New US tax credits could make green hydrogen competitive with gas

By 2030, thanks to new US tax credits, green hydrogen-generated electricity will be competitive in price with gas-fired power.

One US consulting firm estimates that this is feasible if renewable hydrogen production costs can be kept to no more than $3/kg. As reported by ICF International of Virginia, the Inflation Reduction Act (IRA) of August, which introduced and extended tax credits for clean hydrogen and renewable energy, could make it economically viable to generate dispatchable electricity by burning green hydrogen with combined-cycle gas turbines (CCGTs).

By 2030, a green hydrogen CCGT power station may have superior economics than wind and solar combined with batteries, making it the cheapest form of dispatchable renewable energy in the United States. For a period of 10 years, the big renewable H2 power plant would use up roughly $5.8bn in hydrogen tax credits alone.

About 70% of the energy is lost during the process of converting renewable energy sources like wind or solar into green hydrogen using an electrolyser and then burning that H2 in a gas turbine. That is, just 30 MWh of usable green power would be produced for every 100 MWh of renewable energy fed into such a system, making it a relatively inefficient way to generate electricity.