The graph here shows the difference in the cost of producing hydrogen from renewables and fossil fuels in 2018 and 2050, considering average and low-cost solar and wind resources along with electrolyser costs of $840 per kW in 2018 and $370 per kW in 2050, as per IRENA new 'Hydrogen: a renewable energy perspective' report. (Source: IRENA)
- An IRENA report on renewable hydrogen builds a business case for the technology thanks to falling costs for both electrolysers and renewable energy
- It sees renewable hydrogen accounting for 19 EJ of total final energy consumption by 2050 which will translate into 4 TW to 16 TW of solar and wind power capacity
- Hydrogen produced through renewables can also help renewable electricity market to grow substantially as well
- Policymakers as well as private sector will need to assess and explore the concept of producing green hydrogen while ensuring adequate funding, it suggests
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Declining costs of renewable energy and falling capital cost for electrolysers is creating an economic case for green hydrogen, according to the International Renewable Energy Agency (IRENA). It expects 19 exajoule (EJ) as global economic potential for green hydrogen in total final energy consumption by 2050. This should lead to 4 TW to 16 TW of solar and wind power generation capacity to be deployed by the estimated year to produce renewable hydrogen and hydrogen-based products.
IRENA has explained this in its report titled Hydrogen: a renewable energy perspective wherein it explains that the world has three ways to produce hydrogen, through
- fossil-fuels (grey hydrogen)
- fossil-fuel based but combined with carbon capture, utilisation and storage or CCUS (blue hydrogen), and
- renewables (green hydrogen)
Grey hydrogen isn’t good for obvious reasons, while blue hydrogen is better but not entirely carbon free, points out the report thus green hydrogen is what would work best.
While renewables help hydrogen production, the same can also enable renewable electricity market to grow substantially. Electrolyser costs are projected to reduce by half by 2040 and 2050 from $840 per kW now. At the same time, renewable electricity costs continue to all. “Renewable hydrogen will soon become the cheapest clean hydrogen supply option for many greenfield applications,” claim authors of the IRENA report.
By 2050, it expects renewable/green hydrogen to account for 8% of global energy consumption with 16% of all generated electricity to be used to produce hydrogen. Hydrogen thus produced could help decarbonise a range of ‘hard-to-decarbonise’ that need to bring down their CO2 emissions ‘meaningfully’.
Considering the technical viability for hydrogen produced by renewable energy, the need of the hour is to reduce electrolyser costs and supply chain logistics which will require funding in turn necessitating attention from policymakers to consider creating legislative frameworks to facilitate hydrogen-based sector coupling.
Not just governments, IRENA recommends the private sector to also acknowledge the strategic role of hydrogen in the energy transition, understand its benefits, cost-reduction and investment requirements.
The IRENA report can be downloaded for free from its website.
Why the focus on hydrogen?
The sudden global interest in hydrogen stems from the benefits it could bring to help in decarbonisation of transport, chemicals, iron and steel sectors. It can be easily produced, stored and help increase flexibility in power systems. However, major production of this gas which is mainly used for the production of ammonia and oil refining, is dependent on natural gas and coal which eventually contributes to harmful CO2 emissions. Among the policy recommendations that this report makes is to include a hydrogen economy in the revision of Nationally Determined Contributions (NDC) for the Paris Agreement which is due in 2020.
In a previous report in April 2019, IRENA counted renewable hydrogen as one among major drivers for increased electricity demand for renewables that it believes can account for 86% of global power demand by 2050 with solar PV power alone representing 8,500 GW of total capacity (see IRENA Expects 8500 GW Solar Capacity By 2050).
Global potential being explored
Among nations, Australia is one of the frontrunners speeding on its renewable hydrogen potential. Massive projects have been announced while the government is also funding studies to see how renewable hydrogen can help various industries. Elsewhere in Europe, four companies supported by solar sector association SolarPower Europe have proposed to set up a PV module manufacturing fab with 2 GW capacity to produce 100% renewable hydrogen (see Europe: 2 GW PV Fab For Renewable Hydrogen Proposed). The IRENA report details more such efforts across the world.
In August 2019, a BloombergNEF report claimed renewable hydrogen production costs to become cost competitive with the fossil fuel power generated variety (see Sharp Drop In Costs For RE Powered Hydrogen By 2050).