Green hydrogen production costs in Europe could fall to parity with blue in 2030 in some markets but further reductions look out of reach until 2050, consultancy Aurora Energy Research says.

Parity with blue hydrogen would be at around €3/kg ($3.40/kg). Reducing green’s levelised cost of hydrogen to the key €2/kg point, where it starts to undercut blue hydrogen, could take until 2050, Aurora says. Achieving €2/kg would require both power prices and electrolyser capex to drop significantly below levels considered reasonable in the company’s central scenario.

“For instance, an electrolyser running at 50pc load factor with an average power cost of  €10/MWh could beat the [€2/kg] threshold, but assuming such a low power cost is unrealistic,” Aurora says.

“Connecting electrolysers to the grid usually increases the cost of production, due to high grid connection charges and other fees” Aurora

Norway will achieve the lowest production costs for green hydrogen in Europe in the 2030s, followed by Spain and the UK, Aurora says. Norway leads the way on cost reductions due to government support and low power costs, based on the company’s modelling of electrolyser-based production in eight European countries.

The cheapest configuration of green hydrogen production comes when the electrolyser is co-located with both onshore wind and solar on the same site, Aurora says.

The global electrolyser project pipeline stands at 340GW, of which 200GW is in Europe, according to Aurora. Electrolyser projects use a wide range of power sources, mostly from renewables such as solar and wind, but 12pc of those in the pipeline will connect to general power grids.

Connecting electrolyser to the grid usually increases the cost of production, due to high grid connection charges and other fees. If governments were to waive these fees, grid-fed hydrogen could compete on cost with blue hydrogen by 2034, Aurora says.

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Author: Stuart Penson