The Hydrogen Council published a study on January 20 on cost reduction in the sector, announcing a sharp drop to come. The study “Path to Hydrogen Competitiveness: A Cost Perspective” was carried out with the firm McKinsey and analyzes the sector in four key geographic areas: the United States, Europe, China and the Korea/Japan duo.
According to the authors of the report, the intensification of the production and distribution of hydrogen as well as the large-scale industrialization of equipment should lead to a reduction in costs.
50% drop
The study indicates that an investment of $70 billion by 2030 in this sector would halve the cost of hydrogen. A figure which represents less than 5% of annual global energy spending, underline the authors of the study, who specify that for comparison, support for renewable energies in Germany totaled around $30 billion in 2019. The report attributes this trajectory to scaling that has a positive impact on the three main cost drivers: sharp decline in production costs of low-carbon and renewable hydrogen; reduced distribution and fueling costs through increased load utilization and scale effect on infrastructure utilization; Dramatic drop in component cost for end equipment as manufacturing expands.
Production and mobility
The study then goes into detail about the cost reduction potentials in production and in different forms of mobility. While fuel cell vehicles currently cost 70% more than their battery equivalents, the report estimates that annual production of just 200,000 vehicles would reduce the total cost of ownership by 18%. For certain areas of application, such as taxis and professional fleets, balance with battery models could even be achieved as early as 2025.
For Benoît Potier, Chairman and CEO of Air Liquide and co-chair of the Hydrogen Council, 2020 marks “the beginning of a new era for energy. A clean energy future with hydrogen is closer than we think, as the industry has worked hard to address key technological challenges.” “The Hydrogen Council believes that the report’s findings will not only raise public awareness of the potential of hydrogen to power everyday life, but also disprove the myth that a hydrogen economy is unattainable due to costs,” adds Euisun Chung, executive vice president of Hyundai Motor Group and co-chair of the Hydrogen Council. “Based on actual industry cost data, the analysis shows that a number of hydrogen solutions can already become competitive as early as 2030,” says Bernd Heid, senior partner at McKinsey & Company. “Out of 35 use cases analyzed, large-scale hydrogen can be the cheapest low-carbon solution in 22 use cases. It can beat fossil-based solutions at scale in 9 use cases (heavy transportation and trains).
