According to wood Mackenzie's recent analysis, the sudden growth of green hydrogen since 2020 can reduce the resource cost of most markets to less than $2 / kg as soon as 2040.
Hydrogen fuel cells are already cost competitive compared with lead-acid batteries used in the forklift market. According to a separate study by Morgan Stanley, green hydrogen from renewable energy may be economically used for long-distance truck transportation in 2025.
Bridget van dorsten, a hydrogen research analyst at wood Mackenzie, said supply chain constraints in the natural gas market were ready to stimulate the widespread adoption of hydrogen in Europe. The company expects that hydrogen will be burned together with coal and natural gas in the 2030's and beyond, and the power sector will account for 31% of hydrogen demand by 2050.
Analysts believe that after several false starts, hydrogen now seems to be growing at an exponential rate of other renewable energy sources - and the rapid development process may eventually break the long-standing price problem in the industry.
Van dorsten said that at the peak of covid-19 in 2020, the number of hydrogen projects announced suddenly soared, and then almost doubled in 2021. Van dorsten said that exponential growth seems to continue - the announcement in the first quarter of 2022 is equivalent to 25% of the total project pipeline.
Although these figures were obtained before the beginning of the conflict in Ukraine, van dorsten said she did not think it would slow down the long-term development trajectory of hydrogen. If so, she said, soaring energy prices would only enhance the role of hydrogen.
Stephen Byrd, head of research in North American power, utilities and clean energy stocks at Morgan Stanley, said the rising cost of oil and natural gas in recent months has helped narrow the gap between fossil and renewable fuel prices.
"There is a lot of optimism, because although there is an energy crisis and the prices of electricity and natural gas are quite high, it has developed a mentality: Wow, we really need to be less dependent on natural gas imports from other countries. We are already in a considerable period of exponential rise. We may see its growth rate will be faster," van dorsten said
Byrd admitted that this means that hydrogen has finally succeeded in getting rid of the paradox it has been in for a long time. For many years, experts have said that expanding production scale and larger electrolyzers will reduce the cost of hydrogen, but due to the high cost of hydrogen, the demand to support these projects does not exist. Now, industry is rapidly investing in hydrogen, and according to wood Mackenzie, capital expenditure is expected to fall by 35-65% over the next decade.
"Traditional forms of energy such as natural gas in Europe are very expensive now, and the demand for green hydrogen has increased a lot because green hydrogen looks relatively attractive," Byrd said
Byrd said that in the United States, because plug power is committed to making hydrogen fuel cell and electrolysis technology more economical, he also sees the real and near-term potential of hydrogen to replace battery driven systems in logistics and transportation. Byrd said that with the reduction of the cost of these technologies, hydrogen fuel cells now have a competitive advantage over batteries in vehicles, such as forklifts provided by plug power or trucks that need to travel long distances without stopping to charge.
"The advantage is weight and space - in long-distance trucks, you will need a lot of batteries, which can be prohibitive in weight. With hydrogen, the size of the fuel cell on the vehicle will not double. You just double the hydrogen, and the hydrogen is relatively scalable. This is a great advantage for long-term mobility," Byrd said
However, Byrd pointed out that in the United States, blue hydrogen extracted from natural gas may still be more cost-effective than green hydrogen until 2030. He said that to change this situation in the near future, major policy actions need to be taken, such as providing large subsidies through the "reconstruction better" program.
He said that this would be one of the rare cases where green hydrogen really changed the rules of the game. If the plan is approved, you can see that demand accelerates very quickly.
