Technology improvements could allow for a further slide in price to 80 cents by 2050, equivalent to a natural gas price of $6/MMBtu. At this price, green hydrogen-fuelled power stations would be cost competitive with natural gas-fired power plants in most market zones around the globe.
Green hydrogen “already cost competitive”
Producing green hydrogen via electrolysis of water, using electricity from wind and solar power sources, is still more costly in most markets than the alternative method where natural gas is ‘reformed’ into hydrogen and CO2.
In Germany and Texas, however, hydrogen produced using wind power is already attractive for small- and medium-scale users, Gunther Glenk and Stefan Reichelstein write in a research paper.
Renewable hydrogen, produced for €3.23/kg, is already cost competitive in niche applications, although not yet for industrial-scale supply. This might well change within if the cost for renewable hydrogen continues to fall towards €2.50/kg.
If a power-to-gas facility can also source electricity from the grid, it would achieve higher capacity utilization which may substantially lower break-even prices for hydrogen.
Hybrid power plants, combing renewables with a power-to-gas station, can produce hydrogen cheaply by taking advantage of fluctuations in electricity prices and intermittent renewable energy supply. Once produced at scale, hydrogen is very valuable as it can be used for power generation or for storing excess renewable energy in the natural gas grid.