Monday, December 23, 2024

Green Hydrogen Costs Set to Stay Too High For Too Long

ANTI GREEN ENERGY
HE IS CORRECT THOUGH; BLUE H2 IS HOW IT IS PRODUCED NOW


By Charles Kennedy - Dec 23, 2024

BNEF: green hydrogen may not become cost-competitive with other types of hydrogen until 2050.

Rising costs for electrolyzers mean that in 2050, green hydrogen would cost between $1.60 and $5.09 per kilogram.

Just a year and a half ago, BNEF expected green hydrogen cost production to undercut gray hydrogen by the end of this decade.




Green hydrogen will struggle to compete at price level with gray hydrogen made from natural gas at least until 2050—much longer than previously anticipated, according to new estimates by research firm BloombergNEF.

BNEF’s new report on hydrogen prices finds that green hydrogen, the one produced via electrolysis using renewable energy, will fail to reach price parity with gray hydrogen by the middle of the century, as costs have more than tripled from last year’s forecast.

Rising costs for electrolyzers mean that in 2050, green hydrogen would cost between $1.60 and $5.09 per kilogram, down from a current cost range of $3.74 to $11.70 per kilogram.

But gray hydrogen currently costs $1.11 to $2.35 per kilogram, and the cost is expected to remain around these levels by 2050.

In a 2023 report, BNEF said that producing green hydrogen in a new plant in 2030 could be as much as 18% cheaper than continuing to run an existing gray hydrogen plant in five major economies around the world.

Just a year and a half ago, BNEF expected green hydrogen cost production to undercut gray hydrogen by the end of this decade.

The latest report from Monday drastically changes the estimates, raises the estimated cost for green hydrogen three times, and says that price parity is unlikely to be reached soon.

The International Energy Agency (IEA), the most vocal backer of all things renewable, has also warned that policy and demand uncertainty are slowing green hydrogen adoption.

Uncertainty around demand and incentives coupled with cost pressures are weighing on the global adoption of low-carbon hydrogen despite an uptick in final investment decisions in the past year, the IEA said in a report earlier this year.

According to the agency, the main reasons for the slow uptake of low-carbon hydrogen “include unclear demand signals, financing hurdles, delays to incentives, regulatory uncertainties, licensing and permitting issues and operational challenges.”

“[F]or these projects to be a success, low-emissions hydrogen producers need buyers,” said IEA Executive Director Fatih Birol.

“Policymakers and developers must look carefully at the tools for supporting demand creation while also reducing costs and ensuring clear regulations are in place that will support further investment in the sector.”

By Charles Kennedy for Oilprice.com

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