Green hydrogen could already be competitive with blue hydrogen in specific markets even before significant cost reductions and performance improvements in electrolysers have materialised, according to a new study by the International Renewable Energy Agency (Irena).

The potential levelised cost of hydrogen, assuming the low solar PV and onshore wind prices from the recent auctions in Saudi Arabia, could be as little as $1.62/kg.

This compares favourably with the estimated cost of blue hydrogen at between $1.45/kg and $2.40/kg in the same region, according to analysis by Irena.

$1.62/kg – Potential levelised cost of hydrogen

As electrolyser cost starts to fall, green hydrogen production becomes even more competitive, potentially becoming as cheap as $1/kg or lower.

The key barrier to affordable green hydrogen had been thought to be the fact that the high capital costs of hydrogen electrolysers necessitate high load hours—but the solar and wind that supply the electrolysers have relatively low capacity factors.

“These are no longer insurmountable hurdles,” says the report.

Low-cost hydrogen from solar and wind may initially rely on areas with excellent solar and wind resources, given the need to achieve high load hours to amortise the costs of relatively expensive electrolysers.

But in the medium to long-term cost reductions and performance improvements for electrolysers will mean production will shift to areas with very low cost electricity, even if the renewable capacity factors are not as high. In practice, this could mean areas with cheaper solar PV but less wind.

“This has important implications for the extent of the resource base for low-cost hydrogen, as areas with excellent resources for either solar or wind are much more widely distributed than those that combine both,” says the report.

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Author: Tom Young