The Hydrogen Economy #32
Industrial Hydrogen, Neither Intermittent & Cheap Nor High-Cost High Capacity Power Works
- 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