Why green hydrogen?

According to our latest forecasts, solar PV and wind’s cumulative installed capacity will grow to 1,251 GW by the end of 2019, and by 2024 the figure will double. And as renewables proliferate, they have and will continue to become cheaper and cheaper.

The United States, the world’s second-largest solar market, is now home to power purchase agreements (PPAs) below $25 per megawatt-hours (MWh). And globally we’re regularly seeing records set for the lowest PPA.

Global record-low solar PV PPA prices, December 2009-H1 2019

This growth in renewables is leading to intermittency problems, which, coupled with low PPA prices, has led in some cases to negative power prices. Green hydrogen however can help mitigate or even solve some of these issues.

Electrolyzers used for green hydrogen production can operate dynamically, requiring only seconds to be able to operate at maximum capacity. As such, they can be easily paired with renewable assets that are frequently curtailed for either a long or short duration. Moreover, hydrogen can be stored for long periods in large tanks in order to be sold for industrial applications, integrated into the gas network or used to power fuel cells.

This would provide solar and wind asset owners with additional revenue opportunities.

What’s the catch?

Green hydrogen today is expensive compared to the production of hydrogen via fossil fuels. According to our analysis, with sub-US$30/MWh electricity prices, green hydrogen production can be competitive with fossil-fuel-based hydrogen in Australia, Germany and Japan by 2030.

Today, wind and solar PPA prices range from $53 to $153/MWh in those markets.

According to our current view, only Australia will be able to produce green hydrogen competitive with natural-gas-based hydrogen.