Connective Tissue

Yesterday I saw a report of an interesting development in alternative energy at GE. As described in this article in Technology Review, GE says it has invented a device that reduces the cost of producing hydrogen from water using electricity. Electrolysis is hardly new and is already in use in a number of applications where electricity is cheap or natural gas unavailable. Despite this, GE's announcement could be significant for several reasons, including the implications for their own business portfolio.

First, the hydrogen production costs cited in GE's announcement would make electrolysis much more competitive with other sources. Although most commercially-produced hydrogen today is extracted from natural gas, electrolytic hydrogen represents a potential bridge between stationary power generation and transportation energy. That could reduce our consumption of petroleum in the future. It's also significant in the context of our current shaky natural gas supply and demand balance. Any incremental gas for hydrogen production in the US would likely have to be imported as LNG, with all the issues that raises.

This development could also be of value to some of GE's other businesses. Most of the energy technologies in their portfolio produce electricity--rather than fuels--based on coal gasification, gas turbines, wind turbines and solar power. That list suggests they have more than a passing interest in expanding the potential market for these technologies beyond the stationary power sector and into transportation. That could take many years, but in the near term there is already a large and profitable market for the provision of hydrogen for industrial use. That market currently relies on expensive natural gas. Before getting too excited about the possibilities, though, I'd like to understand the assumptions they used in coming up with that $3 per kg cost figure.