Green Hydrogen Cost To Plummet Even Without The Government

The cost of green hydrogen right now is one of the obstacles staying between large-scale deployment. However, according to analysts, it is expected to fall from current levels between $6 – $8 to $1 per kg even without any government support.

Analyst Susanne Andresen explained at Rystad’s Energy Week – an annual summit gathering energy market experts, that the current trajectory of hydrogen and carbon capture and storage technologies is leading them towards economies of scale and global competitiveness.

The cost of green hydrogen is dropping now due to a decrease in the required capital expenditure, particularly in relation to falling electrolyzer costs, and the dropping cost of renewable electricity. 

“The cost of electricity globally will fall as we see renewables take an increasing share of the global power mix, so all told we are looking at about $1 per kilo of hydrogen towards 2050,” Mrs. Andersen explained. 

Right now the price of blue and grey hydrogen falls around $1.50 to $2.50 per kg, which means in the coming decades green hydrogen is about to become much more competitive and even preferable in certain regions.

Government Support

The projections do not take into account any government intervention. If the public sector provides support to green hydrogen, the prices are expected to drop much sooner, possibly between 2025 – 2030. 

The US DOE for example has launched an initiative called Hydrogen Energy Earthshot that aims to provide funding to bring clean hydrogen cost down to $1 per kg by 2030. The Australian government is also investing heavily in the technology, setting aside $1.2 billion for commercial production via the country’s National Hydrogen Strategy.

Adoption Of Green Hydrogen

However, the capacity for green hydrogen production is expected to barely meet demand. Currently, the proposed green hydrogen electrolyzers capacity is around 210 gigawatts, a significant increase from today’s available 3 megawatts. The planned expansion will still only supply around 10% of the forecasted hydrogen demand.

The cost of transporting hydrogen is also a large barrier to deployment. A potential solution could be repurposing existing pipelines to transport hydrogen which would be just 30% of the expense of building new pipelines. 

According to analysts, scaling carbon capture and storage (CCS) is also a driver to the large-scale development of blue hydrogen. With carbon capture cost continuing to fall and costs of emitting CO2 continuing to rise hints that when the point of intersection is met it will be cheaper to sequester emissions rather than release them. With blue hydrogen CAPEX coming down, barriers to adoption are diminishing. 

Green hydrogen and carbon capture and storage are critical technologies that could significantly decarbonize the current pollution coming from fossil fuels use. Green hydrogen inevitably getting cheaper even without political support is a powerful force leading to an increased share of the global energy market. 

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