Annual global investments in green hydrogen production powered-by renewable sources are expected to exceed USD 1 billion by 2023, according to IHS Markit report.
December 04, 2020. By Manu Tayal
The elevated investment outlook is attributed to falling costs and policy support from governments looking to shift towards low carbon economies. Operating capacity for splitting water into hydrogen and oxygen through electrolysis technology (also known as “Power-to-X”) currently stands at 82 MW with a pipeline of over 23 GW, according to the IHS Markit Power-to-X Tracker.
The report further said that this pipeline including projects announced, planned and under construction is up from less than 8 GW at the end of 2019 and 5 GW at the end of 2018. Electrolysis production is ramping up with multiple giga-factories under development.
Explaining more on the development, Catherine Robinson, Executive Director, Hydrogen and Renewable Gas, IHS Markit said “investment in electrolysis is booming around the world. The pipeline through 2030 is for over 23 GW of capacity to be developed more than 280 times current capacity. The increasing interest has been driven by falling electrolysis and renewable power costs and by increasing government focus on green hydrogen.”
The growth in the electrolysis pipeline has been driven by falling costs and policy support.
“By 2030, IHS Markit expects that green hydrogen costs could drop below $2/kg. This cost is the Holy Grail for electrolysis as this is where green hydrogen starts becoming competitive with traditional hydrogen,” said Soufien Taamallah, Director, Energy Technologies and Hydrogen, IHS Markit.
Modelling by IHS Markit shows that by the early-2040s, production of green hydrogen could be the single largest use of electricity exceeding industrial electricity use. To meet this demand, deployment of low-carbon power generation particularly in regions with high quality renewable resources will accelerate.
“Hydrogen production has the potential to become a whole new sector of electricity demand. Large scale development of renewable generation will be required to support it—particularly in regions with high quality renewable resources,” said Frederick Ritter, Senior Research Analyst, Global Gas, IHS Markit.
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