Is a Levelized Cost of Hydrogen (LCOH) of 3 €/kg possible to achieve in the short term?

Small steps to achieve big dreams! Is a Levelized Cost of Hydrogen (LCOH) of 3 €/kg possible to achieve in the short term? More and more knowledge is getting us much closer to it!

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A little bit more than 5 years ago a big attention came to the world with Green Hydrogen. As we have discussed many times, Green Hydrogen is a type of Clean Hydrogen that can be obtained by the combination of water electrolysis technologies and renewable electricity.

The more and more abundant renewable electricity is putting on the table the possibility to produce cheaper and cheaper hydrogen as electricity consumption is the main parameter affecting LCOH.

However, CAPEX is also an important parameter as it determines the final investment needed. This parameter is probably putting many large projects on hold or left behind because of the larger final CAPEX that the first estimations.

But here comes the good news: the more granular information we have about the CAPEX of our hydrogen plants the more we can do to address the problem.

At the same time we need to understand this as the beginning of a cost curve that it may not be as deep as for other technologies (like one order of magnitude in solar in the last 15 years), but why not let’s say half when we take into account that everyone in the sector is adding their risks to the costs (OEMs, EPCs, EPCMs, etc…) and therefore ending up in quite high CAPEX.

Finally, it is important to realise that more than anything the sector needs implementation, deployment, putting products out in the market, and that the more products are out, the best.

Although large projects (>100 MW) are key to showcase what future will look like (lighthouse projects), smaller projects (5-20 MW) are essential to drive cost down and to fulfill our targets.

Source: Carlos Bernuy Lopez

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