High cost is the main barrier for green hydrogen’s uptake. The current production cost of green hydrogen is between US$2-8/kg depending on the region, while grey hydrogen produced without carbon capture is only US$1-3/kg. Scaling up production to produce large volumes of green hydrogen could make it economically viable at this stage. The cost of large-scale hydrogen production could be reduced to lower than EUR2/kg.
The average price of European green hydrogen
slipped in the first five months of 2023, plummeting by more than 40% from
US$10/kg (EUR9.28/kg) in January to US$5.4/kg (EUR5.01/kg) in May.
This was
primarily due to the significant drop of European electricity price, falling from
about US$165/MWh (EUR150/MWh) in January to US$90.8/MWh (EUR82.5/MWh) in May. Subsequently,
the price remained relatively stable, hovering around US$5.9/kg (EUR5.5/kg) for
the remainder of the year.
Hydeal Ambition, one of the largest hydrogen
production projects, targets green hydrogen production at EUR1.5/kg, not
including transmission and storage costs. This will be cheaper than natural gas
prices in Europe. Hydeal Ambition aims to produce 3.6Mtpa green hydrogen in
2030 with 95GW of solar and 67GW of electrolyser capacity. Projections indicate that the production costs
for renewable hydrogen are anticipated to decrease to US$2-4/kg by 2030.