Low-cost solar power in Spain has enabled green hydrogen producers within the HyDeal hub project to secure offtake deals at delivered prices as low as €2.5/kg ($2.64/kg), according to HyDeal president Thierry Lepercq.

That price undershoots some analysts’ estimates that the levelised cost of production in Spain is around €3/kg, which would place the country alongside Norway as one of Europe’s most competitive suppliers.

“We at HyDeal know where the market is because we have already secured offtake at that price: €2.5/kg,” Lepercq told the Word Hydrogen Congress in Rotterdam.

“It has to be an obsession, not an obsession to look for subsidies, an obsession to lower costs, lower capex, lower risks so that we lower financing costs“ Lepercq, HyDeal

He gave no further details of the type of contracts signed but attributed the low prices to the falling cost of solar power used by HyDeal, which is one of the largest green hydrogen projects under development in Europe, with participation from multiple producers, midstream firms, electrolysers manufacturers and offtakers.

Lepercq said massive global oversupply of solar modules would enable prices to continue to fall, strengthening the case to use solar power to feed electrolysers to produce green hydrogen. About 80GW of solar modules are in storage in Europe waiting for buyers, he said.

“So the message is very simple: there is a tsunami of supply. It is already like this in solar, and it is coming in electrolysers,” he said. “The millions of tonnes [of green hydrogen] that Europe wants, the 20mt that we target, are around the corner,” he added. Lepercq’s assessment of the supply outlook was markedly more bullish than other speakers at the congress.

However, Lepercq argued the wider green hydrogen sector in Europe is not focused enough on reducing costs. “It has to be an obsession, not an obsession to look for subsidies, an obsession to lower costs, lower capex, lower risks so that we lower financing costs. It has to be an obsession,” he said.

Milestone

Other delegates highlighted the challenges faced by green hydrogen projects in securing offtake deals from potential industrial users. However, Lepercq pointed to a recent move by France’s TotalEnergies as a breakthrough. The major called for proposals to supply of 500,000t/yr of green hydrogen for use in its European refineries. “Two weeks ago, we crossed a very important milestone in this industry,” he said. “What that says is that we are moving from an announcements business to a business with demand.”

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Author: Stuart Penson