In a new piece of research, BloombergNEF (BNEF) predicts that by 2050, green hydrogen produced from renewable sources will cost less than natural gas, as the cost of solar power continues to fall.
As per BNEF, in 15 out of 28 markets surveyed the cost of green hydrogen will decline in comparison with natural gas on an energy-equivalent basis and these countries accounted for one-third of global GDP in 2019.
In all markets modeled, BNEF found that green hydrogen should get cheaper than both blue hydrogen and even polluting grey hydrogen. The cost of green hydrogen, which is now considered to be expensive to produce, should decline by up to 85 percent by 2050 and could fall below $1 per kilogram or $7.4 per one million British thermal units by fifty years in most markets. These costs are 17 percent lower than BNEF’s old 2050 forecast.
“Such low renewable hydrogen costs could completely rewrite the energy map. It shows that in the future, at least 33 percent of the world economy could be powered by clean energy for not a cent more than it pays for fossil fuels,” said Martin Tengler, lead hydrogen analyst at BloombergNEF.
Globally, the hydrogen industry is expected to expand to $183 billion by 2023, from $129 billion in 2017, according to Fitch Solutions. French investment bank Natixis estimates that investments in hydrogen will exceed $300 billion by 2030.
Oil exporting countries in the Middle East including Saudi Arabia and the UAE plan to tap into hydrogen and produce clean, alternative fuel for exports in the future. The kingdom has ambitions to become the world’s largest producer of hydrogen. The UAE earlier this year formed an alliance of three state entities, including its national oil company, to produce hydrogen at scale.
The continued decline in solar photovoltaic technology costs is the key driver behind the declining costs for green hydrogen. “PV electricity will be 40 percent cheaper in 2050 than what we had thought just two years ago,” the report said.
The decline in solar PV electricity cost is mainly due to more automatic manufacturing, less silicon and silver consumption, higher photovoltaic efficiency of solar cells and greater yields using bifacial panels.
However, the report urged governments across the globe to continue adopting measures to accelerate the development of clean hydrogen.