Zero-carbon green hydrogen produced using renewable energy will be cost-competitive with fossil-fuel-derived “grey hydrogen” in key markets by 2030, according to research from analyst Wood Mackenzie.
Cost parity will be achieved in Australia, Germany and Japan if the cost of renewable energy can fall to $30/MWh in these markets, says the report, entitled Green hydrogen production: Landscape, projects and costs.
Wind and solar power-purchase agreement (PPA) prices currently range from $53-$153/MWh in those markets, but in places with similar irradiation levels to Australia, such as Portugal, Mexico and Saudi Arabia, winning solar bids at auction have already reached as low as €14.80 ($16.50) per MWh.
By the end of this year, 252MW of green hydrogen electrolysis projects will have been deployed worldwide, but this figure is set to increase by more than 1,200% to 3.2GW by 2025, says the report, partly driven by the demand in Japan and South Korea.
“Until the past few years, the green hydrogen market was diminutive. As such, the large increase in the 2019 2025 period is partially due to the nascency of the market,” says the study. “But aggressive targets in East Asia and increased interest from major international stakeholders will drive deployment in the near term.
“While cost competitiveness might be out of reach in most scenarios by 2025 national targets and pilot projects will produce enough volume to realise substantial capex declines beyond 2025.”
Recharge has produced its own easy-to-read in-depth report into hydrogen’s role in the energy transition. Click here for more details.