Lux Research: cost of electrofuels remains far from viable
9 June 2014
|Production costs per barrel of oil equivalent. Source: Lux Research. Click to enlarge.|
The cost of electrofuels—fuels produced by catalyst-based systems for light capture, water electrolysis, and catalytic conversion of carbon dioxide and hydrogen to liquid fuels—remains far away from viable, according to a new analysis by Lux Research.
Building a cost model for the electrolysis process—considering electricity from various routes, such as natural gas and coal as well as renewable electricity from biomass, solar, and wind, as well as generously assuming commercial scale production—Lux found that electrofuels produced from microbes cost $230 per barrel, while a catalytic conversion to make electrofuels produces fuels for $208 per barrel.
Based on the current capabilities, water splitting makes up the vast majority of electrofuel production cost, and is the major bottleneck for electrofuels to come within shouting distance of being cost competitive with petroleum. With technology improvements—specifically advances in microbial yield and catalyst efficiency—production costs for electrofuels drop to below $150 per barrel.
Background. In 2009, ARPA-E began its electrofuels program (earlier post) , providing $49 million in funding to 11 academic institutions and an additional two companies to develop microbial organisms capable of converting carbon dioxide and hydrogen into liquid fuels.
Similarly in 2009 and 2010, the US Department of Energy (DOE) funded the University of North Carolina – Energy Frontier Research Center (UNC EFRC) and the Joint Center for Artificial Photosynthesis, respectively. The DOE made a $122 million investment for five years for the latter institute spearheaded by the California Institute of Technology and US DOE Lawrence Berkeley Laboratory.
Both consortiums focus on developing catalyst-based systems for light capture, water electrolysis, and catalytic conversion of carbon dioxide and hydrogen to liquid fuels.
Hydrogen-to-fuels. are various sources of hydrogen, such as steam methane reforming of natural gas and gasification of biomass into syngas that can make hydrogen cheaper. Although not electrofuels in the strict sense, these are best bets at cost parity, in which using conventional natural gas and coal-generated electricity and making hydrogen from natural gas makes fuels cost competitive at just over $90 per barrel of oil equivalent, according to Lux.
The obvious nearer term value will encourage the downstream microbial-conversion and catalytic conversion technologies to move towards alternative hydrogen sources while the water splitters keep toiling—assuming funding is maintained, the research firm suggests.
Electrofuels developers are likely to idle their water electrolysis research and development (R&D) and seek commercialization partners with alternative hydrogen sources, Lux suggests. ARPA-E has already made transitions to focus funding on gas-to-liquids (GTL) technologies amidst cheap natural gas prices in the US in recent years.
The nearer term value for electrofuels will lie in geographies lacking the natural gas bonanza that dominates the US energy landscape today, Lux says.
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