Low-CO2 H2 ‘can compete with gas by 2030’
Most competitive in large, local supply chains
Platts assessment reflects falling power price
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S&P Global Platts assessed the price of electrolysis-derived hydrogen (California PEM Electrolysis, including capex) at $2.04/kg Friday, driven down from $2.26/kg on day and $3.27/kg January 10 by falling wholesale power prices.
“If electrolyzer manufacturing can scale up, and costs continue to fall, then our calculations suggest renewable hydrogen could be produced for $0.8 to $1.60/kg in most parts of the world before 2050,” BNEF said.
This was equivalent to gas priced at $6-$12/MMBtu, making green hydrogen competitive with current natural gas prices in Brazil, China, India, Germany and Scandinavia on an energy-equivalent basis, and cheaper than producing hydrogen from natural gas or coal with carbon capture and storage, it said.
Hydrogen is likely to be most competitive in large-scale local supply chains, BNEF said.
“Clusters of industrial customers could be supplied by dedicated pipeline networks containing a portfolio of wind- and solar-powered electrolyzers, and a large-scale geological storage facility to smooth and buffer supply,” it said.
A delivered cost of green hydrogen of around $2/kg ($15/MMBtu) in 2030 and $1/kg ($7.40/MMBtu) in 2050 in China, India and Western Europe was achievable, while costs could be 25% lower in countries with the best renewable and hydrogen storage resources, such as the US, Brazil, Australia, Scandinavia and the Middle East.
Feedstock price key
Technology development, cheap electricity and policy support were needed for green hydrogen to compete with blue hydrogen — steam methane reforming of natural gas with carbon capture and storage, S&P Global Platts Analytics said in a March 18 webinar.
Assuming a feedstock cost of $40/MWh, for example, PEM electrolysis-derived hydrogen (at a 70% capacity factor) costs around $3.30/kg compared with $1.50/kg for blue hydrogen production (with $3.50/MMBtu natural gas), it said.
An important caveat, however, is that CCS faces challenges of its own in terms of regional availability, costs and scaling.
For green hydrogen, meanwhile, “curtailed renewables and negative electricity prices provide opportunity for low cost feedstock energy for H2 production,” Platts Analytics said.
Further, grid connected green H2 production could provide valuable grid services and load shaping while capitalizing on power price arbitrage opportunities, it said.