Renewables remain at the core of the energy transition, but the world won’t succeed in limiting the global temperature increase to 1.5° C without clean hydrogen, Norwegian renewables giant Statkraft said in a new report.
Europe’s largest renewable energy generator in its ‘Low emissions scenario 2021’ that serves as a foundation for future investments pointed out that spending into renewable power last year despite the pandemic increased by 7%, and predicted solar power to grow by a factor of 21, and wind power by a factor of seven between today and 2050.
“The world has been called to arms, to work in unison to slow the warming of our planet. It’s the mission of a lifetime, one that will define our generation,” said Statkraft chief executive Christian Rynning-Tønnesen.
“With the world slowly re-opening, so too are emissions returning to pre-pandemic levels, reinforcing our belief that the only way towards a 1.5° through the energy transition.”
Statkraft said green hydrogen (produced via electrolysis from renewables) is necessary to limit climate change to Paris agreement levels, and will play a significant role in the energy system by 2050.
Close to 10% (9.6%) of global power demand will come from green hydrogen production in 2050 and more than 20% in Europe in the Low Emissions Scenario.
The cost of electrolysers to produce green H2 over the last five years has fallen by 60%, and Statkraft expects this decline to continue due to increased automation, standardisation, and technology improvements.
“We expect that investment costs for green hydrogen production will fall an additional 60% by 2050. Falling costs of both renewable energy and electrolysers will make an increasingly attractive business case for green hydrogen,” the utility said.
But Statkraft added that most clean hydrogen will go to industry to replace existing hydrogen feedstock and remove emissions in sectors where direct electrification is impossible or costly, such as the steel industry.
The direct use of green hydrogen in power plants to replace fossil sources such as natural gas so far had been deemed prohibitively expensive.
Statkraft doesn’t detail how costly electricity produced with H2 could be in the future, but analyses what factors will impact the price of green hydrogen in the future.
“Green hydrogen and power interact on several levels, which makes the markets and analyses complex,” the report states.
“In our power market models, the importance of hydrogen for the power systems in Europe increases steadily up to 2050, and as electrolyser costs fall, power prices will gradually have more impact on hydrogen costs.
“The cost of electrolysers and the power price will dictate the price of green hydrogen. … Investment costs for green hydrogen production could fall a further 60% by 2050.”
Green hydrogen connected to the grid can generate hydrogen when power supply in the system is high and power prices are low, which is often the case when there is a lot of sun and wind, the analysis said.