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Exclusive: Calculating the cost of green hydrogen

Exclusive: Calculating the cost of green hydrogen

Image credit: Tarin Yuangtrakul/Enapter

Hydrogen is the word on everybody’s lips. This is because hydrogen, notably green hydrogen, holds the key to decarbonising the fuels we use today.

To deliver on its great potential, green hydrogen must meet certain cost reduction milestones to comprehensively undermine the case for continued fossil fuel use. This makes understanding how we calculate the cost of green hydrogen (and how this will change) essential to investors, policymakers, industry and consumers. So, do current market approaches help us to understand the cost of green hydrogen production effectively? We think not.

The cost of green hydrogen is a function of the volume of power needed, the cost of power supplied, the cost of the electrolyser and its system, and the opex to run the system. Given this simple formula, a pricing methodology for electrolyser companies should provide developers and utilities with a clear sense of how much it costs to produce a kg or a m³/h of hydrogen from each individual supplier. But the most popular approaches today do not provide that.

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