Production of carbon-free green hydrogen could become cost-competitive by 2030, in comparison with currently predominant methods that use natural gas as a feedstock, Kallanish Energy reports.
IHS Markit analysts said earlier this week the driver behind the increased competitiveness is economies of scale. Green hydrogen, which is produced by electrolysis, splitting water into hydrogen and oxygen, is rapidly developing from pilot to commercial-scale operation in many parts of the world.
The use of renewable power, as opposed to natural gas, makes the hydrogen a carbon-free fuel. Its use can increase exponentially, with demand growth prospects in the transport, heating, industry, and power generation sectors.
“Costs for producing green hydrogen have fallen 50% since 2015 and could be reduced by an additional 30% by 2025 due to the benefits of increased scale and more standardized manufacturing, among other factors,” explained Simon Blakey, IHS Markit senior advisor, Global Gas.
The continued expectation of falling costs for renewables also has a part to play in the lowering of costs for carbon-free hydrogen, he noted.
Hydrogen is set to make a major contribution to future energy demand, while decarbonizing systems globally. The overall share of hydrogen, both green and blue (produced from natural gas), could reach one-third of the European energy mix, IHS Markit forecasted.
“In Europe, it is now widely agreed that electrification alone cannot deliver the level of emissions reduction that many countries aspire to,” said Catherine Robinson, IHS Markit executive director, European Power, Hydrogen, and Renewable Gas.
“Hydrogen is a highly versatile fuel—both in terms of how it can be transported and the variety of its potential end-use applications. The greater the degree of a decarbonization, the greater the likely role of hydrogen in the energy future,” she added.
Investment in projects that convert surplus power to different forms of energy, such as power-to-hydrogen, is growing fast. These so-called power-to-x projects attracted $30 million in investment in 2019. IHS Markit expects this figure to grow to over $700 million in 2023.
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