Hydrogen Economy

Industrial Hydrogen, Neither Intermittent & Cheap Nor High-Cost High Capacity Power Works
February 6, 2024
This Week:
Clean Power Availability Will Limit Industrial Hydrogen Activity
Next Week:
Transport: Is Hydrogen Going To Take-Off?

The Hydrogen Economy #32

Industrial Hydrogen, Neither Intermittent & Cheap Nor High-Cost High Capacity Power Works

Key Points

  • In our recent work, we have focused on power, which appears to be a significant constraint to industrial decarbonizing investments – a lack of availability will scale back hydrogen investments (although not the noise).
  • The choice appears to be between intermittency at very low operating rates (projects advocated at 20% capacity factor) or power that is too expensive to make even the best subsidies worthwhile.
  • The more obvious conclusion is that projects will stall as no one is willing to pay up to cover the high costs – equipment providers who have invested early and who are cash flow negative have a high failure risk.
  • None of this applies to China or international projects supported by China and using cheap Chinese equipment – this will give China significant economies of manufacturing scale well ahead of any companies in the West.
  • We look at power more broadly, from our most recent Sustainability report, and we also look at some ammonia initiatives, more blue than green. For all the reasons discussed above – new project announcements are slow.

Exhibit 1: Who do you trust to be there for you with equipment in 2026/27?

Source: Capital IQ and C-MACC Analysis



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