Green hydrogen costs could fall from today's $7.40 per kilogramme to just $1.00 per kilogramme by 2050 without government intervention, but policy measures could make it cheaper much more rapidly, according to Rystad Energy.
At Rystad’s Energy Week, analyst Susanne Andresen spoke about the current trajectory of hydrogen and carbon capture and storage (CCS) technologies as they are scaled up to support decarbonisation.
At present, blue and grey hydrogen cost about $1.50 to $2.50 per kilogramme, so in the coming decades, green hydrogen will become not only more competitive, but preferable in some regions, according to Andersen.
She noted the levelised cost of green hydrogen was falling "quite a bit", driven by a decrease in the required capital expenditure — particularly in relation to falling electrolyser costs — and the cost of electricity.
"We know that the cost of the electrolyser will fall quite a bit because we are moving down those technological learning curves, much like we saw with solar. We are also seeing an increased shift towards modularity," Andresen explained.
Blue hydrogen is produced from natural gas feedstocks, with the carbon dioxide by-product from hydrogen production captured and stored. However, the process is not emissions free.
Green hydrogen is made using electrolysis powered by renewable energy to split water molecules into oxygen and hydrogen, creating an emissions-free fuel.
"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."
Adnersen noted the analysis of the trajectory of the price of green hydrogen did not take into account any policy intervention, which is likely to see costs fall even quicker.
The US Department of Energy’s Hydrogen Energy Earthshot Initiative is providing funding to clean-hydrogen projects to bring the cost of green hydrogen to $1 per kilogramme by 2030.
Norwegian hydrogen company Nel is also working to bring the cost of green hydrogen to $1.50 by 2025.
Gigascale expansion
Speaking during the same conference, Rystad's head of Australia & Global Renewables, Gero Farruggio, noted the global average size of electrolysers was expected to increase by over 20 times in the next three years, from today's current average of about 3 megawatts.
The pipeline of proposed green-hydrogen electrolysers currently exceeds 210 gigawatts, with most of that capacity announced since the beginning of the coronavirus pandemic.
While that figure is significant, it will barely match anticipated demand, with Farruggio expecting more gigascale projects to be announced in the coming years.
"If all the projects identified today break ground, it will only supply 10% of the forecast hydrogen demand," he explained.
"At least 8 terawatts of renewable power to produce hydrogen is needed by 2050. This is significant and equivalent to almost 10 times today’s generating assets."
Andresen said the cost of transporting hydrogen is a large barrier to scaling up green hydrogen, since transporting liquid hydrogen through pipelines is substantially greater than the cost to transport methanol or ammonia.
However, repurposing existing pipelines to transport hydrogen is just 30% of the cost of laying new pipelines.
Carbon capture
Andresen also addressed the scaling up of CCS technology, which is necessary in the production of blue hydrogen, and said it will be even more contingent on government policies than green hydrogen.
“We’re seeing the cost of CCS continue to fall, and the cost of emitting continue to rise. What’s interesting is that, assuming those two forces continue, we’ll reach an intersection where, sometime in the near future, it will be cheaper to capture and sequester carbon than to emit it,” Andresen said.
She added that demand for CCS could reach 474 million tonnes per annum by 2030, which is 10 times current demand.
The hub approach to CCS is a great benefit to the cost, as point source capital expenditure decreases with the collaboration, and a supply of carbon dioxide is more significant.
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