The Hydrogen Council presented research today revealing that government commitments have led to a rapid acceleration of hydrogen projects and, with falling prices, renewable hydrogen could hit cost-parity with grey supply by 2028.

While the news is good, the report warned a $50bn funding gap is a stumbling block to getting prices down.

Developed in collaboration with management consultancy McKinsey & Company, Hydrogen Insights 2021 found that, as of early 2021, over 30 countries have released hydrogen roadmaps and governments worldwide have committed public funding to hydrogen technologies. 228 large-scale projects have been announced, with 85pc located in Europe, Asia and Australia. If all announced projects come to fruition, total investment will reach more than $300bn over the rest of the decade.

With hydrogen production costs falling, transmission and distribution costs are the next frontier to be overcome

However, there are still obstacles in the way. The report has called for industry and government strategies aimed at the critical “unlocks”, such as reducing the cost of hydrogen production and distribution. The report estimates roughly 65GW of electrolysis is required to bring costs down to a breakeven with grey hydrogen under ideal conditions, which implies a funding gap of about $50bn.

Value in clusters

The report recommends the development of clusters with large-scale hydrogen offtakers at their core. It claims these will drive scale through the equipment value chain and reduce the cost of hydrogen production. By combining multiple offtakers, suppliers can share both investments and risks while establishing positive reinforcing loops. Other smaller hydrogen offtakers in the vicinity of such clusters can then piggy-back on the lower-cost hydrogen supply, making their operations breakeven faster.

With hydrogen production costs falling, transmission and distribution costs are the next frontier to be overcome, according to the report. The industry can partially reuse existing gas infrastructure, but even newly constructed pipelines would not be cost prohibitive. For example, it estimates the cost to transport hydrogen from North Africa to central Germany via pipeline could amount to about $0.5/kg of H₂—less than the cost difference for domestic renewable hydrogen production in these two regions.

In the short-to-medium term, the most competitive setup for large-scale clean hydrogen applications involves co-locating hydrogen production on- or near-site. The industry can then use this scaled production to supply the fuel to other hydrogen users in the vicinity, such as refuelling stations for trucks and trains, and smaller industrial users.

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Author: Che Golden