Come 2050 and 85% global hydrogen supply will come from low-carbon sources including 17.5% from dedicated solar-based electrolysis and 13% from wind-based electrolysis, however its uptake is pretty slow and needs supportive policies to make it competitive and bankable, says DNV in a new report.
Titled Hydrogen Forecast to 2050, the report by Norwegian quality assurance and risk management company forecasts green hydrogen production to account for 72% of the total output in 2050. This would require a surplus of renewable energy to power an electrolyzer capacity of 3,100 GW which is more than twice the total installed generation capacity of solar and wind today.
Nonetheless, DNV argues that the current pace of global hydrogen use is far too slow than what's needed to achieve targets of Paris Agreement, and doesn't match the growth of renewables, power grid and battery storage installations.
Sample this, global hydrogen uptake will reach 0.5% of global final energy mix in 2030 and scale up to 5% in 2050. However, this growth will vary geographically and favorable regulatory environment to grow.
Europe, with its enabling policies for production and use, will account for 11% of the global share, followed by OECD Pacific countries taking 8% share and North America with 7% stake in the global energy mix. Greater China will account for 6%.
Costs
According to the analysts, grid-based electrolysis costs will drop significantly to average around $1.5 per kg by 2050, while that of blue hydrogen will go down from $2.5 per kg in 2030 to $2.2 per kg. "Globally, green hydrogen costs will reach cost parity with blue within the next decade," reads the report.
At the end of 2020, cost of renewables-based electrolysis was 'prohibitively expensive' with a global weighted average of $5.0 per kWh. By 2030, there is expected to be a sharp reduction in the cost of electrolysis with dedicated solar and wind power bringing down the average towards $2.0 per kg.
"The main driver of this trend will be a 40% reduction in solar panel costs and a 27% reduction in turbine costs. With continued improvements in turbine sizes and solar panel technologies, the annual operating hours will simultaneously increase by 10-30%, varying between technologies and regions," reads the report.
At the same time, there will be a focus on repurposing natural gas pipelines for over 50% of hydrogen pipeline globally since this process is expected to be just 10% to 35% of new construction costs.
Usage
Manufacturing sector will be the direct user of hydrogen as it seeks to replace coal and gas in high-temperature processes. Iron and steel sectors too will start picking it up in the late 2020s. Hydrogen use for buildings where it is mixed with natural gas will also see limited growth, which will be early in some regions. However, the analysts don't see passenger vehicles warming up to this fuel.
Derivatives of hydrogen, namely ammonia, methanol and e-kerosene for use in aviation, maritime and parts of trucking industries will see acceptance for these fuels in the late 2020s.
DNV is confident of hydrogen being shipped within countries in the medium distance, but rules out the possibility of shipments to continents for this fuel, but anticipates ammonia shipments between regions to higher by 2050 as it is safe and more convenient to ship.
Policy support
That hydrogen is a helpful fuel to decarbonize hard to abate sector and can play a huge role in the global decarbonization efforts should be enough for policymakers around the globe to frame friendly policies for its uptake. Yet this policy support seems slow to come.
DNV report bats for enabling and long-term regulatory frameworks to unleash additional renewable capacities and carbon capture and storage (CCS) deployment to ensure a demand-supply balance.
Policy environment should also be framed around making hydrogen production safe and financially competitive for speedier offtake.
"In present decade, hydrogen will remain too expensive to be widely used and the demand will instead be created through policy support and incentives from governments mainly in Europe, OECD Pacific, North America and China," according to the report.
Complete hydrogen report by DNV, which is a part of its annual Energy Transition Outlook (ETO) to be released in October 2022, can be downloaded for free from its website.
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