What Energy Buyers Can Do Now to Accelerate The Deployment of Green Hydrogen

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By: Cihang Yuan, Senior Program Officer, Climate and Energy, WWF

At a recent meeting of Renewable Thermal Collaborative’s (RTC) Green Hydrogen Working Group (GH2WG), members and sponsors were given a reason to be more optimistic about green hydrogen. This optimism was inspired by the guest speakers:  Meredith Annex, Head of Heating and Hydrogen from BloombergNEF (BNEF), Zhiyuan Fan, Research Associate from the Center on Global Energy Policy at Columbia University, and Oleksiy Tatarenko, the Principal of Green Hydrogen Catapult at Rocky Mountain Institute.

Blue hydrogen is currently more affordable than green hydrogen largely due to the current high costs of electrolyzers and renewable electricity. However, all three speakers agreed that green hydrogen will be less expensive than blue hydrogen by the end of the decade—and perhaps much sooner.

According to projections by BNEF, green hydrogen will outcompete blue hydrogen in all modeled countries by 2030. These models include markets with cheap gas such as the U.S., and those with more costly renewable electricity including Japan and South Korea. Hydrogen made using fossil fuels without CCS could also cost more than green hydrogen by 2030 in 16 of the 28 countries BNEF modeled. Increasing and volatile fossil fuel prices will continue to enhance the cost competitiveness of green hydrogen.

For large commercial and industrial energy users considering using hydrogen to address their thermal energy footprint, this trend is eye-catching. In fact, it was for precisely this reason RTC launched the GH2WG in January. The objective of the group is to help large energy buyers to track this rapidly evolving space and leverage their collective influence to accelerate the deployment of green hydrogen.

During this recent working group meeting, experts dispelled any notions about a lack of cost-competitiveness of green hydrogen looking forward. They mainly attributed their optimism to the decreasing costs of renewable electricity, the anticipated decrease in the cost of electrolyzers, and the GHG emission leakage associated with blue hydrogen which could increase its cost when factoring in carbon accounting. The cost drop of electrolyzers will be particularly key for realizing the cost competitiveness of green hydrogen. The experience of China, where electrolyzers are 80% cheaper than the rest of the world, shows that economy of scale through building larger more concentrated hydrogen projects can be effective to bring down the costs of electrolyzers.

Building upon this optimism, the speakers provided some thoughtful and timely advice about key actions large energy buyers can take now to prepare themselves and help accelerate the deployment of green hydrogen.

Zhiyuan Fan stressed the importance of infrastructure. “The first thing buyers and government should be asking about is the infrastructure plan. The infrastructure in your neighborhood and your country will directly affect the costs for hydrogen that comes to your door.”

Oleksiy Tatarenko extended on the point of infrastructure and highlighted the role of cross-sectoral collaboration. “When we think about hydrogen infrastructure, we need to think in terms of the key players and start to create an ecosystem of industrial clusters and hydrogen hubs. This is critical for developing hydrogen projects on a large scale. “

Finally, Meredith Annex encouraged buyers to express their interests and demand more clearly for green hydrogen. “What I’d like to see is more buyers raise their hands to express their interests. Suppliers are eager to partner but they need to know that companies are taking a portfolio look at their sites and considering a shortlist of ones where hydrogen could be a potential. “

Look out for more insights on the future of green hydrogen for thermal energy buyers in the weeks and months ahead. To learn more about the RTC GH2WG, please reach out to Cihang Yuan for details.