BloombergNEF predicts higher demand and lower costs for hydrogen

As reported by Bloomberg, a Bloomberg New Energy Finance (BloombergNEF) analysis has predicted substantial growth in the market for hydrogen gas. While hydrogen has historically been difficult and costly to produce, store and transport, the analysis predicts significant price drops in the long run.

BloombergNEF proposes connecting hydrogen operations directly to wind and solar energy sources as the most cost-efficient strategy, as this would maximise the hydrogen plant’s operating time. This could bring renewable hydrogen costs as low as $1.40 per kilogram (current costs range from $2.50 to $6.80 per kilogram) in the next decade. This could continue to fall to $0.80 per kilogram by 2050.

BloombergNEF claims that government agency support for renewable hydrogen projects will be essential in speeding up the price drops. Without such support, BloombergNEF predicts only a slight rise in installations of the electrolysers necessary for hydrogen production by 2050.

The analysis identifies China as a global leader in low-cost hydrogen production equipment manufacturing. BloombergNEF predicts that the US and Europe will follow suit and match China’s prices by 2030, by increasing scale and levels of automation in the production line and by outsourcing production processes to countries with cheap labour. Once global prices for this equipment match those in China, demand is expected to grow at a much faster rate.

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