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Hydrogen prices to rise sharply

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The price of green hydrogen will be significantly higher if it is used extensively in the transport and heating sectors, an analysis by the Aurora Energy Research think tank says.

The demand for hydrogen power in Germany could reach anywhere between 150 to 500 terawatt-hours (TWh) by 2050, depending on what extent the transport and heating sectors are electrified, the group said in a statement.

The high-demand scenario would correspond to about half the current demand for natural gas in Germany, it added. Under the lower-demand scenarios, electricity would be used more heavily in the transport and heating sectors, with hydrogen going mostly to the industry such as steel, cement, and chemicals.

The difference is likely to have a major impact on costs. For example, under the higher-demand scenario, the price per kilogramme could be expected to be about twice as much as under the lower-demand scenario by 2040.

“When demand is low, the electrolysers can use the low electricity prices much more frequently in phases of high solar and wind power output. If, on the other hand, more hydrogen is required, hydrogen must be produced even at times of higher electricity prices, which increases hydrogen prices.”

Aurora’s Alexander Esser

Imports from sunny regions outside of Europe, such as North Africa, will not keep prices low, because new pipelines or ship transport will increase costs, the report says. The report calls for significant funding to go into developing the technology to reduce the costs of production.

Green hydrogen, made with water and renewable power, has increasingly been presented as a panacea to clean up CO2-intensive sectors such as steel and chemicals production.

Germany has set out to become a global leader in the associated technologies, penning a National Hydrogen Strategy. Over two dozen projects in northern Germany have also been promoted to show how hydrogen can play a key role in the energy transition.

But high costs have so far stood in the way of a major deployment of the technology, and uncertainty still surrounds much of the industry framework.

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