Published on Jan 04, 2023
Highlighting the phenomenal work done by Hydrogen Europe, in their Clean Hydrogen Monitor report of 2022. The report includes an overview of the levelized cost of hydrogen, transport and infrastructure, EU policies and funding opportunities.
The hydrogen production costs using grid electricity in the EU (together with Norway) in 2021 have been estimated in the range of EUR 3.0-9.7/kg (compared to 1.8-7.7 in 2020), with the average for all countries being EUR 5.3 /kg and a median of EUR 5.1 /kg (3.75 and 3.5 respectively in 2020). Similarly to ‘grey’ hydrogen, this rather significant cost increase is linked to the spike in natural gas and oil prices, which indirectly translated into an increase in wholesale electricity prices in Europe.
The described calculations assumed that the electrolyser would run, on average, around 4,000 hours per year in off-peak hours, when the wholesale electricity prices are lowest (see methodology note for more details). This is close to optimum for most EU countries. If one increased the number of operating hours, the impact of CAPEX on final hydrogen production costs would decrease. Yet, as more and more of the electricity would have to be bought in peak hours at higher prices, the additional electricity consumption costs would more than offset any gains resulting from a higher electrolyser capacity factor. Reversely, limiting the operational time to a few hours daily could reduce the average electricity price.4 In this case, however, as lower amounts of hydrogen would be produced, the impact of CAPEX on the final cost would increase – again offsetting any gains from lower electricity prices. This relationship is depicted in the figure below (on the example of Belgium).