Refueling Stations

FCEV Garagings

Hydrogen Transmission

Cash Flow Components

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Station Placement Algorithm and Detailed Financial Toolkit

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6,000,000

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10,000,000

12,000,000

14,000,000

16,000,000

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2015

2016

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2020

Production incentives

Credit card fees

Sales taxes

Income taxes

Depreciation expense

Retail markup (return on equity)

Interest

Selling and administrative

Licensing & permitting

Rent

Property tax and insurance

Maintenance

Labor

Feedstock & utilities

Sales revenue

Early stations placed near early adopter clusters

and network expansion to provide coverage

Detailed financial breakdown, including influence of incentives

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HCC Results Are Consistent With U.S. DOE Models and Estimate from the UC–Davis Rollout Study