Hydrogen Economy

The Region That Wants Hydrogen the Most Can Least Afford It
November 28, 2023
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Next Week:

C-MACC Hydrogen Weekly Update 22

The Region That Wants Hydrogen the Most Can Least Afford It

  • Weekly Theme: Hydrogen By Country
  • News Update
  • Projects Update
  • Ammonia/Methanol Update
  • Power Update
  • Next Week: Competing With US Blue

Key Points

  • We revisit hydrogen economics again this week, as many of the COP28 delegates believe hydrogen to be the right path and as Europe and others commit to expensive infrastructure in anticipation.
  • Even if Europe chooses to allocate renewable power at cost to hydrogen projects, the cost of making the hydrogen is high; valuing power at prevailing market prices makes investments very unattractive.
  • Although higher than in the recent past, US power prices remain more attractive, yet still drive unattractive hydrogen costs if local alternative power values are used versus power costs.
  • The US 45V credit works for power prices in the 6-8 cent per kWh in the US, but with residential power prices so much higher, giving hydrogen cheap power penalizes the consumer if the power is fungible.
  • Pockets of low-cost power will work in Europe and the US – idled wind power for example and hydro. If you could stack and trade credits in the US for power and hydrogen that might help – not yet!

Exhibit 1: What hydrogen would cost if it competed with residential power in the US.

Source: Capital IQ and C-MACC Analysis

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