Green Hydrogen Can Compete on Costs with Fossil Fuel by 2030: Report

Hydrogen produced with renewable electricity could compete on costs with fossil fuel alternatives by 2030, according to a new report from the International Renewable Energy Agency (IRENA).

December 18, 2020. By Manu Tayal

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Hydrogen produced with renewable electricity could compete on costs with fossil fuel alternatives by 2030, according to a new report from the International Renewable Energy Agency (IRENA).

The report further explained that a combination of falling costs for solar and wind power, improved performance as well as economies of scale for electrolysers could make it possible. Green Hydrogen Cost Reduction: scaling up electrolysers to meet the 1.5 C climate goal looks at drivers for innovation and presents strategies that governments can peruse to reduce the cost of electrolysers by 40 per cent in the short term and by up to 80 per cent in the long term, added the report.

Green hydrogen could play a critical role in decarbonisation strategies, particularly so where direct electrification is challenging in harder-to-abate sectors, such as steel, chemicals, long-haul transport, shipping and aviation. However, regulations, market design and the costs of power and electrolyser production are still major barrier to the uptake of green hydrogen.

Commenting on the report, Francesco La Camera, Director-General of IRENA, said that “renewable hydrogen can be a game-changer in global efforts to decarbonise our economies.”

“Levelling the playing field to close the cost gap between fossil fuels and green hydrogen is necessary. Cost-competitive green hydrogen can help us build a resilient energy system that thrives on modern technologies and embraces innovative solutions fit for the 21st century,” La Camera added.

IRENA further said that, today, green hydrogen is 2-3 times more expensive than blue hydrogen, produced from fossil fuels in combination with carbon capture and storage (CCS).

The production cost for green hydrogen is determined by the renewable electricity price, the investment cost of the electrolyser and its operating hours. Renewables have already become the cheapest source of power in many parts of the world, with auctions reaching record price-lows below USD 20/MWh. While low-cost electricity is a necessary condition for competitive green hydrogen, investment costs for electrolysis facilities must fall significantly too.

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