Green hydrogen cost reduction

December 2020
ISBN : 978-92-9260-295-6

Scaling up renewables to meet the 1.5oC climate goal

As global economies aim to become carbon neutral, competitive hydrogen produced with renewables has emerged as a key component of the energy mix. Falling renewable power costs and improving electrolyser technologies could make "green" hydrogen cost competitive by 2030, this report finds.

Green hydrogen can help to achieve net-zero carbon dioxide (CO2) emissions in energy-intensive, hard-to-decarbonise sectors like steel, chemicals, long-haul transport, shipping and aviation. But production costs must be cut to make it economical for countries worldwide. Green hydrogen currently costs between two and three times more than "blue" hydrogen, which is produced using fossil fuels in combination with carbon capture and storage (CCS).

This report from the International Renewable Energy Agency (IRENA) outlines strategies to reduce electrolyser costs through continuous innovation, performance improvements and upscaling from megawatt (MW) to multi-gigawatt (GW) levels.

Among the findings:

  • Electrolyser design and construction: Increased module size and innovation with increased stack manufacturing have significant impacts on cost. Increasing plant size from 1 MW (typical in 2020) to 20 MW could reduce costs by over a third. Optimal system designs maximise efficiency and flexibility.
  • Economies of scale: Increasing stack production with automated processes in gigawatt-scale manufacturing facilities can achieve a step-change cost reduction. Procurement of materials: Scarcity of materials can impede electrolyser cost reduction and scale-up.
  • Efficiency and flexibility in operations: Power supply incurs large efficiency losses at low load, limiting system flexibility from an economic perspective.
  • Industrial applications: Design and operation of electrolysis systems can be optimised for specific applications in different industries. Learning rates: Based on historic cost declines for solar photovoltaics (PV), the learning rates for fuel cells and electrolysers – whereby costs fall as capacity expands – could reach values between 16% and 21%.
  • Ambitious climate mitigation: An ambitious energy transition, aligned with key international climate goals, would drive rapid cost reduction for green hydrogen. The trajectory needed to limit global warming at 1.5oC could make electrolysers an estimated 40% cheaper by 2030.