According to BloombergNEF(BNEF) report, ‘green’ hydrogen cost will get cheaper than natural gas (on an energy equivalent basis) by 2050 in 15 of the 28 markets which were taken as a model by Bloomberg, on the assumption that scale-up continues.
The International Energy Agency labels hydrogen as a “versatile energy carrier,” as it has a diverse range of applications and can be deployed in sectors such as industry and transport. Hydrogen can be produced in a number of ways, of which one method includes using electrolysis, with electric current splitting water into oxygen and hydrogen. When renewable sources of electricity like wind or solar are used in the process, then it is termed as “green” or “renewable” hydrogen. Presently, the majority of hydrogen generation is based on fossil fuels – blue hydrogen – which in turn has a negative impact on the environment. The IEA said that hydrogen production is responsible for the generation of roughly 830 million metric tons of carbon dioxide each year.
Green Hydrogen which is produced from renewable sources, on the other hand, accounted for about 0.1% of hydrogen production globally in 2020, because of its comparatively higher cost of production. This scenario may change according to BNEF forecasts. In all the markets which were modeled by the researcher, green hydrogen is expected to get cheaper compared to blue hydrogen and polluting grey hydrogen (hydrogen from fossil fuels without CCS). The cost of green hydrogen production is expected to fall by up to 85%, which is $1/kgfrom 2021 to 2050, in most modeled markets.
Martin Tengler, lead hydrogen analyst at BloombergNEF commented, “By 2030, the building of blue’ hydrogen production facilities in most countries will make little economic sense to unless space constraints are an issue for renewables. Companies currently investing in producing hydrogen from fossil fuels with CCS will feel the pinch in ten years’ time. Eventually, those assets will be weakened like what is happening with coal in the power sector today.”
The reason for such a forecast of reduction of cost is due to the tumbling cost of solar PV. BNEF expects a 40% decline in PV electricity cost in 2050 than driven by automated manufacturing facilities, less silicon and silver consumption, higher photovoltaic efficiency of solar cells, and greater yields using bifacial panels. “Such low renewable hydrogen costs could restructure the energy map completely,” said Martin Tengler. “Based on the current findings, it can be deduced that in the future at least 33% of the world economy could be powered by clean energy. But the technology will need continuous government support to achieve its mark – we are at the high part of the cost curve now, and policy-supported investment is needed to get to the low part.”
