Iridium scarcity in Green Hydrogen Production
The latest estimate for the production of green hydrogen by 2030 will be 24 million tonnes generated by 212 GW of electrolyzers powered by the newest cycle of incentive programs.
If 2022 accelerates this green-hydrogen economy, then 2023 will mark the beginning of a long journey for this emerging sector, which is expected to become the basis for transition, decarbonization, and security of energy strategies. Rystad’s Research in energy has revealed that the electrolyzer capacity is predicted to increase by 186% between 2022 and 2023.
The focus is now on the capacity of the supply chain to produce electrolyzers. Although most of the components needed for the expansion of the industry have been expensive in recent times, Rystad Energy expects a 10 per cent decrease in electrolyzer cost inflation between 2022 and 2027 as the use of green hydrogen increases and cost reductions are realized.
The most popular electrolyzer techniques are alkaline electrolysis (AWE) and polymer electrolyte membrane (PEM).
The two industries, PEM and AWE, have seen particularly significant inflation over the last two years. On average, the prices for PEM electrolyzers have increased by about 30%, while AWE prices have increased by around 21% in the period 2020-2022. The price fluctuations of platinum and iridium between Jan 2021 and January 2023 have contributed to the recent rise in prices of membranes coated with catalysts. It also exposes the severe challenges of using platinum and iridium catalysts for PEM electrolyzers.
The problem is that price volatility isn’t an issue of the past since both natural resources are among the most precious on the planet. Iridium can only be found with two parts of billion (ppb) in the Earth’s crust, and platinum is found in five parts per billion.
South Africa is responsible for 83% of the world’s Iridium supply and 70 per cent of the collection of platinum currently. Prices for these precious metals are expected to increase by 2023 because of South Africa’s ageing, fault-prone coal-fired power stations, which could threaten production due to power outages. However, it was reported that the International Renewable Energy Agency said that the future usage of platinum and iridium catalyst-coated membranes would be restricted to 0.4 grams per kW and 0.1 G/kW, for instance.
In addition, researchers at the Netherlands Organization for Applied Scientific Research have already developed a process that requires the use of 200-fold less iridium for making PEM electrolyzers, as well as increasing the efficiency. Iridium and platinum recycling may aid in meeting the increasing demand for precious metals from the hydrogen industry. In the long run, Rystad Energy finds that the pace of PEM development is not impacted by the availability of platinum and iridium when future technologies allow the reduction of their use between 70 and 80%, which will result in significant reductions in costs associated with catalyst-coated membranes (CCM).
“In the short-term, the price of electrolyzers will fall as the most important raw materials can stabilize after a period of volatility. In the longer term, technological advancement and efficiency improvements will lessen the need for iridium, leading to an impressive cost reduction. However, unexpected increases in cost could be expected because iridium is under pressure to supply. After all, its primary manufacturer South Africa faces power outages.”
“This illustrates that the energy transition will not be a certainty with many predicting the green hydrogen market will follow the same path as photovoltaics, which saw their investment costs decrease by about 80percent in the period between 2010-2020,” states Selena Remmen, supply chain analyst at Rystad Energy.
Nickel and stainless steel’s impact
In the last 12 months, the price of nickel worldwide has increased by 30 per cent on average, with a more significant spike in June. This is primarily due to lower Chinese production resulting from Covid-19 lockdowns within the country and sanctions towards Russian material sources. Since AWE utilizes Raney nickel to act as a catalyst and nickel to make porous transport layers as well as bipolar plates, as well as end plates, the metal has contributed to significant inflationary pressures from the beginning of the year 2020, which has seen an average increase of 10% from 2021 and 2022.
In addition, stainless-steel production is responsible for about two-thirds of all global demand for nickel. Nickel is utilized as an alloying component in the manufacture of stainless steel to improve the steel’s formability, weldability and ductility, as well as increase its corrosion resistance.
Because of the significance of nickel in producing stainless steel, nickel price is an essential factor in the price of stainless steel. It is a typical material that is used in electrolyzers, including PEM stack elements like bipolar and end plates, and also the balance of plant (BOP) components like valves, pipes, tanks and pumps.
As per Rystad Research, the cost of nickel is likely to continue its downward trend. It will likely fall to $25,000 per tonne (or less) in 2023 because of the relaxation of Chinese zero-covid policies and the additional Indonesian supply entering the market. Additionally, the global steel market is likely to decrease as the US expands its steel production and increases imports from Europe, where prices are considerably lower. This will lower the cost of electrolyzer components made of nickel and stainless steel.
There are numerous avenues for reducing the cost of electrolyzers:
• Decreasing the use of precious metals
• Enhancing the efficiency of electrolyzers
• Boosting production rates
• Automating production processes
Furthermore, there are government-backed incentives to make these strategies into reality too.
For example, it is the Important Project of Common European Interest, “Hy2Tech” $5.8 billion fund released in 2022 or the recently revealed Green Deal Industrial Plan, where the bloc’s Innovation Fund will focus on expanding the production of electrolyzers parts and other components.
In the end, Rystad Energy expects that these cost reductions will reduce the cost of electrolyzers by up to 15% in 2027 and improve the financial viability of producing green hydrogen.
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