Renewables-generated hydrogen is set to “rewrite the global energy map” in the coming decades, with collapsing costs powering the way forward for green H2 to displace both fossils-fuelled blue and grey varieties’ roles in the rapidly emerging market, according to the latest report on the sector from BloombergNEF (BNEF).
The analyst group, in its first-half of 2021 Hydrogen Levelized Cost Update, forecasts that green hydrogen is on track to be cheaper than natural gas by 2050 in 15 of the 28 markets modelled — countries that accounted for one-third of global gross domestic product in 2019 — and to undercut both blue and grey hydrogen on cost per kilogram.
Such low renewable hydrogen costs could completely rewrite the energy map. It shows that in future, at least 33% of the world economy could be powered by clean energy for not a cent more than it pays for fossil fuels.Martin Tengler, Leader Hydrogen Analyst, BNEF
But the technology will require continued government support to get there – we are at the high part of the cost curve now, and policy-supported investment is needed to get to the low part.Martin Tengler, Leader Hydrogen Analyst, BNEF
BNEF predicts the cost of producing hydrogen from renewable electricity should fall by up to 85% from today to 2050, leading to costs below $1 pre kg ($7.4 per million British thermal units) by 2050 in most international markets.
By 2030, it will make little economic sense to build blue hydrogen production facilities in most countries.Martin Tengler, Leader Hydrogen Analyst, BNEF
Companies currently banking on producing hydrogen from fossil fuels with CCS [carbon capture and storage] will have at most 10 years before they feel the pinch. Eventually those assets will be undercut, like what is happening with coal in the power sector today.Martin Tengler, Leader Hydrogen Analyst, BNEF
The “key driver” lying behind green hydrogen’s cost-cratering, noted BNEF, was the falling price of solar power, with Tengler pointing out that renewables-hydrogen costs are 13% lower than in the analysts’ previous 2030 scenario and 17% below an earlier 2050 version.
On one hand the reduction in the forecast was surprising, on the other hand not. This is how it goes with clean energy.Martin Tengler, Leader Hydrogen Analyst, BNEF
Every year it gets cheaper, faster than anyone expects. The key driver is the falling cost of PV electricity [which] we now think will be 40% cheaper by 2050 than what we had thought just two years ago.Martin Tengler, Leader Hydrogen Analyst, BNEF