While some proposed plants are of 100 MW capacity or more, they remain small compared to fossil fuel alternatives. According to PricewaterhouseCoopers (PWC), most green hydrogen projects under construction and in operation are at the pre-commercial phase with limited electrolyzer capacity-typically less than 50 MW. Yet, to date, only a few green hydrogen projects have been successfully brought to market. Given this significant growth in demand, the scale of input energy required (22,000 TWh of green electricity to produce 500 million tons of green hydrogen per year), and the parallels of the hydrogen value chain to that of the fossil fuel value chain (with upstream, midstream, and downstream elements), the green hydrogen industry should attract investments. How do we structure a bankable green hydrogen project? NEL, the world’s largest producer and manufacturer of electrolyzers, believes that green hydrogen production cost parity (or even superiority) with fossil fuels could be achieved as early as 2025. The figure below shows the forecast of the global range of levelized cost of hydrogen production for large projects through 2050.Īccording to Bloomberg New Energy Finance, if these costs continue to fall, green hydrogen could be produced for $0.70 – $1.60 per kg in most parts of the world by 2050, a price competitive with natural gas. Moreover, falling renewable energy prices-coupled with the dwindling cost of electrolyzers and increased efficiency due to technology improvements-have increased the commercial viability of green hydrogen production. This is because the possible uses for hydrogen are expanding across multiple sectors including power generation, manufacturing processes in industries such as steelmaking and cement production, fuel cells for electric vehicles, heavy transport such as shipping, green ammonia production for fertilizers, cleaning products, refrigeration, and electricity grid stabilization. Nevertheless, green hydrogen production technologies are seeing a renewed wave of interest. Today, 6% of global natural gas and 2% of global coal go into hydrogen production. But there’s a catch: over 95% of current hydrogen production is fossil-fuel based, very little of it is “green”. From 2020 to 2021, the hydrogen production market was valued at $130 billion and is estimated to grow up to 9.2% per year through 2030. The demand for hydrogen reached an estimated 87 million metric tons (MT) in 2020, and is expected to grow to 500–680 million MT by 2050. Produced by using renewably generated electricity that splits water molecules into hydrogen and oxygen, green hydrogen holds significant promise to help meet global energy demand while contributing to climate action goals.
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