Hydrogen’s Cost Revolution and Industry Convergence

In a study conducted by researchers at Harvard Business School and the University of Mannheim, hydrogen emerges as a transformative force capable of accelerating the global energy transition. The study delves into the challenges, progress, and potential impact of hydrogen technology, shedding light on the promising future of this clean energy source.

Hydrogen, particularly green hydrogen produced through power-to-gas technologies, is poised to play a pivotal role in reducing greenhouse gas emissions in industries resistant to conventional decarbonization methods. Target sectors include heavy-duty transport, energy-intensive manufacturing, and long-term energy storage. The overarching goal is to make hydrogen a cost-effective and efficient alternative in these challenging domains.

The study, authored by Prof. Dr. Gunther Glenk, Professor Stefan Reichelstein, Ph.D., and Philip Holler from the Mannheim Institute for Sustainable Energy Studies (MISES), evaluates the advancements in various hydrogen technologies. Based on global observations of installed power-to-gas systems, the researchers anticipate a significant drop in the life cycle cost of producing clean hydrogen, from the current three to five US dollars per kilogram to $1.6 to $1.9 by 2030.

Governments worldwide are recognizing hydrogen’s potential as a decarbonized energy source and are responding with regulatory initiatives and subsidy programs. The US Department of Energy’s Hydrogen Shot initiative, launched in 2021, aims to reduce the cost of producing clean hydrogen to one US dollar per kilogram by 2030. These initiatives underscore the commitment to making hydrogen a central player in the global energy transition.

While investors have sometimes viewed ambitious sustainable energy targets with skepticism, the study reveals a convergence of industry trends with the goals set by regulatory bodies. The projected cost reductions align closely with the US Department of Energy’s target, indicating that hydrogen’s potential is not just a vision but a tangible reality.

As Prof. Dr. Gunther Glenk emphasizes, the deployment of hydrogen technology sets in motion a cycle of success. Cost reductions make hydrogen applications financially attractive, driving increased use, further cost reduction, and a transformative cycle that could be a game-changer in the energy landscape.