(Montel) The cost of producing green hydrogen in Europe would be prohibitive for at least the next five years, said OCI Global, a producer and distributor of hydrogen-based products.
“The biggest barrier for green hydrogen is the cost, but also the technology and scale still aren’t there yet – it will take 5-10 years for electrolysers to be able to scale in a meaningful way,” Hanh Nguyen, vice-president of global sustainability, told Montel in an interview.
Grey hydrogen production costs were “easily” below USD 1/kg in the US or Middle East compared with USD 4-5/kg for unsubsidised green hydrogen, she added.
Green hydrogen is made by electrolysis using renewable sources, while grey hydrogen is produced using fossil fuels and blue hydrogen relies on gas with carbon capture and storage (CCS).
It would take time for green hydrogen to become competitive as renewable power caused a “big part” of the cost, Nguyen said.
She said she found the debate about green versus blue hydrogen “abit false” as both forms were needed.
“You need a sustainable solution [long term] but we also need to prevent CO2 getting into the atmosphere as fast as possible,” she said.
“CCS is an important solution, especially to address the emissions today from existing industrial installations.”
Scale lacking
Replacing grey hydrogen with green would require electrolysers of at least 1 GW, “a scale that is not there today”, she said, let alone the willingness from customers to pay to underwrite such a large-scale project.
“That’s why, despite thousands of announcements, less than 10% of green H2 projects have reached FID (final investment decision).”
OCI was looking to offtake green hydrogen for two plants in the Netherlands, which produce bio-based ammonia/fertiliser and methanol, she said, but it was difficult due to the high cost of power there.
“In the last couple of years since we started a conversation with developers, PPA prices went from EUR 40-45/MWh to EUR 70-80/MWh. That ws over 18-24 months and you can imagine what that does to the hydrogen price,” Nguyen said.
High expenses
Using green hydrogen for its Dutch ammonia plants would require a 2 GW electrolyser and 4 GW of wind capacity, she said, adding: “The target for Dutch wind capacity is 4.5 GW in 2023, just to put this in perspective.”
“The cost of integration to create this renewable capacity and electrolyser would require investment of around EUR 5bn [for our suppliers], which is why blue hydrogen would be needed in the short term.”
Grey ammonia production cost around USD 400/t compared with USD 500/t for blue and USD 800-1,500/t for green, Nguyen estimated, calling for incentives to bridge the “green premium” from both supply and demand.
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