Australia currently leads the pack for proposed green hydrogen electrolyser capacity with a total of 69 gigawatts of planned projects in the pipeline, pushing Western Europe into a distant second place with 41GW of proposed projects in the pipeline.

Research by Rystad Energy showed Australia in the lead, despite the consultancy finding that government spending to support green hydrogen production only totals about US$290 million there, and Canberra has yet to set any green hydrogen capacity targets.

This pales in comparison to the support being given to the emissions-free fuel from Western European nations, with Germany having provided US$10.5 billion in support to reach a 5GW target by 2030, according to Rystad.

The Norwegian consultant’s research also shows the French government is providing US$8.2 billion to reach a 6.5GW target by 2030, while the Italian government is believed to have provided US$6 billion to US$9.7 billion in support to reach a 5GW target by 2030.

Australian advantage

Principal at Rystad Energy, Martin Opdal, explained there were a number of reasons some of the world’s largest green hydrogen projects were being planned Down Under.

“One being the availability of land, the second one being the availability of renewable energy sources, both for wind and solar,” he explained.

He also listed government support for the development of green hydrogen products.

Opdal noted that the Australian government had set a target to drive down the cost of green hydrogen production to below A$2 (US$1.46) per kilogram.

However, there is still some way to go to reach that target, with Opdal highlighting that the estimated cost of green hydrogen production varied from state-to-state in Australia but ranged between A$5 and A$6 per kilogram.

“So there is a long way to get down to the target, and that means that in order to get there, you would need to reduce the capex by about 75% compared to the current level,” he added.

Reducing costs

The majority of the cost reduction is anticipated to come from falling electrolyser costs as the industry matures and scales up.

Increased electrolyser utilisation is also anticipated to have a positive impact on bringing down costs through the combination of wind and solar resources.

“If you can combine wind and solar resources, you can utilise the electrolysis more efficiently and produce throughout the whole day instead of just in certain areas of the day,” Opdal explained.

He also noted lower renewable energy prices are anticipated to bring down green hydrogen costs as renewable energy projects increase in scale and renewable technology improves.

Hydrogen wars

Despite these factors, Rystad does not anticipate green hydrogen will be able to compete on cost with blue and grey hydrogen by the end of the decade, which goes against analysis from the likes of BloombergNEF, which expects green hydrogen to be cheaper than blue by 2030.

Instead, Rystad’s forecasts see the levelized cost of green hydrogen production falling from an estimated US$5.90 per kilogram currently to US$4.20 per kilogram by 2030.

In comparison, it sees the cost of blue hydrogen averaging US$2.30 per kilogram by 2030, while grey hydrogen costs are tipped to remain stable at around US$2 per kilogram.

While blue hydrogen may still hold a cost advantage at the end of the decade, Opdal said green would have other advantages, such as being more environmentally friendly than blue.

He added there was also an energy security advantage for green hydrogen in countries that do not have any domestic supply of the natural gas used in the creation of blue hydrogen, but could have the renewable capacity to produce green hydrogen.

Driving demand

The anticipated buildout of both blue and green hydrogen production in coming years comes amid an anticipated rise in demand in the fuel, although estimates for future demand vary.

Rystad’s own forecast sees hydrogen demand growing from about 70 million tonnes per annum currently to roughly 310 million tpa by 2050.

While refining and fertiliser manufacturing are the main industries that take up near-term demand for hydrogen, Rystad anticipates demand growth to come from new uses for hydrogen, with Opdal highlighting the aviation, steel and shipping industries in particular.

He also noted that a number of countries were working to stimulate hydrogen demand, in particular Japan and South Korea.

The two Asian nations see hydrogen playing a key role in the transportation sector, with Japan targeting a total of 800,000 hydrogen fuel cells cars on the roads by 2030 and also 1000 fuelling stations.

Over the same period, South Korea is targeting 850,000 cars by 2030, with an even more ambitious 6.2 million target for 2040, along with 1200 fuelling stations.

“Another example of countries trying to drive demand is India, where they are now looking to their refineries and fertiliser plants to purchase 10% of their hydrogen as green hydrogen,” Opdal said.

He also highlighted that India’s current hydrogen demand sits at around 6.9 million tpa, the majority of which is consumed by refineries and fertiliser plants, providing scope for significant emissions reductions through the use of cleaner forms of hydrogen.