# Hydrogen storage: Economics Why salt caverns are the cheapest way to hold hydrogen Source page: https://www.materialinsights.org/energy/e_h2_storage/sg-econ/ What this tab covers Economics and financial structure: capital versus operating cost, levelised cost of storage, and how the asset earns money. Underground storage in salt is the cheapest way to hold large amounts of hydrogen; cost per kg discharged depends heavily on how often the store is cycled. #### Capex versus opex Mixed Capital cost is dominated by cavern solution-mining or tank material. For vehicle-scale 700 bar tanks, DOE's 2025 status record puts system cost at about USD 12.7 per kWh of hydrogen (2020 dollars) at 100,000 units a year, against a 2025 target of USD 9 that has not been met. The largest US project, ACES Delta in Utah, received a USD 504.4 million federal loan guarantee in 2022. Operating costs come mainly from compressor electricity, and for liquid hydrogen and LOHC from cooling or heating energy.^[2](https://www.hydrogen.energy.gov/docs/hydrogenprogramlibraries/pdfs/24006-onboard-storage-cost-performance-status.pdf?Status=Master&sfvrsn=a1e6209b_2)^[8](https://www.energy.gov/lpo/advanced-clean-energy-storage) 700 bar tank system cost (2023) USD 12.7/kWh (2020 dollars); target USD 9/kWh^[2](https://www.hydrogen.energy.gov/docs/hydrogenprogramlibraries/pdfs/24006-onboard-storage-cost-performance-status.pdf?Status=Master&sfvrsn=a1e6209b_2) ACES Delta loan guarantee USD 504.4 million (2022)^[8](https://www.energy.gov/lpo/advanced-clean-energy-storage) #### Levelised cost of storage Mixed For salt caverns, the University of Cologne energy institute (EWI, 2024) estimated EUR 0.66-1.75 per kg of hydrogen discharged, equal to roughly EUR 20-53 per MWh of hydrogen (calculated). Cycling the store more often cuts this to about EUR 0.45 per kg, while poorly used caverns can reach EUR 3.50 per kg. Against expected production costs of EUR 3-4 per kg, storage can be up to a quarter of the delivered cost. Salt caverns are generally regarded as the most mature and cheapest underground option; porous fields are still unproven for hydrogen.^[4](https://ewi.uni-koeln.de/en/?p=17110)^[6](https://www.ieahydrogen.org/download/87/2021/2076/2021_presentation_underground-hydrogen-storage-application-of_resource-management-week-unece_h2tcp.pdf) Salt cavern LCOS EUR 0.66-1.75/kg discharged (2024)^[4](https://ewi.uni-koeln.de/en/?p=17110) Low utilisation case up to EUR 3.50/kg^[4](https://ewi.uni-koeln.de/en/?p=17110) Per MWh equivalent about EUR 20-53/MWh H2 (calculated)^[4](https://ewi.uni-koeln.de/en/?p=17110) #### Revenue stack and market participation Mixed Hydrogen stores earn from seasonal and multi-day shifting of renewable electricity, security of supply for industrial users (the few existing hydrogen caverns serve mainly as strategic reserves for refineries), and balancing hydrogen pipelines. They are poorly suited to fast frequency services unless paired with batteries. Revenue models are immature, so most projects rely on public support or integrated industrial offtake.^[4](https://ewi.uni-koeln.de/en/?p=17110)^[7](https://innovation.engie.com/en/articles/detail/hydrogen-underground-storage-salt-caverns/25906/general) #### Sources 1. [DOE Hydrogen Program Record 24006: Onboard Type IV compressed hydrogen storage system cost and performance status](https://www.hydrogen.energy.gov/docs/hydrogenprogramlibraries/pdfs/24006-onboard-storage-cost-performance-status.pdf?Status=Master&sfvrsn=a1e6209b_2) US Department of Energy, 2025 2. [Analysis of costs for underground hydrogen storage in salt caverns (Klaas, Schlund, Kopp, Vey)](https://ewi.uni-koeln.de/en/?p=17110) EWI, University of Cologne, 2024 3. [Underground hydrogen storage: application of resource management (UNECE Resource Management Week)](https://www.ieahydrogen.org/download/87/2021/2076/2021_presentation_underground-hydrogen-storage-application-of_resource-management-week-unece_h2tcp.pdf) IEA Hydrogen Technology Collaboration Programme, 2021 4. [Hydrogen underground storage in salt caverns](https://innovation.engie.com/en/articles/detail/hydrogen-underground-storage-salt-caverns/25906/general) ENGIE Innovation, 2021 5. [Advanced Clean Energy Storage (ACES Delta) project summary](https://www.energy.gov/lpo/advanced-clean-energy-storage) US DOE Loan Programs Office, 2022 ## Other sections - [Summary](https://www.materialinsights.org/energy/e_h2_storage/index.md) - [Overview](https://www.materialinsights.org/energy/e_h2_storage/overview/index.md) - [Correlation](https://www.materialinsights.org/energy/e_h2_storage/correlation/index.md) - [Science and technology](https://www.materialinsights.org/energy/e_h2_storage/sg-sci/index.md) - [Engineering and performance](https://www.materialinsights.org/energy/e_h2_storage/sg-eng/index.md) - [Impact and additionality](https://www.materialinsights.org/energy/e_h2_storage/sg-impact/index.md) - [What to track](https://www.materialinsights.org/energy/e_h2_storage/tracking/index.md) - [Relationships](https://www.materialinsights.org/energy/e_h2_storage/links/index.md)