With the scaling up of hydrogen production, distribution, and equipment along with component manufacturing, the costs of hydrogen technologies used in various applications will decline radically in the coming years.
Costs associated with hydrogen technologies used in various applications, including heat and power, will decline radically over the next decade with increasing hydrogen production, distribution, and equipment and component manufacturing. For some applications, hydrogen will become competitive with other low-carbon alternatives and traditional options. As part of concerted decarbonisation goals, many governments have developed detailed strategies for deploying hydrogen solutions. The energy industry is paying attention to the sharp improvements in cost drivers associated with renewable hydrogen production and the versatile role hydrogen plays in future energy systems. Although the hydrogen council actively promotes hydrogen as a crucial element of future industrial decarbonization worldwide, it acknowledges that new projects have not yet been approved despite increased interest and more than 30 significant investments in sectors like heavy-duty trucking, rail, and steel production using low-carbon or renewable hydrogen. This is due to the lack of suitable policy and regulatory frameworks and visibility on near- and long-term economic viability and industry readiness. The group suggests governments can boost the hydrogen economy with increased coordination, standardisation, infrastructure investment, and providing incentives. On the other hand, the energy industry’s role should focus on establishing a market. This is possible by reducing market uncertainty, concentrating on scaling applications, and advancing technologies creating significant investment improvement. For instance, scaling fuel cell production can reduce costs by a considerable percentage and can impact various end-use cases. Although the hydrogen industry greatly depends on the region, for applications, the eventual costs of renewable hydrogen are vital. Despite renewable hydrogen from electrolysis costs about six kilograms, in the short term, hydrogen could become competitive in transportation, mostly for large vehicles with long ranges such as trains, coaches, or forklifts. If hydrogen production and distribution costs continue to decline, hydrogen solutions could compete with other low-carbon alternatives in simple cycle hydrogen turbines for high power, hydrogen boilers, and industrial heating. There are also various power applications included with this. Fuel cells for combined heat and power (FC-CHP) is an application where hydrogen generates power from fuel cells. Later, it recovers and uses the by-product heat for hot water, space heating, or cooling in residential and commercial buildings. Compared to both low-carbon and natural gas, FC-CHP is a viable alternative for a house in the near future with reduced hydrogen costs. Industrial heat is another application. Electrification will continue to be the lowest-cost decarbonisation option for low-grade heat. Therefore, hydrogen will not play a significant role. Biomass is an option but faces supply constraints, and CCS will be limited to regions with access to carbon dioxide storage for mid and high-grade heat. In places where these are not alternatives, hydrogen and electric heating will be the only low-carbon solutions.Although the hydrogen industry greatly depends on the region, for applications, the eventual costs of renewable hydrogen are vital.
