Green hydrogen can be made for under $1 per kilogram, says Wood MackenzieDecember 14, 2021
Analyst WoodMac has predicted that some countries will make cheap renewable H2 by 2030.
Substantial reductions in electrolyzer prices in combination with inexpensive renewable energy can make it possible for green hydrogen to become the cheapest form of H2 in some countries by 2030, according to analyst Wood Mackenzie.
Some countries will be able to produce renewable H2 for $1 per kilogram by 2030, said WoodMac.
The analyst also stated that it will be possible to produce green hydrogen for less than $2 per kilogram in other countries. Wood Mackenzie’s study showed that based on the cost of H2 this year, the price tag for alkaline and PEM electrolyzers is expected to plumet by 35 percent and 50 percent respectively by 2025. Solid oxide electrolyzers have already been experiencing the “most dramatic [price reductions] in the next six to eight years”.
“Costs are being driven down by a range of factors, including economies of scale, new entrants to the market, greater automation and increased modularity,” said Wood Mackenzie.
“Capex [capital expenditure] reduction will help drive down the levelized cost of hydrogen production. Combined with cheap renewable PPAs [power-purchase agreements] and good renewable utilization in many markets, the potential for competitive green electrolysis-based hydrogen really starts to grow,” added WoodMac H2 research analyst Bridget van Dorsten.
The predictions of falling green hydrogen costs are based on using wind/solar hybrid power projects.
In order to achieve a levelized renewable H2 cost of under $1 per kilogram, the cost of the clean electricity fed to the electrolyzers would need to be under $10/MWh and have a capacity factor of 50 percent, according to the report on the study. Though this isn’t yet possible everywhere, it is expected to be possible at wind/solar hybrid power projects in countries in which performance is exceptionally high, for instance in Saudi Arabia where strong winds and solar irradiation is high.
H2 made with unabated coal or methane – which is currently about 95 to 99 percent of the global supply – had a price tag of about $1.70 per kilogram in 2019, according to data from the International Energy Agency. That said, ICIS and other analysts have looked at high natural gas prices to conclude that by early November, it was already cheaper to produce green hydrogen in the United Kingdom ($4.16 per kilogram) when compared to grey ($4.47 per kilogram).
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