Green hydrogen produced in South America, the Middle East or North Africa could be delivered to Europe at levels competitive with local production by 2030 or earlier, despite expensive shipping and cracking costs, according to an analysis of various cost comparisons.

At least 50pc of the cost of producing green hydrogen comes from the cost of electricity, meaning desert areas with large amounts of sunshine, land space and wind are well-suited for production.

But transporting hydrogen is much more expensive and dangerous than other fuels such as natural gas, reducing the cost-effectiveness of imports. Although all fuels encounter efficiency losses along the value chain, such losses are particularly acute in the case of hydrogen—sometimes as high as 30pc below the amount of energy in the original electricity input.

“Europe will want a guaranteed supply of green hydrogen to kick-start demand” Jabbour, Aurora Energy Research

There are three key technologies that could be used to transport hydrogen, all with varying levels of efficiency and cost.

The most developed in terms of intercontinental transport is ammonia, which relies on chemical and semi-refrigerated liquefied petroleum gas tankers.  These tankers already carry ammonia on existing routes from the Middle East to Europe. Converting hydrogen to ammonia uses 7-18pc of the energy in the hydrogen itself, as does reconversion.

Liquid organic hydrogen carriers (LOHCs) can also be used to transport the fuel. Making an LOHC involves attaching hydrogen molecules to carrier molecules, and then re-extracting pure hydrogen at the destination. LOHCs are similar in form to oil products and can be carried on product tankers. Converting to LOHCs uses 35-45pc of the energy in the hydrogen itself, as does reconversion.

Hydrogen can also be liquefied and transported, just as natural gas is. However, it requires cooling to -253°C—an extremely energy-intensive process. It then requires specially constructed vessels to be transported. Firms such as Japan’s Kawasaki Heavy Industries have developed these vessels, but they have yet to reach wide levels of adoption.

There are many uncertainties associated with all of these cost components, and some—particularly liquid hydrogen—have the potential to dramatically improve in efficiency, and therefore reduce costs, over time.

Cheapest options

However in the near-term, for distances over 1,500km, analysis by the IEA shows LOHC and ammonia transport by ship are currently the cheapest delivery options, and are broadly equivalent in their costs.

The route from Australia to Japan has been the object of several studies on the cost of imported hydrogen as it is viewed as one of the most likely to develop—Japan has over a hundred hydrogen refuelling stations already and is looking to increase imports, while Australia has the land mass and hours of sunshine suitable for production.

Synthesising these studies, the IEA estimates that importing electrolytic hydrogen in 2030 via either LOHC or ammonia will have a delivered cost after reconversion of $5.5/kg, cheaper than forecast domestic production of $6.5/kg. (The price is as high as $7/kg using a liquid hydrogen shipping process.) Within this calculation, the cost of production accounts for around $3.8/kg.

But a separate peer-reviewed study focused on Chile and carried out by the Chilean Solar and Energy Innovation Committee estimated that green hydrogen could be produced much more cheaply than this—for $2.2/kg currently and $1.67/kg by 2025.

Saudi Arabia is also developing a project on the Red Sea that aims to produce hydrogen at a cost of less than $2/kg. Analysis by the IEA estimates that the cost of delivering and converting to the industrial sector by ship is around $4.2/kg via both LOHC and ammonia.

This means hydrogen could be delivered to Europe at less than $6/kg, including reconversion. This is the same cost that EU Hydrogen Council assumes for the early 2020s in its Path to Hydrogen Competitiveness report.

$6/kg – Potential delivered cost of hydrogen in Europe

The Hydrogen Council says in its 2021 insights report that international distribution and reconversion costs might fall to $2-3/kg by 2030 if the liquid hydrogen shipping market develops rapidly, implying that delivered costs in Europe could potentially fall as low as $4/kg by that date.

Analysis carried out by Aurora Energy Research found that green hydrogen produced in Morocco could even be cost-competitive with domestically produced blue hydrogen in 2030.

Aurora also found that domestic green hydrogen production supply is unlikely to be sufficient to meet demand in Europe, providing further economic support for imports.

But domestic green hydrogen production will still be incentivised in the EU, however low the costs elsewhere might be, Aurora commercial associate Alan Jabbour tells Hydrogen Economist.

“Europe will want a guaranteed supply of green hydrogen to kick-start demand,” he says. “There is also a security of supply argument, and many of the factors around shipping are still uncertain.”

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Author: Tom Young