Produced by electrolysis – a process that uses electricity to split water into hydrogen and oxygen, green hydrogen is rapidly developing from pilot to commercial scale operation in many parts of the word, analysis by the IHS Markit Hydrogen and Renewable Gas Forum found.
“Costs for producing green hydrogen have fallen 50% since 2015 and could be reduced by an additional 30% by 2025 due to the benefits of increased scale and more standardised manufacturing, among other factors,” said Simon Blakey, IHS Markit Senior Advisor, Global Gas.
“The work that we have done for the IHS Markit Hydrogen Forum very much focuses on economies of scale as a way of reducing costs, developing dedicated renewables in order to get the load factor on the electrolyser up and, of course, continued expectations of falling costs for renewables.”
Investment in Power-to-X projects, of which hydrogen makes up the large majority, is growing rapidly. Investment is expected to grow from around $30m in 2019 to more than $700m in 2023, IHS Markit said.
Economies of scale are a primary driver for green hydrogen’s growing cost competitiveness. The average size for Power-to-X projects scheduled for 2023 is 100 megawatts – ten times the capacity of the largest project in operation today – according to the IHS Markit Power-to-X Tracker, which tracks hydrogen projects around the world.
Both green and blue hydrogen – methane reforming coupled with carbon capture technology – are likely to play a role in the energy future as demand expands, IHS Markit said.
“Blue and green hydrogen are extremely complementary,” Shankari Srinivasan, IHS Markit Vice-President, Global and Renewable Gas, added.
“If they are developed in parallel, hydrogen will be able to make a big contribution to future energy demand, especially with the ambitious goals on carbon.”
Hydrogen’s overall share in the energy mix will ultimately depend on the extent of decarbonisation that is desired.
In Europe, currently the primary market for hydrogen projects, hydrogen could account for as much as one third of the energy mix if the aim was 95% decarbonisation or greater, IHS Markit said.
“In Europe it is now widely agreed that electrification alone cannot deliver the level of emissions reduction that many countries aspire to,” said Catherine Robinson, IHS Markit Executive Director, European Power, Hydrogen and Renewable Gas.
“Hydrogen is a highly versatile fuel, both in terms of how it can be transported and the variety of its potential end-use applications. The greater the degree of a decarbonisation, the greater the likely role of hydrogen in the energy future.”
