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Green Hydrogen current and projected production costs

Updated: Jan 3

Determining the Cost of Green Hydrogen

Studies have found that there is significant variation in the cost of electrolyzer systems, ranging from USD 306/kW up to USD 4,748/kW. Thus, demonstrating the challenge of finding representative numbers for capital and operation costs of electrolyzers (Saba, et al., 2020). As such, these costs are determined based on the combination of projected overall costs of green hydrogen along with the estimated cost breakdown of electricity costs, CAPEX, and OPEX.

Work by Jeffers, et al. (2021) shows cost breakdown estimates for green hydrogen in 2020 and 2050, as tabulated in Table 1. Using these values, the cost breakdown percentiles of green hydrogen in 2030 and 2040 can also be determined through extrapolation. The cost breakdown for each decade is presented in Figure 1.

Green hydrogen cost breakdown estimates
Table 1 - Green hydrogen cost breakdown estimates

Estimated green hydrogen cost breakdown
Figure 1 - Estimated green hydrogen cost breakdown

There are various studies that estimate the cost of green hydrogen based on a variety of other sources to improve accuracy. Three of which are by the European Commission, the U.S. Department of Energy, and the International Energy Agency (IEA).

The European Commission (2020) estimates the current cost of green hydrogen to be in the range of EUR 2.50-5.50/kg, whereas the U.S. Department of Energy (2020) estimates a range of EUR 4.44-5.32/kg, and the IEA (2021b) estimates a range of EUR 3.10-6.65/kg. Taking an average of the three, we can consider green hydrogen to currently cost around EUR 4.59/kg.

Projected future costs of green hydrogen have also been studied by various parties. By 2030, green hydrogen is expected to compete with fossil-based hydrogen (European Commission, 2020) with cost estimates of EUR 1.15-3.10/kg (IEA, 2021a), giving an average of EUR 2.13/kg.

There are fewer studies giving cost estimates for 2040, however, a study by Wood Mackenzie (2020) expects a fall in the cost of up to 64% compared to 2020 prices. Based on the cost estimate of EUR 4.59/kg for 2020, we can expect a 2040 price of around EUR 1.56/kg; a cost that also lines up with the extrapolation of 2030 and 2050 cost estimates.

Most studies project a cost for 2050 to be below USD 1/kg (EUR 0.89/kg) in locations with high potential for renewable resources (International Energy Agency, 2021; KPMG, 2021; PwC, 2021; BNEF, 2020), but to be conservative, a 2050 cost is estimated equal to EUR 0.89/kg. The estimated costs for all timeframes for this project are presented in Table 3.

Summary of green hydrogen cost estimates