EU green hydrogen uncompetitive into 2030s: Aurora

Consultancy Aurora Energy Research expects blue hydrogen and imported green hydrogen to be cheaper than domestically produced green hydrogen in Europe in the medium term, according to a report released today.

European hydrogen demand could increase eight-fold by 2050, as countries work toward net zero, Aurora said. Hydrogen consumption rises to 2,500TWh by 2050 in a high-use scenario, where heating switches to hydrogen. By comparison, the European power system is currently around 3,000-3,3200TWh, Aurora said.

The cheapest source of low-carbon hydrogen by 2030 would be blue hydrogen produced in the Netherlands or Norway, followed by imported green hydrogen from Morocco. Aurora defines blue hydrogen as made from natural gas but combined with carbon capture and storage, and green hydrogen as made from water and electricity using electrolysis.

Green hydrogen from Morocco will be cheaper because power prices are much lower. A large rollout of solar is depressing power prices in Morocco, although it is still building coal-fired capacity. As a result, such green hydrogen may be more carbon intensive than blue hydrogen. This problem will also exist in European countries slow to decarbonise, for example in Germany, which still has a high share of coal and lignite in its power generation mix, Aurora said.

Aurora sees levelised costs of green hydrogen at €91-121/MWh for electrolyser plants built in 2025.

The lower end comes from flexible projects that can optimise production according to power prices. The optimal load factor for such projects would be around 50pc. If the load factor gets too high, it would be running during times of higher power prices, while if it falls too low, the capex costs per MWh produced would rise, Aurora said.

In Britain and Spain, hydrogen from flexible electrolysers will be cheaper than blue hydrogen by the late 2030s. It becomes cheaper in France by the early 2040s, and in Germany by the mid 2040s, Aurora's modelling shows.

Electrolysers co-located with renewable capacity will have higher costs than flexible or inflexible assets using power from the grid. This is primarily because low load factors increase capex — an electrolyser co-located with solar in Spain would have a load factor of just 22pc. Such a plant would still be cheaper than an inflexible asset using grid power in Spain in the 2030s, but will always remain more expensive than a flexible asset, the report said.

By Killian Staines