C-MACC Hydrogen Weekly Update 21
Plugging Some Holes: Is There A Way Out Of The Slump
- Weekly Theme: Hydrogen’s Complex Path
- News Update
- Projects Update
- Ammonia/Methanol Update
- Power Update
- Next Week: Regional Economics Review
Key Points
- Willingness to pay looks like the major stumbling block when it comes to hydrogen development as production incentives are driving investment in production equipment for which there is no demand.
- Demand incentives may be the answer, but this is more taxpayer money – demand mandates may be the better solution and may provide the most economic pathways, but agreement is a challenge.
- Small hydrogen projects, while not capital efficient, may be all that market demand needs today, but this leaves the equipment industry with a growing capacity overhang and no path to scale economies.
- Otherwise, we question the headlong rush into hydrogen infrastructure in Europe, with many of the billions spent on pipelines likely to be wasted as distributed power and hydrogen evolves.
Exhibit 1: While there may be some outliers, we see most sustainability/transition pathways facing customers with this type of tolerance for higher prices.
Source: Capital IQ and C-MACC Analysis
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