After years of hype and broken promises, investors are hoping this time might really be different for hydrogen stocks.
A sudden sense of climate urgency in boardrooms and government alike has spiked interest in emerging technologies that could help reach aggressive decarbonization goals. That includes hydrogen, especially hydrogen produced with renewable energy to create truly carbon-free fuel. This so-called green hydrogen could decarbonize industrial processes, and perhaps make marginal contributions to transportation and heating as well.
It's all sounds so promising, but it's important for investors to remain realistic. Production costs, economies of scale, storage, and transportation all present significant hurdles to green hydrogen and the hydrogen economy at large.
But if hydrogen ever lives up to its potential as a wonder fuel, then it may be thanks to nuclear power plants. Although this supply is also carbon-free, environmentalists are a sensitive bunch. Therefore, this is referred to as pink hydrogen. It could be just what aging nuclear fleets need to remain economically relevant.
Pink Hydrogen, Explained
Hydrogen can be manufactured in numerous ways. The most referenced process is electrolysis, which uses electricity to split water molecules into hydrogen and oxygen. Electrolysis is the process used to manufacture green hydrogen, where electrolyzers are supplied by companies such as Plug Power (PLUG) and electricity is supplied by a wind or solar farm.
Pink hydrogen can also be manufactured via electrolysis, but with the electricity supplied by nuclear power plants. However, the manufacturing process would be tweaked slightly due to low efficiency and poor economics.
The chemical reactions needed to manufacture hydrogen require significant amounts of energy. Whereas methods to produce green hydrogen must rely primarily on energy in the form of electricity ("cold electrolysis"), nuclear power plants can leverage waste energy from the heat they produce. That opens a whole new economic reality for pink hydrogen.
Nuclear power plants could manufacture zero-carbon hydrogen using four different processes, according to the World Nuclear Association:
- Cold electrolysis, which uses only electricity
- Low-temperature steam electrolysis (LTSE), which uses both electricity and heat
- High-temperature steam electrolysis (HTSE), which uses both electricity and heat
- High-temperature thermochemical production, which uses only heat
Processes that use heat benefit from higher efficiencies and potentially lower production costs, although they can be limited by materials science. That's because the membranes used in HTSE can be quickly degraded by the high temperatures. Similarly, existing nuclear reactors aren't optimized for high-temperature thermochemical production, which would be the Holy Grail of low-cost hydrogen production. Next-generation nuclear technology now in development could provide viable manufacturing pathways in the 2030s.
Industry isn't waiting idly in the meantime. The potential to manufacture hydrogen with excess heat and electricity could significantly alter the economics of atomic energy.
Nuclear power plants could use off-peak electricity to manufacture hydrogen more efficiently and in greater volumes than renewable energy, then sell the supply to existing industrial customers for an additional revenue stream. A single 1,000-megawatt reactor could produce nearly 500 metric tons of hydrogen per day. For perspective, Plug Power has announced a goal of achieving the same level of production by 2025, but needs 13 green hydrogen production sites combined to reach that volume.
This isn't to suggest industrial suppliers such as Plug Power or Bloom Energy (BE) cannot benefit from pink hydrogen. Rather, this provides an additional potential source of funding, partners, and future business. Indeed, Bloom Energy is working with Westinghouse and others to develop HTSE processes for pink hydrogen production.
Growing Interest in Pink Hydrogen
The U.S. Department of Energy (DOE) supports the Hydrogen Shot program, which aims to develop the technologies required to produce clean hydrogen for $1 per kilogram. Green hydrogen gets all the glory, but pink hydrogen from nuclear plants is also eligible for funding.
The DOE has provided millions of dollars for pilot programs exploring HTSE processes, including in Arizona and Minnesota. Xcel Energy (XEL) has been one beneficiary. The electric and gas utility recently began a pilot project at its Prairie Island nuclear power plant. Although work remains in the earliest stages of development, the utility is interested extending the life of its atomic fleet, selling hydrogen to industrial customers, and possibly mixing hydrogen into its own natural gas network.
Additionally, the Bipartisan Infrastructure Act passed earlier this year set aside $8 billion to create four regional clean hydrogen hubs across the United States. Sites have yet to be finalized, but investors can expect nuclear power to play a central role in the so-called H2Hubs.
Don't Sleep on Nuclear Power's Role in the Hydrogen Economy
Green hydrogen tends to receive all the coverage and excitement, but pink hydrogen boasts several notable advantages. Nuclear power plants can produce hydrogen at lower costs, higher volumes, and closer to end-users (industrial customers) than newer projects based on renewable energy.
It could be a win-win scenario. If the nation's atomic fleet gains commercial traction with first-generation processes such as HTSE, then it could provide incentives to develop next-generation nuclear reactors capable of operating at higher temperatures. That would deliver safer nuclear energy, increase the nation's supply of carbon-free electricity, and reduce or even eliminate nuclear wastes -- all while having the added benefit to manufacture the lowest-cost hydrogen on the market through thermochemical processes.
There's no guarantee the hydrogen economy will emerge on the timeline or scale expected by investors or politicians, but if and when it does, expect nuclear power to be a critical piece.
