Oct 22, 2019 – pv magazine reports: Green hydrogen could be cheaper in 2030 than hydrogen of fossil origin

By Ralph Diermann

(Convenience translation; citation: https://www.pv-magazine.de/2019/10/22/gruener-wasserstoff-koennte-2030-guenstiger-sein-als-blauer-wasserstoff/)

According to a new study by Wood Mackenzie, this applies to production in Germany, Japan and Australia – provided that the production costs for solar and wind power there fall to the equivalent of 2.7 euro cents per kilowatt hour by 2030. According to analysts‘ estimates, electrolysers with a combined capacity of 3.2 gigawatts will be installed worldwide by 2025.

Today, hydrogen is generally produced from natural gas or coal. This is very damaging to the climate: in 2017, production processes worldwide caused a total of 830 million tonnes of CO2 emissions, more than Germany’s total emissions. Not even one percent of the hydrogen currently comes from electrolysers powered by renewable energies. According to a new report by the US analyst firm Wood Mackenzie, the cumulative output of plants for the production of green hydrogen amounts to 252 megawatts. By 2025, electrolysers with a capacity of 3205 megawatts are to be added – an increase of 1272 percent.

Market researchers also predict that in ten years‘ time it will be cheaper to produce green hydrogen in Germany, Japan and Australia than to produce it from fossil fuels. The prerequisite for this is that the production costs for solar and wind power will fall to the equivalent of a maximum of 2.7 euro cents per kilowatt hour by 2030. Today the prices there in PPA contracts are between the equivalent of 4.8 and 13.7 cents per kilowatt hour.

Ben Gallagher, leading analyst at Wood Mackenzie, cites the fact that a real market is now emerging here as one reason for the rapid increase in electrolysis output over the next few years. „Ambitious goals in East Asia and the growing interest of large international stakeholders will ensure great growth in the near future,“ explains Gallagher.

At the same time, he points out that in most cases green hydrogen will not be able to compete with natural gas or coal until 2025. National targets and pilot projects will, however, lead to a considerable increase in construction. As the number of plants increases, investment costs will fall, even beyond 2025. However, Gallagher also stresses that it is far from certain whether the PPA prices for solar and wind power will actually fall fast enough to make the production of green hydrogen competitive.

Overall, however, the analyst is optimistic. „We have only just begun the conversion of the energy system,“ said Gallagher. „There are a number of factors that can further advance the introduction of green hydrogen: a changed political dynamic, the pricing of CO2, new ways to monetarise grid flexibility and a drop in costs for renewable energies that exceeds expectations.

Translated with www.DeepL.com/Translator