The cost of the device used to make clean hydrogen from renewable electricity – an electrolyzer – has been rapidly falling. According to our electrolyzer cost survey, a 2-3MW electrolyzer project using alkaline technology was typically quoted for $1,200/kW in Europe and America in 2019. Two years later, the budgeted cost for a planned 20MW alkaline system to be built in Australia in 2023 was just $780/kW. But alkaline electrolyzer projects in China still cost the least, with 1-10MW scale projects built for $200/kW. If electrolyzer manufacturing can scale up, and costs continue to fall, our calculations suggest renewable hydrogen could be produced for $0.7 to $1.6/kg in most parts of the world before 2050. This is equivalent to natural gas priced at $6-12/MMBtu.
Projects and scale-up
While it appears that demand for electrolyzers is about to soar, gauging exactly how much will come online can be difficult. In our Hydrogen Electrolyzer Database we identify nearly 17GW of electrolyzers planned for commissioning by 2030. Most project announcements have taken place in European countries and in the APAC region, namely Australia.
Yet most announcements still lack important details. Many announced projects do not even specify the electrolyzer capacity in megawatts, so are excluded from the chart above. Of the 17GW of announced electrolyzer projects we identified, 52% (8.68GW) did not specify the planned year of commissioning. Even more – 9.5GW (57%) – have not detailed what electricity source they plan to use. The vast majority – nearly 14GW (82%) – have yet to specify an electrolyzer technology. The large number of announcements and the lack of details reveal the importance of having access to good information. Many companies are keen to capitalize on the hype that hydrogen has received in the past several years. But many of the projects are purely speculative.
Hydrogen + CCS
Low-carbon hydrogen can also be produced using fossil fuels fitted with carbon capture and storage technology – so-called “blue hydrogen”. Almost all studies on a future hydrogen economy nominate this as a major route of production, because right now it is the cheapest way to make low-carbon hydrogen at scale. Nine new projects to produce hydrogen from fossil fuels with carbon capture and storage (CCS) were announced in 2020, taking the total in our database at various stages of development to 28. However our analysis suggests that the cost of producing hydrogen from renewable electricity could be cheaper in most locations than from fossil fuels with carbon capture by the year 2030.
BloombergNEF clients have access to a variety of tools:
