No Match Found
Hydrogen has long been produced using industrial processes powered by fossil fuels, particularly natural gas. This so-called grey hydrogen is widely available and inexpensive, costing just €1–2/kilogram. However, the process used to make it is greenhouse gas–intensive.
Green hydrogen is formed by using renewable energy, such as solar or wind, to power electrolysers that split water molecules into hydrogen and oxygen. Because it relies on renewable energy, green hydrogen is far more environmentally sustainable than traditional energy sources, yet it is also more expensive, at €3–8/kilogram.
As the cost of renewable energy production and electrolyser hardware declines, green hydrogen will become more cost-competitive, making it a viable source for applications ranging from power to transportation to industrial processes.
To better understand the potential future production costs of renewable energy around the world, we recently evaluated forecasts for different markets. The key projections from our model include the following:
Hydrogen production costs will decrease by around 50% by 2030 and then continue to fall steadily at a slightly slower rate until 2050.
By 2050, green hydrogen production costs in some parts of the Middle East, Africa, Russia, China, the US and Australia will be in the range of €1/kilogram.
Over the same time period, production costs in regions with limited renewable resources, such as parts of Europe, Japan and Korea, will be more than €2/kilogram, making it likely these markets will import green hydrogen from elsewhere.
Even densely populated regions with good renewable resources will import hydrogen, as land constraints limit the production of green electricity for direct use and conversion to hydrogen.
To capitalise on the emerging opportunity, industries, in partnership with governments, need to start implementing pilot projects in order to gain experience and generate efficiencies through learning curves and scale effects. Governments also need to put the correct regulatory framework in place, which can dramatically swing the economics of projects and make countries more competitive in this rapidly growing market.
Senior Manager, Sustainability Services, PwC Germany
+49 30 2636-5409