Economic Viability of Hydrogen Production via Plasma Thermal Degradation of Natural Gas

Abstract

This study evaluated the economic feasibility of producing hydrogen from natural gas via thermal degradation in a plasma reactor. Plasma pyrolysis, where natural gas passes through the space between electrodes and serves as the working medium, enables high hydrogen yields without emitting carbon monoxide or carbon dioxide. Instead, the primary products are hydrogen and solid carbon. Unlike conventional methods, this approach requires no catalysts, addressing a major technological limitation. A thermodynamic equilibrium model based on Gibbs free energy minimization was used to analyze the process over a temperature range of 500–2500 K. The results indicate an optimal temperature of approximately 1500 K, which achieved a 99.5% methane conversion by mass. Considering the capital and operating costs and profit margins, the hydrogen production cost was estimated at 3.49 EUR/kg. The sensitivity analysis revealed that the price of solid carbon had the most significant impact, which potentially raised the hydrogen cost to 4.53 EUR/kg or reduced it to 1.70 EUR/kg.

1. Introduction

The Renewable Energy Directive (2009/28/EC) set an initial target of 22% share of renewable energy by 2020, which was increased to 40% in July 2021 and 45% in September 2022, with the overarching goal of achieving climate neutrality by 2050 [1]. Within this strategic framework, hydrogen has proven to be a crucial element for the decarbonization of hard-to-decarbonize sectors, such as heavy industry, transport, and energy-intensive processes.

The global hydrogen demand reached 94 million tonnes in 2021, mostly “grey” hydrogen from fossil fuels, which generates around 900 million tonnes of carbon dioxide (CO₂) emissions [2,3]. The main consumers include oil refining (40 million tonnes), ammonia production (34 million tonnes), methanol synthesis (15 million tonnes), and steel production (5 million tonnes). In contrast, the use of hydrogen in private households and in the energy sector is still limited, indicating an untapped potential for wider use.

Hydrogen can be produced by various thermochemical processes, such as steam methane reforming (SMR), dry reforming (DRM), partial oxidation (POx), and thermal decomposition (TD) [4,5,6,7]. Of these processes, SMR is the most mature and the most widely used due to its efficiency and scalability. However, it operates at high temperatures (>800 °C), requires catalysts, and emits significant amounts of CO₂ [8,9,10,11]. Electrolysis offers a CO₂-free alternative, but is hindered by the high energy consumption, with a theoretical enthalpy of reaction of 572 kJ/mol [12].

Methane pyrolysis represents a promising low-carbon route to hydrogen production and enables the conversion of CH₄ into hydrogen and solid carbon without CO₂ emissions [13,14,15,16,17]. The operating conditions are different: catalytic decomposition can take place at 500 °C using metals such as Ni, Fe, or Cu, while non-catalytic processes require temperatures above 1000 °C [18,19,20]. Nevertheless, challenges such as the deactivation of the catalyst due to carbon fouling and the high cost of precious metals remain significant obstacles [8,19,20].

In recent years, plasma-assisted methane decomposition has gained attention as a potential solution to these limitations. Plasma processes offer extremely high reaction temperatures (above 2000 °C) and enable fast reaction kinetics without the use of catalysts [6,21,22]. Both non-thermal (e.g., dielectric barrier discharge, gliding arc) and thermal (e.g., RF, microwave, direct current arcs) plasma systems have been investigated, offering a wide range of configurations for methane activation and hydrogen production [23,24,25,26,27,28,29,30,31,32,33,34,35].

Thermodynamic analyses have shown that while steam reforming provides a higher hydrogen output than dry reforming, it also requires more energy—about 79 MJ/kg for SMR compared with 116 MJ/kg for DRM [6]. Experimental studies of plasma reactors showed promising methane conversion and hydrogen yield, although the energy efficiency is closely linked to the operating parameters, such as power consumption and feedstock composition [31].

The solid carbon by-product, often in the form of carbon black, can serve as a valuable by-product, especially if its morphology meets industrial specifications [36,37]. In contrast to conventional carbon black production methods, which cause significant CO₂ emissions, plasma processes can produce carbon in a more environmentally friendly way [38,39,40,41,42]. Companies such as Monolith have started large-scale, plasma-based hydrogen and carbon production using methane as a feedstock [38].

Comprehensive techno-economic assessments using tools such as LCA, H2A modelling, and levelized cost of hydrogen (LCOH) show that SMR without carbon capture remains the most cost-effective method (~1.26 USD/kg H₂), while methane pyrolysis (~1.39 USD/kg H₂) is a competitive and environmentally favorable alternative [37,43,44,45,46,47]. Despite the ongoing technical challenges, especially related to catalyst-free operation at high temperatures, methane pyrolysis remains an interesting solution for the production of clean hydrogen.

In this study, the technical and economic feasibility of continuous, catalyst-free hydrogen production from methane by thermal plasma decomposition was investigated. An equilibrium model based on Gibbs free energy minimization was utilized to evaluate the hydrogen yield, by-product formation, and system performance under different operating conditions [48,49,50,51,52], providing insights into the optimization of this promising decarbonization pathway.

2. Materials and Methods

This study provided a comprehensive techno-economic assessment of hydrogen production from natural gas using a thermal plasma reactor. The proposed system uses natural gas not only as a feedstock, but also as a working medium, which is fed directly into the plasma torch, in particular into the inter-electrode space, resulting in a high-temperature natural gas plasma jet. This configuration offers several advantages: it eliminates the need for additional working media, such as air or steam, increasing the efficiency of the overall process and minimizing the formation of unwanted by-products, particularly nitrogen oxides (NO_x), typically associated with air-based plasma systems.

The thermodynamic performance of the system was evaluated using a one-dimensional equilibrium model based on the minimization of Gibbs free energy to determine the chemical composition of the reaction mixture as a function of temperature. In addition, the economic analysis included both the capital expenditures (CAPEXs) and operational expenditures (OPEXs), which allowed for an accurate estimation of the levelized cost of hydrogen production. These considerations were essential for assessing the viability and competitiveness of the proposed technology in the broader context of low-emission hydrogen production.

2.1. Concept Description

Figure 1 illustrates a conceptual layout of a potential hydrogen production process based on natural gas plasma pyrolysis. The configuration incorporates four primary operating units. The initial unit, a plasma reactor, facilitates the controlled thermal decomposition of natural gas. The reactor is supplied via a regulation station and a pressure-reducing valve and also receives direct current with specific characteristics to maintain an electric arc within the plasma torch, which is generated by the associated electrical subsystem.

Upon the completion of pyrolysis within the reactor, the generated output comprising hydrogen, solid carbon, and various unwanted by-products influenced by operational parameters exits the reaction chamber. They then enter the unit for cooling and separating the solid carbon. This unit can be cooled with water at 25 °C and 1 bar of pressure, producing steam as a by-product, which can be used for various technological applications not covered in this study. Steam as a by-product could also be used for the production of electricity, so its valorization is informative and has been made on the basis of the price of electricity that could be produced by its use. It was assumed that only 33% of the thermal energy is converted into electricity. In the case of using the produced steam for electricity production, the technological scheme would of course have to be much more complex, which would distract the focus away from the main process—hydrogen production.

After leaving the cooling and solid carbon separation unit, the gases enter the purification unit, the so-called ECO unit. Here, impurities such as NH₃ and HCN are removed from the gas stream, resulting in pure hydrogen at the outlet, which is kept at 25 °C and 1 bar of pressure and is suitable for immediate use or storage. Unwanted gaseous products from the produced gas are removed by developed commercial methods, such as the diffusional transfer of gas molecules into the liquid under the influence of the concentration gradient. For the removal of NH₃, it is sufficient to use only water, while in the case of HCN, a solution of water and an alkaline absorbent (NaOH) is used.

The efficiency of converting electrical input into plasma energy was considered, alongside thermal losses associated with reactor section cooling. Given the constrained flow capacity of the working medium—natural gas—through the plasma torch, additional electrical energy is required to maintain stable operation.

Based on the outlined process configuration, the associated balance parameters can be established and are categorized as presented in

Table 1. Energy and material balance parameters for the natural gas pyrolysis process.

In		Out
		Useful		By-Product		Undesirable
Matter	Condition	Matter	Condition	Matter	Condition	Matter	Condition
Natural gas	25 °C, 1 bar	H2	25 °C, 1 bar	Solid carbon	25 °C	Compounds from the ECO unit	Depends on the specificity of the process
Electricity	380 V, 50 Hz			Steam for other processes	Depends on the process
Water for cooling	25 °C, 1 bar

[52].

2.2. Thermodynamic Equilibrium Model

To develop the model, a number of foundational assumptions were introduced. Primarily, the system was considered to operate at temperatures high enough to justify the ideal gas approximation. Furthermore, despite reaching temperatures as high as 2000 °C, the extent of ionization within the plasma was presumed to remain limited. An additional assumption posits that the particle residence time was adequate to allow the system to achieve thermodynamic equilibrium, with the kinetic limitations deemed negligible.

According to Clausius’s inequality, which governs the behavior of irreversible processes, a process that takes place at constant temperature and constant pressure is considered spontaneous if the total entropy change is positive (which includes both the system and its environment), while the associated enthalpy change is negative. In thermodynamic systems, enthalpy represents the total heat content, which can only be partially converted into useful work depending on the environmental conditions. Consequently, enthalpy consists of both a usable and a non-usable component. The maximum amount of energy that can be extracted from such a system under constant pressure conditions in the form of non-expansion work corresponds to the Gibbs free energy. This thermodynamic potential can be determined as follows:

$$G={\displaystyle {\sum }_{i=1}^N}{n}_i\cdot \left({\displaystyle g_i^0}+RT\mathit{ln}\left({\displaystyle \frac{n_i}{n_N}}\right)\right)$$

(1)

The formulation of Gibbs free energy in Equation (1) incorporates the standard enthalpy of formation for each individual chemical species. Based on the thermodynamic criterion for spontaneity, equilibrium is attained when the system’s total Gibbs free energy reaches its minimum value [53]. Consequently, to evaluate the equilibrium composition, it was essential to locate the minimum of Equation (1), subject to the elemental mass balance constraint given in Equation (2):

$${\displaystyle {\sum }_{i=1}^N}{a}_{ij}\cdot n_i=A_j j=\overline{1,M}$$

(2)

where a_ij represents the number of atoms of the j^th element in the i^th species, and Aj denotes the total atom count of the j^th element within the system. For this minimization task, the application of the Lagrange multiplier method proves to be the most effective approach:

$$L={\displaystyle {\sum }_{i=1}^N}{n}_i\cdot \left({\displaystyle g_i^0}+RT\mathit{ln}\left({\displaystyle \frac{n_i}{n_N}}\right)\right)+{\displaystyle {\sum }_{k=1}^K}{\lambda }_k\cdot \left(a_{ij}\cdot n_i-A_j\right) {\lambda }_k=\overline{1,K}$$

(3)

The differentiation of Equation (3) with respect to all the independent variables, followed by setting the total differential equal to zero, yields a system of equilibrium conditions. This resulting system defines the relationships between the parameters characterizing the equilibrium state [53]:

$${\displaystyle g_i^0}+RT\mathit{ln}\left({\displaystyle \frac{n_i}{n_N}}\right)+{\displaystyle {\sum }_{k=1}^K}{\lambda }_k\cdot a_{ij}\ge 0$$

(4)

$$n_N={\displaystyle {\sum }_{i=1}^N}{n}_i$$

(5)

$${\displaystyle {\sum }_{i=1}^N}{a}_{ij}\cdot n_i=A_j j=\overline{1,M}$$

(6)

Let us write expression (4) in the form

$$n_i\ge n_N\cdot \mathit{exp}\left({\displaystyle \frac{\left(-{\displaystyle g_i^0}+{\displaystyle {\sum }_{k=1}^K}{\lambda }_k\cdot a_{ij}\right)}{RT}}\right)$$

(7)

The inequality in Equation (4) reflects the condition that the function L must satisfy to attain a minimum, which is formally expressed by the requirement that the partial derivative ∂L is greater than or equal to zero. When a particular chemical species is present in the system, this condition becomes an equality and the corresponding term in Equation (4) satisfies the equality sign. By substituting Expression (7) into Expressions (5) and (6), and incorporating the constraint related to the existence of a given chemical species, a system of equations is obtained that governs the equilibrium state of the system:

$$n_N{\displaystyle {\sum }_{i=1}^N}{a}_{ij}\cdot \mathit{exp}\left({\displaystyle \frac{\left(-{\displaystyle g_i^0}+{\displaystyle {\sum }_{k=1}^K}{\lambda }_k\cdot a_{ij}\right)}{RT}}\right)=A_j$$

(8)

and

$$n_N\left[\mathit{exp}\left({\displaystyle \frac{\left(-{\displaystyle g_i^0}+{\displaystyle {\sum }_{k=1}^K}{\lambda }_k\cdot a_{ij}\right)}{RT}}\right)-1\right]=0$$

(9)

The system of Equations (8) and (9) was solved using an iterative method, ultimately yielding the chemical composition corresponding to thermodynamic equilibrium.

Standard Gibbs free energy values were derived from established thermodynamic data sources:

$${\displaystyle g_i^0}={\displaystyle h_i^0}-T\cdot {\displaystyle s_i^0}$$

(10)

The total enthalpy of the system, H_s, at a given temperature T is determined by the summation of the specific enthalpies of all the chemical species present, with each one weighted by their respective molar or mass fractions:

$$H_s\left(T\right)={\displaystyle {\sum }_{i=1}^N}{n}_i\cdot h_i\left(T\right)$$

(11)

Polynomial coefficients representing temperature-dependent changes in the Gibbs free energy and standard enthalpy of formation (referenced to 0 K) for different chemical species were obtained from published sources in the scientific literature [53]. These coefficients are consistent with the JANAF dataset.

2.3. Establishing of the Mass and Energy Balance

This study investigated the thermal decomposition (pyrolysis) of methane (the primary constituent of natural gas) within a thermal plasma reactor, with the objective of achieving a high hydrogen yield. The composition and thermophysical properties of the natural gas utilized in the model are presented in

Table 2. Natural gas composition and characteristics at the reactor inlet.

Gas Components				Lower Heating Value	Higher Heating Value	Density
CH4	C2H6	N2	CO2	LHV	HHV	ρg
$\% \mathrm{vol}$				$\mathrm{MJ}/{\mathrm{m}}^3$	$\mathrm{kWh}/{\mathrm{m}}^3$	$\mathrm{kg}/{\mathrm{m}}^3$
95.96	2.16	0.72	0.28	34.798	11.31	0.71

[53].

It was assumed that the natural gas entered the plasma reactor at an initial temperature of 25 °C (298.15 K), flowed through an electric arc discharge, and exited as a thermodynamically equilibrated mixture at a specified target temperature.

As the natural gas passes through the plasma zone, it absorbs energy from the electric arc, leading to the breaking of covalent bonds in the hydrocarbon molecules (primarily CH₄ and C₂H₆). This results in the formation of molecular hydrogen (H₂) and carbon in the solid phase. While hydrogen dissociation occurs at elevated temperatures, typically above 2000 K, it was not a focus of this study, as the dissociated hydrogen atoms rapidly recombine into stable diatomic hydrogen molecules upon cooling.

The carbon generated during this process may exist in multiple forms, including graphite, graphene, activated carbon, carbon black, or metallurgical coke. Nevertheless, the primary focus of this study did not involve valorization or the recovery of the solid carbon by-product, despite its potentially higher market value per ton compared with hydrogen. Therefore, no comprehensive characterization or morphological evaluation of the carbon phase was performed. In this analysis, the solid carbon product was treated generically and denoted simply as “solid carbon,” without specifying its structural characteristics.

Following the identification of the optimal system temperature, the energy demand for the plasma torch could be estimated. This calculation was based on the enthalpy difference between the system at the target temperature and the natural gas feed at the reactor inlet under the assumption of an adiabatic operation:

$$E_P=h_s-\left(h_{NG,0}+{\Delta }_f{\displaystyle h_{NG}^0}\right)$$

(12)

The energy supply for the plasma torch originates from the supplied electrical current, which is converted into direct current with specified characteristics by the electrical unit.

2.4. Model Validation

The validation of the developed model was carried out by comparison with the experimental results of steam methane reforming reported by Hrabovsky et al. [6]. The comparison was made by simulating the process under identical conditions to the experimental investigation. A methane throughput of 150 slm, a steam flow rate of 94 g/min, and an argon flow rate of 50 slm were assumed. The reactor temperature considered was around 1300 °C. The comparative results show a satisfactory agreement with respect to the molar fractions of the synthesis gas components at the reactor outlet. The agreement between the results predicted by the proposed model and the experimental data was generally good. A clear discrepancy was observed for the hydrogen concentration, which showed a relative deviation of 2.91%, while the deviations for argon, carbon monoxide, and oxygen were below 1%. More significant discrepancies were observed for the concentrations of methane and carbon dioxide, for which the model assumed that they were not present in the final product within the considered temperature range, while the experimental results indicate their presence in traces (Figure 2).

This deviation was due to the simplifications that were adopted when defining the model and may be responsible to a significant extent for these deviations. The following simplifications were made to define the model:

-

The system was at a sufficiently high temperature and pressure of 1 bar to be considered an ideal gas;

-

The mixing of components in the reactor was sufficient to ensure thermodynamic homogeneity in each part of the volume;

-

The retention time of the components at a high temperature was sufficient for all chemical processes in the system to take place completely.

The experimental conditions could deviate to some extent from the assumed ideal conditions so that they were considered to be the reason for the deviations observed in methane concentrations, and the same reason explained the differences in CO₂ and H₂ concentrations.

2.5. Techno-Economic Evaluation

An economic assessment was performed to estimate the hydrogen production costs based on the process schematic presented in Figure 1. The evaluation employed data derived from the one-dimensional thermodynamic equilibrium model to quantify both the capital expenditures (CAPEXs) and operating expenditures (OPEXs). The OPEXs included all the variable and fixed operational costs, such as the electricity consumption for plasma generation, natural gas usage, equipment insurance, and labor expenses. In contrast, the CAPEXs covered the projected investment required for procurement, installation, and commissioning of the processing equipment.

The process primarily yielded hydrogen and solid carbon, with the latter representing a potentially valuable by-product whose market price varies significantly with its morphology. Although this study did not focus on the recovery or detailed characterization of solid carbon, its economic importance is acknowledged. Therefore, a conservative market value of 500 EUR/tonne was assumed for solid carbon within the economic model, which reflected an intermediate estimate between the lower bound of approximately 150 EUR/tonne (metallurgical coke) and the upper bound near 2000 EUR/tonne (high-purity graphite).

Based on the differential relationship between the CAPEXs, OPEXs, and projected revenue streams, the production cost per kilogram of hydrogen was derived through a detailed cash flow analysis. This economic assessment was carried out under defined financial assumptions, including the application of a nominal discount rate of 10%, which reflected the post-tax Weighted Average Cost of Capital (WACC). Bearing in mind that for most companies, any value of WACC below 10% is favorable, as well as the fact that it is a new technology that in itself represents an increased risk for investments [54,55], for the purposes of the economic analysis, the threshold value of 10% was chosen. The level of inflation was assumed to be 2% per year, which represents the average value in most developed countries. The value of the Internal Rate of Return was adopted at a level equal to the WACC of 10% in order to achieve a profitability index equal to 1. The hydrogen price per kilogram was calculated through an iterative process targeting an Internal Rate of Return (IRR) of 10%, which corresponded to a profitability index of one and a Net Present Value (NPV) near zero. The plant’s operational lifetime was assumed to be 25 years. A comprehensive presentation of the economic assessment outlining the estimation of hydrogen prices can be found in Figure 3. The economic analysis was carried out using a model developed in Excel software.

2.6. Model Limitations

Although the system was analyzed at high temperatures and a low pressure (1 bar), the assumption of ideal gas behavior can lead to certain deviations. In reality, it is impossible to completely eliminate intermolecular forces and molecular interactions, which can lead to the occurrence of reactions that are not taken into account by the model. Non-ideal mixing in practical systems can lead to spatial inhomogeneities and the formation of zones with different redox properties that were not predicted by the developed model.

In addition, the model assumed a uniform temperature profile throughout the reactor, which deviated significantly from the actual physical behavior. This simplification could strongly influence the thermodynamic equilibrium composition in certain zones of the system and represented a significant limitation in terms of the model accuracy and applicability to real-world scenarios. In addition, the model did not take into account the residence time of the components within the reactor but assumed that this was long enough for all chemical reactions to take place. In practice, however, the composition of the system was very sensitive to the residence time, so this was another important limitation in terms of the prediction accuracy.

A further limitation of the model related to the economic analysis, in particular the morphological properties of the solid by-product carbon. Since the amount of this by-product was much larger than that of the main product, with a mass ratio of about 12:3, its market value played a significant role in determining the total cost of the final product. The proposed model did not predict the morphological structure of the solid carbon produced, so its market price was based on a rough estimate. The exact determination of the morphological properties of the solid carbon requires further experimental investigations, which were beyond the scope of the present study. For this reason, the influence of the carbon price on the cost of the main product hydrogen was analyzed in detail as part of the sensitivity analysis.

3. Results and Discussion

Figure 4 and Figure 5 illustrate the equilibrium composition of the system as a function of temperature, as determined using the thermodynamic methodology developed for the pyrolysis of natural gas in a thermal plasma reactor.

The thermal decomposition of methane is an endothermic reaction in which a high degree of conversion is only achieved at temperatures around 1500 K in the case of a non-catalytic conversion. As the temperature increased beyond 500 K, the methane concentration in the system began to fall and reached a noticeable decrease up to approximately 700 K. Beyond this point, a phase of rapid methane conversion occurred, which lasted until about 1100 K, where the conversion reached about 80%. After this threshold, the conversion rate gradually increased with the temperature and finally reached a significant value at 1500 K.

Considering that the main products of thermal methane—the main component of natural gas—decomposition were hydrogen and solid carbon, the decrease in the methane content with increased temperature was accompanied by corresponding increases in the hydrogen and carbon concentrations. An analysis of the graph in Figure 4 confirmed that the methane conversion was satisfactorily achieved at 1500 K, which was fully consistent with the data reported in the available literature on non-catalytic methane decomposition by other researchers.

Figure 5 illustrates the mass fractions of undesirable components in the system over the considered temperature range. The diagram shows that the content of these undesirable components increased with temperature up to 1000 K. Beyond this point, the increases in nitrogen oxide (NO) and hydrocyanic acid (HCN) slowed down but remained positive. In contrast, the concentration gradients of ammonia (NH₃) and carbon dioxide (CO₂) became negative, indicating a decrease in their respective concentrations. The gradient of carbon monoxide (CO) was almost zero, which means that it changed only insignificantly with the temperature. Among the undesirable gases, CO and HCN were the most prevalent, while the concentration of NH₃, the next most prevalent component, was four orders of magnitude lower.

Given the more pronounced formation rates of NO and HCN compared with the decreases in NH₃ and CO₂ and considering the toxicological and environmental impacts of NO and HCN, it can be concluded that the operation at lower temperatures was more favorable to minimize the formation of these harmful substances.

Figure 6 shows the relationship between methane conversion from natural gas and the corresponding electrical energy requirement for the process, assuming that the conversion rate of electrical energy to plasma energy was 70%, based on the plasma torch’s local heat balance calculations. It was also assumed that the insulation of the reactor part of the plant was so high that the heat losses did not exceed 1% of the total energy input. This value for heat losses was assumed in view of the fact that these losses in thermal power plants are about 0.5% of the thermal energy input and that the temperature of the reactor in plasma gasification is about 1500 K, compared with about 1200 K in thermal power plants. Since the flow of the working medium (natural gas) is limited, the heat losses must be compensated for by electricity, which in this case meant an increase in consumption of about 5%. The analysis shows that at 1500 K, a commendable methane conversion rate of 99.5% by mass was achieved, which required a consumption of 17.80 kWh per kilogram of hydrogen. This temperature is consistent with the results reported by the authors [40] regarding the complete conversion of methane.

The natural gas price was established at 0.043 EUR/kWh (11.45 EUR/GJ) for non-household consumers based on data from the official Eurostat Statistics Explained platform [56]. Examination of the historical price trend for non-household consumers in the EU since early 2008 revealed that natural gas costs remained below 0.04 EUR/kWh until the 2021 crisis, after which a substantial increase was observed. This price jump can be seen as a disruption due to the current geopolitical situation, and it was assumed that the natural gas market will stabilize after the end of the crisis. It was assumed that this will lead to a fall in the price of natural gas, which is why the price that was applied shortly before the start of the crisis was adopted. Scaling the natural gas pyrolysis process to a conversion rate of 1 kg per second (equivalent to 25.23 kilotonnes annually), and assuming a gas price of 11.45 EUR per gigajoule (GJ), the yearly expenditure on raw materials was estimated at EUR 14.113 million.

Based on data from the official Eurostat Statistics Explained platform [57], the electricity cost for non-household consumers, inclusive of taxes, was set at 0.122 EUR/kWh. Similar to natural gas, electricity prices remained near 0.12 EUR/kWh until disrupted by the recent energy crisis linked to geopolitical events. It is anticipated that market stabilization will restore prices to pre-crisis levels. Under ideal operational conditions, using calculated electricity consumption and a unit price of 122 EUR per megawatt-hour (MWh), the annual electricity expenses were projected to reach EUR 10.475 million.

The capital investment for the plant, which was designed for a 25-year lifespan, was approximately EUR 31.67 million, which corresponded to an annual amortized cost of EUR 1.267 million. This figure was derived by scaling up from a laboratory-scale demonstration plant with a capacity of 30 g per second. The fixed costs included commission fees estimated at 25%, which amounted to EUR 0.317 million annually. Additionally, the maintenance and insurance expenses were approximated at 2% of the plant’s capital cost per year, or EUR 0.025 million. The operational costs were estimated at 60% of the total annual expenses, which totaled EUR 0.608 million annually.

Assuming an annual natural gas input of 25.23 kilotonnes, the hydrogen production was estimated at 6.25 kilotonnes per year. To accurately assess the cost of hydrogen, the associated by-products, such as solid carbon and water vapor, from the cooling system needed to be considered, as detailed in Table 1.

The yield of solid carbon for the 25.23 kta natural gas feed was projected to be 18.62 kta based on [37], suggesting the potential for significant market introduction. Assuming a consistent and acceptable quality, a conservative unit price of 500 EUR per tonne was applied for this analysis. This corresponded to estimated annual revenue of approximately EUR 9.980 million from the carbon by-product.

The valuation of water vapor as a secondary by-product was based on calculating the thermal energy required to cool the system to 25 °C with 80% heat exchange efficiency, which totaled 41.123 gigajoules per year. If this thermal energy were converted to electricity via a steam turbine operating at approximately 33% efficiency, it could generate an annual profit of EUR 1.671 million, assuming an electricity price of 122 EUR per MWh.

Through this techno-economic assessment, the hydrogen production cost was determined to be 3.49 EUR/kgH₂, as summarized in

Table 3. Estimated hydrogen sale price.

CAPEX			OPEX			Profit
Equipment			Natural Gas			Solid Carbon
Purchased cost	31.670	MEUR	Price	11.45	EUR/GJ	Price	500	EUR/t
Operation period	25	years	Produced annually	25.23	kta	Produced annually	18.62	kta
Annually	1.267	MEUR/yr	Annually	14.113	MEUR/yr	Annually	9.309	MEUR/yr
Commissioning			Electricity			Steam
Percentage	25	%	Electricity price	122	EUR/MWh	Electricity price	122	EUR/MWh
Annually	0.317	MEUR/yr	Annually	13.467	MEUR/yr	The annual price of equivalent electricity	1.671	MEUR/yr
			Insurance			Hydrogen
			Percentage	2	%/yr	Levelized H2 price	3.49	EUR/kg
			Annually	0.025	MEUR/yr	Produced annually	6.25	kta
			Maintenance			Annually	21.823	MEUR/yr
			Percentage	2	%/yr
			Annually	0.025	MEUR/yr
			Labor
			Percentage	20	%/yr
			Annually	0.608	MEUR/yr
Sum:	1.583	MEUR/yr	Sum:	28.240	MEUR/yr	Sum:	32.803	MEUR/yr
General assumptions
Plant Lifetime	WACC (Nominal, After Tax)		Discount Rate	Corporate Tax		Inflation	IRR
25 years	10%		10%	20%		2%	10.13%

[52]. It should be noted that the cash flow analysis excluded corporate profit margins; the inclusion of profit would result in a higher hydrogen selling price.

Sensitivity Analysis of H₂ Price Estimation

The sensitivity analysis was conducted by evaluating key variables with the greatest potential influence on the operating expenses and profit margins. Among the operating costs, the natural gas price, electricity price, and labor expenses were selected for the detailed assessment. Forecasting natural gas prices remains challenging due to their strong dependence on volatile global geopolitical factors, which have exhibited considerable fluctuations recently. The current projections suggest a potential increase of up to 30% by 2025. Conversely, historical data indicate the possibility of a 30% price decrease, which is consistent with long-term trends. Accordingly, the natural gas prices in this analysis varied within a ±30% range.

Similarly, the electricity prices were assumed to fluctuate within a ±30% interval; however, for this study, only a +30% increase scenario was considered to focus on the effects of rising costs. The solid carbon price was included in the profit category, as the electricity expenses were already accounted for under the operating costs. The outcomes of the sensitivity analysis are presented in Figure 7 and

Table 4. H₂ price sensitivity analysis.

NG	H2 Price	Electricity	H2 Price	Labor	H2 Price	Solid Carbon	H2 Price
% change	EUR/kg	% change	EUR/kg	% change	EUR/kg	EUR/t	EUR/kg
−30	2.81	−30	2.92	0	3.49	150	4.53
+30	4.16	+30	4.05	30	3.52	1100	1.70

[52].

The sensitivity analysis revealed that the market value of solid carbon had the greatest impact on the overall hydrogen production cost. If the entire solid carbon output were sold on the graphite market at 1100 EUR/tonne, the hydrogen production cost would decrease significantly to approximately 1.70 EUR/kg. Conversely, marketing the carbon as metallurgical coke at a lower price of 150 EUR/tonne would substantially increase the hydrogen cost to around 4.53 EUR/kg.

In comparison, variations in the natural gas prices had a relatively moderate effect on the hydrogen cost. A ±30% change in natural gas prices resulted in a hydrogen cost range between 2.81 and 4.16 EUR/kg. Similarly, electricity price fluctuations within the same range caused the hydrogen costs to vary from 2.92 to 4.05 EUR/kg. Labor cost changes exerted the least influence; even a 30% increase in labor expenses raised the hydrogen price only slightly, from 3.49 EUR/kg to 3.52 EUR/kg.

These findings clearly indicate that among all the evaluated variables, the market price of solid carbon was the dominant economic factor that affected the hydrogen pricing. If the by-product was assumed to be activated carbon valued at 1100 EUR/t, the proposed plasma-based methane pyrolysis technology achieved a hydrogen production cost of approximately 1.70 EUR/kg. At this price point, the technology becomes highly competitive when compared with conventional and catalytic hydrogen production methods utilizing natural gas.

A comparative analysis of hydrogen production costs revealed that the steam methane reforming (SMR) process without carbon capture remained the most economically favorable method, with a production cost of approximately 1.26 USD per kilogram, as reported in [37]. However, the integration of a carbon capture system into the SMR process significantly elevates the cost, increasing it to nearly 2.00 USD per kilogram. In contrast, hydrogen production via water electrolysis is currently the most capital-intensive approach, with reported costs reaching approximately 7.13 USD per kilogram [37].

According to the same source [37], the estimated cost of hydrogen production via the thermal decomposition (TD) of natural gas is approximately 1.39 USD per kilogram. This value is notably lower than the 3.49 USD per kilogram that was determined for hydrogen produced through the thermal plasma decomposition of natural gas in the present study. It is important to emphasize that the TD process analyzed in [37] is based on catalytic decomposition that employ salt-based catalysts, such as magnesium chloride (MgCl₂) and sodium chloride (NaCl). Despite the lower production cost, this catalytic method is constrained by operational limitations, primarily due to catalyst saturation, which impairs the feasibility of continuous, long-term operation.

Although the cost of hydrogen derived from plasma-assisted thermal decomposition was moderately higher than that associated with the SMR process coupled with carbon capture, it offers a distinct operational advantage. Specifically, the plasma-based method enables sustained, uninterrupted operation without the degradation issues associated with catalysts, thereby enhancing the technological reliability and long-term applicability of the process.

The hydrogen production technology presented has both a high degree of applicability and considerable market potential. The thermal decomposition of natural gas in a thermal plasma is very promising for future applications due to its flexibility, ease of composition control, and compatibility with a wide range of hydrocarbons. In addition, the process does not require a catalyst, and thus, avoids problems associated with catalyst degradation and sensitivity.

In terms of market potential, this technology, although comparable in cost to existing commercial methods, offers much greater potential. This is because it enables the use of electrical energy generated by the solar panels installed above the plant (or other renewable sources) or the purchase of electricity from the free electricity market, which can have a negative price at certain times of the day.

4. Conclusions

This study dealt with the pyrolysis of natural gas for hydrogen production within a thermal plasma reactor. The hydrogen yield was determined through equilibrium composition calculations based on the Gibbs free energy minimization method. The methodology revealed a temperature-dependent equilibrium composition of the system. A one-dimensional numerical analysis demonstrated that the efficiency of the methane conversion increased with temperature and reached a maximum of about 99.50% at 1500 K. Rapid quenching of the reaction products was crucial to prevent the reversibility of the reaction and to minimize the formation of undesirable species, such as carbon monoxide, ammonia, hydrocyanic acid, and nitrogen oxide. From an environmental perspective, lower operating temperatures are preferable; however, an optimal pyrolysis temperature of 1500 K was established to ensure the effective conversion of methane to hydrogen.

In the economic evaluation, not only was the hydrogen considered, but also the solid carbon and the vapor produced during the cooling phase as valuable by-products. Accounting for the capital expenditure (CAPEX), operational expenditure (OPEX), and the profit margins, the hydrogen production cost was estimated at 3.49 EUR/kg. The sensitivity analysis indicated that fluctuations in the price of the solid carbon by-product exerted the largest impact on the hydrogen price, where the carbon prices varied between 150 and 1100 EUR/t, which corresponded to hydrogen prices in the range of 4.53–1.70 EUR/kg. The labor costs had a negligible impact: a 30% increase led to only a marginal increase in the hydrogen cost to 3.52 EUR/kg.

The normalized hydrogen price given here exceeds the prices for alternative technologies documented in the literature. These higher costs reflect the focus on developing a stable and durable technology that can be operated over an extended period of time without downtime. Nevertheless, there is potential to reduce the cost, particularly by optimizing the electricity costs and the market value of solid carbon. Utilizing renewable energy sources or energy storage systems that are charged during periods of low electricity prices could significantly reduce the cost of hydrogen production. In addition, an increase in the market value of solid carbon by-products, which depends on further characterization and valorization of their properties, would significantly reduce hydrogen prices.

The thermodynamic model developed for natural gas pyrolysis in a thermal plasma reactor provides a basis for further investigations, especially in the field of natural gasification with water vapor as a working medium in plasma reactors. It is expected that this approach will provide higher hydrogen production efficiencies compared with gasification processes without an additional plasma working medium, and thus, show promising avenues for future research.