Green Hydrogen Cost – By when can GH2 Realistically Achieve $1 Per Kg Cost?

By when can GH2 Realistically Achieve $1 Per Kg Cost?

The timeline for achieving a cost of $1 per kilogram (kg) of green hydrogen (GH2) can vary depending on several factors such as technological advancements, economies of scale, policy support, and market dynamics.Experts and industry stakeholders have been optimistic about the potential for significant cost reductions in green hydrogen production over the coming decade.

Several studies and analyses have suggested that reaching the $1 per kg target for green hydrogen could be feasible by the mid to late 2020s, particularly if there is significant investment in research and development, scaling up of production facilities, and supportive policies to drive market growth.

However, it’s important to note that predicting exact timelines for cost reductions in emerging technologies like green hydrogen can be challenging due to the complex interplay of various factors. Technological breakthroughs, improvements in electrolyzer efficiency, renewable energy cost reductions, and advancements in hydrogen storage and transportation technologies are among the key drivers that could accelerate the timeline for achieving the $1 per kg cost target.

Additionally, factors such as the availability and cost of renewable energy sources, the development of hydrogen infrastructure, and the evolution of regulatory frameworks will also play crucial roles in determining the pace of cost reduction for green hydrogen.

Overall, while the $1 per kg target for green hydrogen is seen as an ambitious but achievable goal, the exact timeline for its realization will depend on the collective efforts of industry stakeholders, policymakers, and researchers to overcome existing challenges and drive innovation in the sector.

PERSPECTIVES OF GLOBAL EXPERTS:

 Mukesh Ambani,Chairman, RIL:

“Green Hydrogen is the best and cleanest source of energy, which can play a fundamental role in the world’s decarbonisation plans. Efforts are on globally to make Green Hydrogen the most affordable fuel option by bringing down its cost to initially under USD 2 per kg. Let me assure you all that Reliance will aggressively pursue this target and achieve it well before the turn of this decade. And India has always set and achieved even more audacious goals. Am sure that India can set an even more aggressive target of achieving under USD 1 per kg within a decade. This will make India the first country globally to achieve $1 per 1 kilogram in 1 decade – the 1-1-1 target for Green Hydrogen” 

Gautam Adani, Chairman, Adani Group :                                                         

‘’The cost of production of green hydrogen must decline from the current $3-$5 per kilogram towards $1 per kg for widespread adoption. For India, the equitable solution is not to replace one fossil fuel with another but to leapfrog to renewables and green hydrogen. The decrease in solar costs can be replicated with green hydrogen. This shift will help India achieve energy security and improve air quality in its cities. This would also contribute to food security by eliminating the uncertainties of imported ammonia prices, which is a crucial component in fertilisers and, most importantly, will offer the world a chance to avert the adverse impacts of climate change. “

• Norwegian electrolyzer-maker Nel ASA in January announced a goal of producing green hydrogen at $1.50 per kilogram by 2025. Malaysian oil and gas giant Petroliam Nasional Bhd., or Petronas, is targeting hydrogen production costs from the nation’s hydropower and solar resources in a range of $1/kg to $2/kg, Petronas Technology Ventures CEO Mahpuzah Abai said during the panel.
• “Those are levels that are very important because they would allow us to really have low-carbon hydrogen compete with the traditional forms of hydrogen that are not low-carbon,” said Soufien Taamallah, director for energy technologies and hydrogen research at IHS Markit.
• MIT Energy Initiative research scientist Dharik Mallapragada chalked up hydrogen technology cost declines to a factor that is familiar to the utility industry: the vast cost decreases for wind and solar resources that paved the way for large deployments in electric power systems, enhancing opportunities for low-carbon and marginal-cost generation.
• Access to low-cost renewable electricity will be the most important factor in driving green hydrogen costs down to $1.50/kg, according to Everett Anderson, vice president for advanced product development at NEL Hydrogen AS. The electric power price is by far the biggest variable cost when breaking down capital versus operating expenses for electrolyzers, Anderson said. Companies can achieve very high efficiency by operating electrolyzers at reduced capacity, but that will drive up capital costs, he explained. For that reason, companies should consider the total cost of owning an electrolyzer, Anderson said. He also stressed that electrolyzer operators not only need access to low-cost renewable energy but high capacity factors — in other words, a steady supply of wind, sun or water flow. “You need the highest capacity factor possible in order to amortize that capital,” Anderson said.

Key Government Policies:

Governments play a crucial role in shaping the environment for the adoption and growth of emerging technologies like green hydrogen (GH2). Key policies that can influence the cost reduction of GH2 include:

• Subsidies and incentives: Governments can provide subsidies and financial incentives to support research and development, production, and deployment of GH2 technologies. This can include tax credits, grants, and low-interest loans to companies involved in GH2 production.
• Regulation and standards: Governments can establish regulations and standards to ensure the safety, reliability, and efficiency of GH2 production, storage, and distribution. This can help reduce uncertainties for investors and drive innovation in the sector.
• Infrastructure investment: Governments can invest in infrastructure such as hydrogen refueling stations, pipelines, and storage facilities to support the widespread adoption of GH2. This can reduce the cost of GH2 distribution and increase its availability to consumers.
• International cooperation: Governments can collaborate with other countries to share best practices, promote research collaboration, and harmonize regulations to accelerate the development and deployment of GH2 technologies globally.

The European Union’s Hydrogen Strategy aims to scale up production and use of hydrogen as part of its efforts to achieve carbon neutrality by 2050. The strategy includes a target of 6 gigawatts of renewable hydrogen electrolyzers by 2024 and 40 gigawatts by 2030, supported by funding from the EU’s Just Transition Fund and the European Investment Bank.

Specific Challenges:

Despite the potential benefits of GH2, several challenges need to be addressed to achieve a $1 per kg cost:

• Electrolyzer cost: Electrolysis, the process of splitting water into hydrogen and oxygen using electricity, is currently the most common method of GH2 production. The cost of electrolyzers, particularly those using proton exchange membrane (PEM) technology, is a significant barrier to achieving cost competitiveness with fossil fuels.
• Renewable energy integration: GH2 production relies on renewable energy sources such as wind and solar power to reduce carbon emissions. However, the intermittent nature of these energy sources can lead to variability in GH2 production, requiring innovative solutions for energy storage and grid integration.
• Scale-up and infrastructure: Scaling up GH2 production to meet demand requires significant investments in infrastructure such as electrolyzers, storage facilities, and distribution networks. Building this infrastructure at scale can be challenging and requires collaboration between governments, industry, and other stakeholders.
• Technological advancements: Continued research and development are needed to improve the efficiency and reduce the cost of GH2 production technologies. This includes advancements in electrolysis, catalysts, and materials science to enhance performance and durability.

Example: The California Energy Commission’s Hydrogen Refueling Infrastructure program aims to support the development of a network of hydrogen refueling stations across the state to promote the adoption of fuel cell vehicles. The program provides funding for station construction and operation, as well as research and development to advance hydrogen production and distribution technologies.

Case study: The H2@Scale initiative in the United States aims to enable affordable and reliable large-scale hydrogen production, storage, transport, and utilization across various sectors. The initiative includes research and development efforts to address key challenges such as electrolyzer cost reduction, renewable energy integration, and infrastructure development.

Data points:

• According to a study by BloombergNEF, the cost of renewable hydrogen production is expected to decline from around $3-$7 per kg in 2020 to $1.40-$2.60 per kg by 2030, assuming continued technological advancements and policy support.
• The International Renewable Energy Agency (IRENA) estimates that the cost of electrolyzers could decrease by 40-60% by 2030, driven by economies of scale, technological improvements, and increased competition in the market.
• A report by the Hydrogen Council suggests that the cost of hydrogen production could reach $1-2 per kg by 2030 with the right policy support and investment in infrastructure and technology development.

In conclusion, achieving a $1 per kg cost for GH2 will require concerted efforts from governments, industry, and other stakeholders to address key challenges such as electrolyzer cost reduction, renewable energy integration, scale-up and infrastructure development, and technological advancements. With the right policies and investments, this target is realistic by 2030 or possibly earlier, depending on the pace of technological innovation and market adoption.