Brazil and Chile could take the lead in establishing affordable green hydrogen

According to WoodMac, falling electrolyzer costs due to economies of scale, improved automation of production, and the flexibility of such systems would bring green hydrogen to a price point where it is competitive with fossil-fuel-powered hydrogen in a dozen markets by 2030.

With the rapid development of plans for electrolyzer production plants across the globe expected to drive down costs, US-based analyst WoodMackenzie has identified Brazil and Chile as “among the front-runners” for achieving affordable clean hydrogen this decade.

WoodMac cited plans for large-scale electrolyzer production facilities announced “in recent weeks” by Ohmium in the United States, Clean Power Hydrogen in the United Kingdom, Green Hydrogen Systems in Denmark, Sunfire in Germany, and Fortescue Future Industries in Australia.

With similar plans already announced by Cummins in the United States, Haldor Topsoe in Denmark, Sheffield-based ITM Power, Oslo-based Nel Hydrogen, French company McPhy, German brands Siemens and Thyssenkrupp, and New York-based Plug Power, WoodMac predicted that economies of scale, automated production, and modularity will result in a “significant reduction” in the cost of electrolyzers by 2025.

With the cost of alkaline and polymer electrolyzer membranes expected to fall 35-50 percent by 2025, and solid oxide electrolyzer technology expected to become even cheaper, a combination of hydrogen demand and cheap renewable energy generation capacity will determine the location of the world’s green hydrogen pioneer markets. According to the researcher, this equation puts Brazil and Chile in the limelight.

WoodMac compared the costs of renewable hydrogen to grey, brown, and blue hydrogen fuelled by natural gas, lignite coal, and gas with carbon capture, respectively.

While the analyst noted a significant increase in planned hydrogen-related carbon capture projects, which is likely to bolster advances in blue hydrogen, the analyst added that the recent rise in global commodity prices has harmed the economics of fossil-fuel-powered hydrogen production in comparison to its green equivalent.
According to WoodMac, the intended size of electrolyzer production is such that a business segment capable of producing only 200 MW of electrolyzer capacity annually until 2019 had grown to 6.3 GW by the summer, with plans for 1.3 GW of manufacturing lines disclosed in January to March alone.