BloombergNEF (BNEF) has published a new piece of research forecasting the costs of renewable hydrogen. The 1H 2021 Hydrogen Levelized Cost Update report finds that the levelized cost of hydrogen (LCOH2) made from renewable electricity is set to fall faster than previously estimated, driven by a downward revision in the forecast for solar PV electricity costs.
BNEF’s renewable H2 cost forecast is 13% lower in 2030 than in its previous outlook, and 17% lower in 2050.
BNEF finds that green hydrogen from renewables should get cheaper than natural gas (on an energy-equivalent basis) by 2050 in 15 of the 28 markets modeled, assuming scale-up continues. These countries accounted for one-third of global GDP in 2019.
Blue hydrogen would be undercut by green, as in all of the markets modeled, green hydrogen should get cheaper than both blue hydrogen (from fossil fuels with carbon capture and storage – CCS) and even polluting grey hydrogen from fossil fuels without CCS.
The costs of producing green hydrogen from renewable electricity should fall by up to 85% from today to 2050, leading to costs below $2/kg by 2030 and well below $1/kg ($7.4/MMBtu) by 2050 in most modeled markets.
BNEF’s updated forecast on the levelized cost of renewable electricity (LCOE) is the main driver of the drop in the LCOH2 projection. By 2030, hydrogen from PV or onshore wind power should cost less than H2 made from natural gas with carbon capture and storage (CCS) in all 28 countries modeled. Falling costs of solar PV are the key driver behind the reduction. BNEF now thinks that PV electricity will be 40% cheaper in 2050 than what they had thought just two years ago, driven by more automatic manufacturing, less silicon and silver consumption, higher photovoltaic efficiency of solar cells, and greater yields using bifacial panels.
The cost of electricity will account for the majority of the cost of producing renewable H2 by 2030, with electrolyzer-related costs accounting for the rest. By 2050, the share of LCOH2 driven by electricity should approach 90% when made from onshore wind.
Source: BloombergNEF (BNEF)