There is much to suggest that the production of green hydrogen will face an enormous cost degression in the coming years. But it would be negligent to ignore the problems. Whether Australia, Tunesia, Chile or Saudi Arabia will actually supply Hydrogen to Europe on a large scale one day is written in the stars.
Anyone who reads the announcement by a group of European companies that have joined forces under the name “The H2 Deal” must be amazed: they want to bring green hydrogen produced in southern Europe and north of Africa to the customer in Germany in 2030 at a price of 1.50 euros per kilogram, including transport costs. This would make green hydrogen competitive with conventionally produced hydrogen.
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Is the Hydrogen Dream come true?
Green hydrogen is seen as a universal problem solver on the road to climate neutrality. It is supposed to achieve in industry, in certain areas of the transport sector and perhaps also in the heating sector what cannot be achieved with electricity from renewable sources.
But how realistic is the announcement? Spontaneously, one is inclined to dismiss it as a PR stunt. In fact, however, it stands up to critical scrutiny.
The initiators want to operate the hydrogen electrolysis with photovoltaic electricity, which they produce on a large scale on the Iberian Peninsula. Electricity costs are by far the largest cost factor in the production of green hydrogen. Cheap electricity is therefore the basic prerequisite for cheap hydrogen. Electricity costs from photovoltaic plants in Spain are conceivably low and will fall even further in the coming years.
At the same time, the manufacturers of electrolysers are holding out the prospect of significant cost reductions.
In addition, the initiators of the Hydrogen (H2) deal idea want to make partial use of the existing gas grid infrastructure to transport the hydrogen. A more cost-effective hydrogen transport is hardly conceivable. The starting conditions are therefore favorable.
The magic Hydrogen
A look back confirms that cost degression is not magic. Just ten years ago, offshore wind power was considered an expensive technology toy. Today, offshore wind farms are being planned and built without government support.
Things could develop similarly with hydrogen electrolysis. But it would be negligent to ignore the problems. First, a very practical hurdle: Where will the large quantities of water needed for electrolysis come from in Spain?
But more importantly, even if production costs are low, the volume problem remains relevant. The expansion of renewable energies for power generation, which is an indispensable prerequisite for the production of green hydrogen, comes up against limits. There is no infinite land potential.
Even with low production costs, hydrogen production in Europe cannot be expanded at will. Whether Australia, Chile, Saudi Arabia or Ukraine will actually supply hydrogen to Europe on a large scale one day is written in the stars. Anyone who believes that green hydrogen will safely and naturally pave the way to climate neutrality is not immune to disappointment.