The Hydrogen Council has published a new report, Path to Hydrogen Competitiveness: A Cost Perspective, demonstrating that the cost of hydrogen solutions will fall sharply within the next decade, sooner than previously expected.
As scale-up of production, distribution and equipment manufacturing continues, cost is projected to decrease by up to 50% by 2030 for a wide range of applications, making hydrogen financially competitive with other low-carbon alternatives and, in some cases, even conventional options.
Significant cost reductions are expected across different hydrogen applications. For more than 20 of them, such as long-distance and heavy-duty transportation, industrial heating, and heavy industry feedstock, which together comprise roughly 15% of global energy consumption, the hydrogen route appears the decarbonization option of choice—a material opportunity.
The report attributes this trajectory to scale-up that positively impacts the three main cost drivers:
Strong fall in the cost of producing low carbon and renewable hydrogen;
Lower distribution and refueling costs thanks to higher load utilization and scale effect on infrastructure utilization; and
Drop in the cost of components for end-use equipment under scaling up of manufacturing.
To deliver on this opportunity, supporting policies will be required in key geographies, together with investment support of around $70 billion in the lead up to 2030 in order to scale up and achieve hydrogen competitiveness. While this figure is sizable, it accounts for less than 5% of annual global spending on energy. For comparison, support provided to renewables in Germany totalled roughly $30 billion in 2019.
Commissioned by the Hydrogen Council and delivered by McKinsey & Company in partnership with E4tech, the report collected and analyzed 25,000 data points from 30 companies representing the entire hydrogen value chain across four key geographies (US, Europe, Japan/Korea and China). An independent advisory group comprising industry experts also reviewed the data.