Green hydrogen already approaching cost-competitiveness in Australia, says new study

Green hydrogen already approaching cost-competitiveness in Australia, says new study

A new extensive market study into the competitiveness of green hydrogen across 25 Australian industry sectors has been released highlighting that green hydrogen is already approaching cost competitiveness for heavy trucking, buses and remote power.

The market study, released by CEFC, also quotes that green hydrogen has the potential to become commercially viable across further sectors of transportation as early as 2030.

Large scale development could be critical to reducing installation and commission costs whilst being compared to the accelerated development experienced by Australia’s large scale renewable energy sector.

Displacing natural gas has been identified as a potential transitional use to reach scale at pace.

Read more: Japanese-Australian hydrogen venture takes a major step forward

The main aspects that the Australian Hydrogen Market study focuses on is the potential competitiveness and key hurdles associated with advancing the hydrogen economy in comparison with incumbent energy technologies.

It also helps to identify investment opportunities for hydrogen producers, large-scale energy users and potential investors with assessments of cost-competitiveness over three times frames: 2020, 2030 and 2050.

As part of the study several key drivers for competitive green hydrogen costs have been identified.

Electrolyser capital cost trends will largely be driven by global developments through increased research and development spend and value manufacturing at scale, similar to solar and wind farms.

Renewable energy costs will continue to see a dramatic decline in solar and wind and thus will be a key input to lower hydrogen production costs.

Read more: Australia pledges A$275.5m for clean hydrogen hubs

High utilisation rate of electrolysers will drive the lowest cost hydrogen for the foreseeable future, requiring large amounts of low-cost solar and wind supplied for the grid.

The flexibility of hydrogen production may also play an important role in demand shifting, which can help integrate renewables into the grid.

In addition to this, installation and operational efficiencies will be needed with electrolyser equipment’s costs currently making up approximately 50% of total electrolyser capital costs.

As electrolyser equipment costs decline over time, the balance of plant and installation costs will likely make up a higher proportion of total costs with pathways to drive installation efficiencies critical to expanding the industry.

Several factors have also been identified that currently are helping to drive the competitiveness of green hydrogen.

These include displacement of petroleum products, displacement of natural gas or derivatives and export opportunities.

Ian Learmonth, CEO of CEFC, said, “There is enormous excitement around the potential to create green hydrogen to deliver a cleaner and more enduring energy source. As with any new technology, costs will decline over time.

“The purpose of this analysis is to give industry participants and investors an understanding of the potential economics for the uses of hydrogen in the Australian context, including potential early adopters.

“Our experience in developing the solar and wind sectors shows that prices decline rapidly as a new industry reaches scale and technical proficiency.

“It is encouraging to see a similar trajectory for the exciting hydrogen sector.”

You can read the study in full here.

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