The output level at which two capacity alternatives generate equal cost is the definition of

Although abundant on earth as an element, hydrogen is almost always found as part of another compound, such as water (H2O) or methane (CH4), and it must be separated into pure hydrogen (H2) for use in fuel cell electric vehicles. Hydrogen fuel combines with oxygen from the air through a fuel cell, creating electricity and water through an electrochemical process.

Production

Hydrogen can be produced from diverse, domestic resources, including fossil fuels, biomass, and water electrolysis with electricity. The environmental impact and energy efficiency of hydrogen depends on how it is produced. Several projects are underway to decrease costs associated with hydrogen production.

There are several ways to produce hydrogen:

• Natural Gas Reforming/Gasification: Synthesis gas—a mixture of hydrogen, carbon monoxide, and a small amount of carbon dioxide—is created by reacting natural gas with high-temperature steam. The carbon monoxide is reacted with water to produce additional hydrogen. This method is the cheapest, most efficient, and most common. Natural gas reforming using steam accounts for the majority of hydrogen produced in the United States annually.

  A synthesis gas can also be created by reacting coal or biomass with high-temperature steam and oxygen in a pressurized gasifier. This converts the coal or biomass into gaseous components—a process called gasification. The resulting synthesis gas contains hydrogen and carbon monoxide, which is reacted with steam to separate the hydrogen.

• Electrolysis: An electric current splits water into hydrogen and oxygen. If the electricity is produced by renewable sources, such as solar or wind, the resulting hydrogen will be considered renewable as well, and has numerous emissions benefits. Power-to-hydrogen projects are taking off, using excess renewable electricity, when available, to make hydrogen through electrolysis.

• Renewable Liquid Reforming: Renewable liquid fuels, such as ethanol, are reacted with high-temperature steam to produce hydrogen near the point of end use.

• Fermentation: Biomass is converted into sugar-rich feedstocks that can be fermented to produce hydrogen.

Several hydrogen production methods are in development:

The major hydrogen-producing states are California, Louisiana, and Texas. Today, almost all the hydrogen produced in the United States is used for refining petroleum, treating metals, producing fertilizer, and processing foods.

The primary challenge for hydrogen production is reducing the cost of production technologies to make the resulting hydrogen cost competitive with conventional transportation fuels. Government and industry research and development projects are reducing the cost as well as the environmental impacts of hydrogen production technologies. Learn more about hydrogen production from the Hydrogen and Fuel Cell Technologies Office.

Distribution

Most hydrogen used in the United States is produced at or close to where it is used—typically at large industrial sites. The infrastructure needed for distributing hydrogen to the nationwide network of fueling stations required for the widespread use of fuel cell electric vehicles still needs to be developed. The initial rollout for vehicles and stations focuses on building out these distribution networks, primarily in southern and northern California.

Currently, hydrogen is distributed through three methods:

• Pipeline: This is the least-expensive way to deliver large volumes of hydrogen, but the capacity is limited because only about 1,600 miles of pipelines for hydrogen delivery are currently available in the United States. These pipelines are located near large petroleum refineries and chemical plants in Illinois, California, and the Gulf Coast.

• High-Pressure Tube Trailers: Transporting compressed hydrogen gas by truck, railcar, ship, or barge in high-pressure tube trailers is expensive and used primarily for distances of 200 miles or less.

• Liquefied Hydrogen Tankers: Cryogenic liquefaction is a process that cools hydrogen to a temperature where it becomes a liquid. Although the liquefaction process is expensive, it enables hydrogen to be transported more efficiently (compared with high-pressure tube trailers) over longer distances by truck, railcar, ship, or barge. If the liquefied hydrogen is not used at a sufficiently high rate at the point of consumption, it boils off (or evaporates) from its containment vessels. As a result, hydrogen delivery and consumption rates must be carefully matched.

Creating an infrastructure for hydrogen distribution and delivery to thousands of future individual fueling stations presents many challenges. Because hydrogen contains less energy per unit volume than all other fuels, transporting, storing, and delivering it to the point of end-use is more expensive on a per gasoline gallon equivalent basis. Building a new hydrogen pipeline network involves high initial capital costs, and hydrogen's properties present unique challenges to pipeline materials and compressor design. However, because hydrogen can be produced from a wide variety of resources, regional or even local hydrogen production can maximize use of local resources and minimize distribution challenges.

There are tradeoffs between centralized and distributed production to consider. Producing hydrogen centrally in large plants cuts production costs but boosts distribution costs. Producing hydrogen at the point of end-use—at fueling stations, for example—cuts distribution costs but increases production costs because of the cost to construct on-site production capabilities.

Government and industry research and development projects are overcoming the barriers to efficient hydrogen distribution. Learn more about hydrogen distribution from the Hydrogen and Fuel Cell Technologies Office.

The production system design planning considers input requirements, conversion process and output. After considering the forecast and long-term planning organization should undertake capacity planning.

Capacity is defined as the ability to achieve, store or produce. For an organization, capacity would be the ability of a given system to produce output within the specific time period. In operations, management capacity is referred as an amount of the input resources available to produce relative output over period of time.

In general, terms capacity is referred as maximum production capacity, which can be attained within a normal working schedule.

Capacity planning is essential to be determining optimum utilization of resource and plays an important role decision-making process, for example, extension of existing operations, modification to product lines, starting new products, etc.

Strategic Capacity Planning

A technique used to identify and measure overall capacity of production is referred to as strategic capacity planning. Strategic capacity planning is utilized for capital intensive resource like plant, machinery, labor, etc.

Strategic capacity planning is essential as it helps the organization in meeting the future requirements of the organization. Planning ensures that operating cost are maintained at a minimum possible level without affecting the quality. It ensures the organization remain competitive and can achieve the long-term growth plan.

Capacity Planning Classification

Capacity planning based on the timeline is classified into three main categories long range, medium range and short range.

Long Term Capacity: Long range capacity of an organization is dependent on various other capacities like design capacity, production capacity, sustainable capacity and effective capacity. Design capacity is the maximum output possible as indicated by equipment manufacturer under ideal working condition.

Production capacity is the maximum output possible from equipment under normal working condition or day.

Sustainable capacity is the maximum production level achievable in realistic work condition and considering normal machine breakdown, maintenance, etc.

Effective capacity is the optimum production level under pre-defined job and work-schedules, normal machine breakdown, maintenance, etc.

Medium Term Capacity: The strategic capacity planning undertaken by organization for 2 to 3 years of a time frame is referred to as medium term capacity planning.

Short Term Capacity: The strategic planning undertaken by organization for a daily weekly or quarterly time frame is referred to as short term capacity planning.

Goal of Capacity Planning

The ultimate goal of capacity planning is to meet the current and future level of the requirement at a minimal wastage. The three types of capacity planning based on goal are lead capacity planning, lag strategy planning and match strategy planning.

Factors Affecting Capacity Planning

Effective capacity planning is dependent upon factors like production facility (layout, design, and location), product line or matrix, production technology, human capital (job design, compensation), operational structure (scheduling, quality assurance) and external structure ( policy, safety regulations)

Forecasting v/s Capacity Planning

There would be a scenario where capacity planning done on a basis of forecasting may not exactly match. For example, there could be a scenario where demand is more than production capacity; in this situation, a company needs to fulfill its requirement by buying from outside. If demand is equal to production capacity; company is in a position to use its production capacity to the fullest. If the demand is less than the production capacity, company can choose to reduce the production or share it output with other manufacturers.

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