RenewableUK and Hydrogen UK have teamed up to release a report detailing strategic measures to significantly lower the costs of green hydrogen production.
The report, titled “Splitting the difference – reducing the cost of green hydrogen to accelerate deployment,” suggests that implementing these measures could reduce hydrogen production costs from £241 per megawatt hour to less than £100/MWh. This dramatic reduction aims to boost demand and drive the energy transition.
Green hydrogen, produced through renewable energy-powered electrolysis, is poised to play a crucial role in the future energy system. It provides long-lasting storage for surplus electricity and is vital for decarbonizing industries like steel, chemicals, and shipping. However, for green hydrogen to realize its full potential in helping the UK decarbonize, the cost must decrease significantly as production scales.
The cost of electricity used in the electrolysis process makes up approximately 70% of the final cost of green hydrogen. Consequently, reducing the price of electricity is essential to making green hydrogen more affordable. The report outlines eleven key recommendations to achieve cost-effective electrolytic hydrogen production by lowering these electricity costs.
The report recommends reforming the hydrogen production business model (HPBM) to include realistic strike prices, encouraging investment in the market. It suggests optimizing electrolysis to occur when and where electricity is cheapest, potentially reducing wasted electricity due to grid limits. It also calls for the elimination of barriers that prevent hydrogen projects from co-locating with renewable energy generators and supports the development of a hydrogen transmission network. Additionally, it advocates for lowering grid access charges for developers.
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