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S&P Global Platts announced the debut of daily cost of production pricing for hydrogen in Saudi Arabia, Oman, Qatar, and the United Arab Emirates.
The daily cost of hydrogen generation using proton exchange membrane (PEM) electrolysis, alkaline electrolysis, and steam methane reforming with carbon capture and sequestration is reflected in these current hydrogen pricing. The new Middle East evaluations add to Platts’ current suite of hydrogen production pricing assessments, which covers North America, Europe, Japan, and Australia.
S&P Global Platts’ Head of Energy Transition Pricing, Alan Hayes, said: “The Middle East is investing a lot of money in hydrogen production, and the projects that are now being developed will place the area at the forefront of the burgeoning hydrogen economy. In the same way that it is currently for crude oil, the Middle East has the potential to become a worldwide supply hub for hydrogen. With the addition of the Middle East to Platts’ hydrogen pricing coverage, market players will be able to watch the cost of production in this crucial region, as well as compare costs to other hydrogen production centres around the world.”
The overall investment value of stated hydrogen projects in the Middle East, according to S&P Global Platts Analytics, is estimated to be $44 billion. Of this sum, $35 billion will be spent on projects that will be operational by 2030. The potential for hydrogen to achieve large reductions in carbon emissions across the economy is driving investments in new manufacturing.
The first hydrogen cost of production pricing for Saudi Arabia and the United Arab Emirates emphasize the relevance of regional differences in feedstock costs in influencing hydrogen production’s relative competitiveness throughout the world. According to the most recent estimates, methane steam reforming has a significant cost advantage in the present market in the UAE and Saudi Arabia. The initial UAE evaluation for steam methane reforming with carbon capture and sequestration is $5.60/kg, which is comparable to Saudi Arabia’s $5.50/kg for the same production route. In Western Australia, $5.95/kg is paid, but in the Netherlands, Eur5.70/kg ($6.43/kg) is paid.
In the present market, Australia has a strong cost advantage over the UAE, Saudi Arabia, and the US Gulf Coast, according to comparisons across the electrolyzer paths.
Alkaline and PEM electrolysis production methods in Western Australia were estimated at $2.11/kg and $3.39/kg, respectively. The current alkaline pathway expenses in the US Gulf were estimated at $2.96/kg and PEM at $3.95/kg. Alkaline electrolysis cost $4.51/kg in the UAE, whereas PEM cost $5.74/kg. The alkaline electrolysis manufacturing process was valued at $3.24/kg in Saudi Arabia, whereas PEM electrolysis was valued at $4.26/kg.
Spreads in hydrogen production costs between areas will play a big role in determining how much hydrogen costs around the world. The evolution of trade routes between higher-cost suppliers and growing demand centers will be greatly influenced by these price discrepancies. When it comes to building global hydrogen trade routes, these newest cost of production analyses suggest that alternative production routes may advantage different locations.
Hydrogen, either directly or when converted to ammonia, may reduce carbon emissions in a variety of sectors, including road transportation, as a feedstock in industries like steel production, and even in power generation. This flexibility, along with technological advancements, is fueling a rise in worldwide hydrogen production investment.
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