## BloombergNEF forecasts green hydrogen should be cheaper than natural gas by 2050 in some markets; falling costs of solar PV key

##### 07 April 2021

In a new piece of research, BloombergNEF (BNEF) finds that the levelized cost of hydrogen (LCOH2) made from renewable electricity is set to fall faster than it previously estimated. BNEF now forecasts that green hydrogen from renewables should be cheaper than natural gas (on an energy-equivalent basis) by 2050 in 15 of the 28 markets modeled, assuming scale-up continues. These countries accounted for one-third of global GDP in 2019.

In all markets modeled, BNEF found that green hydrogen should get cheaper than both blue hydrogen (from fossil fuels with carbon capture and storage - CCS) and even polluting grey hydrogen from fossil fuels without CCS.

According to the BNEF forecast, the costs of producing green hydrogen from renewable electricity should fall by up to 85% from today to 2050, leading to costs below $1/kg ($7.4/MMBtu) by 2050 in most modeled markets.

These costs are 13% lower than BNEF’s previous 2030 forecast and 17% lower than its old 2050 forecast. BNEF said that its updated forecast on the levelized cost of renewable electricity (LCOE) is the main driver of the drop in the LCOH2 projection.

BNEF expects the average levelized cost of solar PV to be 40% lower by 2050 than it did two years ago, driven by more automatic manufacturing, less silicon and silver consumption, higher photovoltaic efficiency of solar cells, and greater yields using bifacial panels.

The cost of electricity will account for the majority of the cost of producing renewable H2 by 2030, with electrolyzer-related costs accounting for the rest.

Such low renewable hydrogen costs could completely rewrite the energy map. It shows that in future, at least 33% of the world economy could be powered by clean energy for not a cent more than it pays for fossil fuels. But the technology will require continued government support to get there—we are at the high part of the cost curve now, and policy-supported investment is needed to get to the low part.

By 2030, it will make little economic sense to build blue hydrogen production facilities in most countries, unless space constraints are an issue for renewables. Companies currently banking on producing hydrogen from fossil fuels with CCS will have at most ten years before they feel the pinch. Eventually those assets will be undercut, like what is happening with coal in the power sector today.

On one hand the reduction in the forecast was surprising, on the other hand not. This is how it goes with clean energy. Every year it gets cheaper, faster than anyone expects. The key driver is the falling cost of solar PV electricity. We now think solar PV power will be 40% cheaper by 2050 than what we had thought just two years ago.

—Martin Tengler, lead hydrogen analyst at BloombergNEF

BNEF’s LCOH2 analysis covers 627 modeled projects in 28 markets. All inputs and LCOH2 results are available in BNEF’s Hydrogen Project Valuation (H2Val) Model.

Several of the paths for blue hydrogen output solid carbon, which can be valuable products.

This does not take account of that, at least in the precis shown.

These predictions for 2050 always remind me of predictions made in the late 1800's of how deep the horse manure would be in our cities by 1920 or so. And I would add that BNEF's predictions are just that -- horse manure.

Here is a link to the full report:

https://data.bloomberglp.com/professional/sites/24/BNEF-Hydrogen-Economy-Outlook-Key-Messages-30-Mar-2020.pdf

It does not seem to be very well founded to me either.

For a start it seems to ignore a lot of projects which are already underway, and mainly seems to be concerned with advocating subsidies, when it seems to me perfectly possible that using what is around and reasonably economic at the time, for instance blue hydrogen, can morph into still cleaner alternatives over time without the benefit or expense of cunning 'Master plans'

Thanks for posting the link, Davemart.

There are also gaping holes in the report due to narrow focus, for instance the off shore wind potential using floating turbines in Japan and China is enormous, off the top of my head around 434TW for Japan.

And the regular alkaline electrolysers assumed are a pretty low tech alternative, when for instance Haldor Topsoe with their SOEC are hitting way higher efficiencies and are building a 500MW plant right now.

High temperature electrolysis also has a lot higher efficiency, and one way to do that would be to use nuclear energy, as China is building reactors with specifically just that in mind, so although it does not fit into the 'renewables' mantra, they could certainly turn out a lot of hydrogen cheaply that way in 2050.

That ignores more speculative possibilities, for instance plasmonics, as Syzygy are investigating:

http://plasmonics.tech/

And of course there are a number of alternatives for directly producing hydrogen from sunlight being developed.

Hydrogen can be produced cheaply from urea -insert joke here

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