- IRENA’s latest report pins green hydrogen LCOH of $0.65 per kg potential on renewable energy potential, land availability and water availability in 2050
- Growth of renewables, including solar PV and reduction in their cost is directly corelated to green hydrogen’s LCOH coming down
- Water scarcity is also a concern that could limit its growth as it would mean transporting the same which will increase the overall costs
The International Renewable Energy Agency (IRENA) believes there is potential for green hydrogen production costs to reach levels of $0.65 per kg by 2050, but it would largely depend on land and water availability within specific regions that hold more renewable energy potential than others.
It expects the world to require almost 14 TW of solar PV, 6 TW onshore wind and 4 TW to 5 TW electrolysis capacity to achieve this cost prediction and a net zero emissions energy system under an optimistic scenario.
Under the pessimistic scenario, with higher technology costs the lowest green hydrogen production cost will be between $1.15 per kg and $1.25 per kg.
These estimates appear in part III of IRENA’s Global Hydrogen Trade to Meet the 1.5° C Climate Goal report series. The previous 2 reports in this series concentrated on technology development towards 2050 to assess the outlook of global hydrogen trade, and start-of-the-art literature for 4 different transport technology pathways respectively. The 3rd and the current report in the series covers the cost and potential for green hydrogen for various regions and time horizons under different scenarios and assumptions.
Back to the report that calculates the total demand for hydrogen in 2050 as representing 12% of the total final energy demand and amounts to 74 exajoules (EJ). Of this, 24 EJ will be dedicated to the power sector, and the remaining 50 EJ will be mostly between the chemical (mostly ammonia) and transportation sectors.
IRENA counts high cost of green hydrogen production vis-à-vis fossil fuels as one of the main challenges for its accelerated deployment, but this is directly corelated with a variety of factors including technological advancement, and continuous decrease in renewable power cost. This can bring cost parity for this fuel with fossil-derived hydrogen within the next decade.
Since renewable resources are location specific, the report writers pick China, India and the US as the countries best suited for domestic green hydrogen production and consumption with low levelized cost of hydrogen (LCOH) as $0.65 per kg to $0.78 per kg, thanks to high-quality solar resources here.
In comparison, the UK for instance with its poor solar resource quality presents a higher LCOH of $1.0 per kg to $2.0 per kg. Even European countries as France, Germany, Italy and Spain are likely to have a higher LCOH of around $0.8 per kg to $1.1 per kg.
Lack of water is also a critical parameter for green hydrogen production. Regions that face water scarcity may need to consider transporting water or desalination which would again raise overall production costs while representing a relatively small share of total production cost.
IRENA identifies countries with water constraints for green hydrogen production as Saudi Arabia, the Middle East and Morocco, among others. Notably, Kallis Energy Investments recently cancelled its 6 GW wind and solar powered green hydrogen hub in Australia citing water supply related issues (see 6 GW Green Hydrogen Project Scrapped).
The report writers argue, “However, if the economic potential of the single countries is addressed, it may fall below the forecast hydrogen demand for the year 2050. Under optimistic assumptions and including water availability constraints, the hydrogen production potential under USD 2/kgH2 of Japan and the Republic of Korea is already half and one-third of the forecast demand, deeming them as potential future importers.”
Complete IRENA report is available on its website for free download.
In a March 2021 report, IRENA said the world would need close to 21,000 TWh electricity for green hydrogen production and its derivatives as e-ammonia and e-methanol by 2050 (see IRENA Expects 14,000 GW Solar PV By 2050 In New Report).
Recently, at the Renewable Hydrogen Summit organized by the Renewable Hydrogen Coalition in Brussels, various stakeholders called on European policymakers to adopt an enabling definition of renewable hydrogen, streamline permitting of renewables as well as renewable hydrogen and the most ambitious biding targets for the uptake of renewable hydrogen and derived e-fuels in hard-to-electrify industry and transport.