Hydrogen cost-of-production assessments fell sharply across Europe, coming down from peaks in March when Russia’s military invasion of Ukraine send feedstock gas and power prices rocketing, as gas imports to the continent rose.
UK hydrogen production costs fell to parity with the Netherlands at around $13/kg for alkaline electrolysis, the Platts Hydrogen Price Wall from S&P Global Commodity Insights shows. The cheapest hydrogen production pathway in Europe was UK-based autothermal reforming, averaging $/kg in April.
Gas prices in Europe eased as LNG cargoes arrived, including from the US, where the rise in exports pushed prices higher there, increasing steam methane reforming costs.
The cheapest electrolytic hydrogen production pathway location remained the US Midcontinent, at $/kg, with costs at the US Gulf Coast around $/kg and $2.60-$/kg Middle East illustrating the export potential of these regions.
In Asia, alkaline electrolysis costs in Queensland, Australia, overtook those in Japan, reaching almost $10/kg, as coal-fired power prices in the state rose sharply.
Middle East SMR costs fell across the board, reflecting lower regional LNG prices.
Project developments
At the start of April, hydrogen megaproject developer InterContinental Energy advanced its 14-GW Green Energy Oman project, awarding a feasibility study contract to Worley and an energy yield assessment from DNV.
The project aims to produce over 1.8 million mt/year of hydrogen at full capacity, which could produce up to 10 million mt/year of ammonia for export.
In Europe, the European Hydrogen Backbone initiative accelerated plans to roll out a dedicated hydrogen pipeline network across the continent in the wake of Russia’s invasion of Ukraine.
The EHB will bring forward plans for five pan-European hydrogen supply and import corridors by 2030, including 28,000 km of pipelines.
The initiative was previously targeting a 2035 date, but has accelerated the planned rollout in response to the Russian invasion.
The UK also doubled its hydrogen production target to 10 GW by 2030, with half of this coming from electrolysis. The move followed the EU’s increased target of 10 million mt/year of hydrogen by 2030, requiring in the region of 80 GW of electrolysis, in addition to 10 million mt/year of imports by that date.
The European Commission’s REPowerEU package in the wake of the Russian invasion paved the way for increased hydrogen investments, prompting hydrogen companies and trade associations to call for higher electrolyzer manufacturing capacity and increased demand-side hydrogen targets.
In Ukraine, an advisor to the government said the country and the EU plan to pick up on hydrogen and renewable gas export projects as soon Russia’s invasion is over.
“When we win, it will be time to build,” President of the Ukrainian Hydrogen Council Oleksandr Riepkin, who is also special representative of the country’s Minister of Foreign Affairs for economic diplomacy, said April 13 in a webinar.
Before the invasion, Ukraine aimed to develop up to 10 GW of renewable hydrogen production capacity by 2030, with 7.5 GW of this dedicated to exports to the EU, and the rest consumed domestically.
Financial opportunities
In the finance space, fund HydrogenOne said investment opportunities in the sector had already surpassed expectations, less than one year on from its initial public offering.
The fund sees a GBP500 million ($650 million) pipeline of investable hydrogen opportunities, and has invested GBP69 million in projects to date.
In the US, a panel called for policies to create large-scale demand for clean hydrogen to drive down costs, similar to how California’s renewable portfolio standard created demand for clean electrons.
“There needs to be large, consistent and bankable, financeable demand, which is exactly what was created in California when utilities were mandated to buy clean electrons,” said Yuri Freedman, senior director of business development at the Southern California Gas Company, speaking during a panel April 19.
Established in 2002, California’s RPS required electric providers to include a certain amount of renewable energy in their electric load. That portion has been increased over the years by the state legislature, resulting in one of the most ambitious renewable energy standards in the country today, according to the Berkeley Center for Law, Energy and the Environment.
The policy had the effect of dropping the cost of renewable power by an order of magnitude. If such a policy can work for clean power, it should work for clean hydrogen as well, Freedman said.
