According to DNV GL’s research paper ‘Hydrogen in the electricity value chain’, the production of hydrogen from electrolysis will become competitive with production from natural gas. In fact, hydrogen produced from renewable energy will be an economic energy carrier to complement electricity and boost decarbonization.
As the study shows, the economic viability of green hydrogen is possible because of the growing penetration of wind and solar power in the future. This is presented in DNV GL’s Energy Transition Outlook, which expects solar PV, wind energy and hydropower to account for 80% of global electricity production in 2050.
As this capacity increases, opportunities to utilize its low-cost electricity are becoming feasible to avoid curtailment: initially conversion into heat then (daily) battery storage and eventually conversion into green hydrogen
The report explains.
However, there are two necessities for hydrogen to become an economically viable energy carrier:
- First is the prospect of increasing times with low-cost electricity caused by an oversupply of available energy due to the sharp rise of renewable energy sources;
- Secondly, use cases for hydrogen applications are expected to be in support of low-carbon options. If those parameters are set, the production of hydrogen from electricity can compete with natural-gas based hydrogen production and provide a viable commercial business option.
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In this aspect, DNV GL believes that the key reasons for the economic feasibility of hydrogen between 2030 and 2050 will be driven by three main factors:
- The cost of electrolysers will reduce due to by learning curve experiences and the cost of asset developments which is expected to decrease. Production by electrolysis from ‘surplus’ or low- cost electricity from renewables is an option for producing low-carbon hydrogen with no related carbon emissions;
- Time periods when low or zero cost prices for electricity are available will increase because of the growth of renewables, generating a surplus of energy available to the power grid;
- Penalization of carbon emissions in the future industries are expected to see a change away from carbon-heavy activities, for example because of the introduction of carbon tax and incentives for low-carbon solutions.
Speaking about the conclusions of the report, Lucy Craig, Vice President of Technology and Innovation at DNV GL – Energy, mentioned:
The prospect of delivering affordable hydrogen applications in the mid-term future provides a very encouraging signal to accelerate the global energy transition. Our research demonstrates that green hydrogen provides an optimal use for surplus electricity, which we expect to see in the years to come due to the rapid rise of renewable energy. In combination with electrolysis, hydrogen proves to be an economically feasible solution for the decarbonization of the heat and storage sector
