Producing H2V will be 18% cheaper than producing gray hydrogen

The most recent report published by BNEF (BloombergNEF) pointed out that, from 2030, produce H2V (green hydrogen) in a new plant can be up to 18% cheaper than to continue operating a gray hydrogen plant existing in top five economies in the world.

"You don't Brazil, China, India, Spain and Sweden, H2V of new plants will begin to reduce gray hydrogen of existing plants by the end of the decade. Surprisingly, this is true even for green hydrogen plants built without subsidies,” he said. Adithya Bhashyam, BloombergNEF hydrogen analyst.

When compared to newly built gray hydrogen plants, the prospects for H2V are even better: by 2030, a new green hydrogen plant will outperform newly built gray in eight of the 28 markets modeled in the 2023 Hydrogen Levelized Cost Update from BNEF.

“Nor is green hydrogen likely to be blueshifted. Using Western-made alkaline systems, green outperforms blue hydrogen by 2030 in almost all modeled markets,” highlighted Bhashyam.

According to the expert, the drop in the price of green hydrogen is due to two main factors: economies of scale and supporting policies. “The more electrolyzers that are deployed, the cheaper they will become.”

On the policy front, the US Inflation Reduction Act tax credit for clean hydrogen – which has no budget cap and can therefore provide funding for as many projects as meet emissions criteria – will likely have a huge impact on hydrogen production. green of the country.

The EU is also planning to establish a 'Hydrogen Bank' this year, a subsidy mechanism for commercial-scale projects similar to the IRA but with a fixed budget.

“H2V is not the first clean technology to be cheaper than existing fossil fuels,” noted Bhashyam. “Solar and wind generation are already cheaper in many markets than fossil fuel-based electricity. But for hydrogen, which has so long been the most expensive when it comes to green power generation, to be able to join that group – well, that’s pretty cool.”

Current H2V price

According to Adithya Bhashyam, 'clean' green hydrogen has always been much more expensive than its 'gray' dirty counterpart. “Currently, when it comes to producing H2V, the numbers are against us. Gray hydrogen, which comes from natural gas, costs $0,98 to $2,93 per kilogram to produce.”

“Blue hydrogen, or hydrogen produced with fossil fuels but subject to carbon capture, costs $1,8 to $4,7 per kilogram. And green hydrogen, produced by passing an electrical charge through water, costs between US$4,5 and US$12 per kilogram. In all the markets we researched, H2V is more expensive than its gray counterpart”, pointed out the BNEF analyst.