Hydrogen Economy

Hedging Your Bets – The Only Way to Play Hydrogen
February 27, 2024
This Week:
If you bet on hydrogen, don’t bet the ranch.
Next Week:
Enter marginal technologies – not so marginal now.

The Hydrogen Economy #35

Hedging Your Bets – The Only Way to Play Hydrogen

Key Points

  • Countries and companies will need to adapt plans to account for growing uncertainty around the availability of clean hydrogen and develop projects that might first rely on other feedstocks or delay plans altogether.
  • Power plants that can run on natural gas or hydrogen are one option, although not a good one in our view, as is incrementally feeding traditional ammonia facilities with green hydrogen based on available cheap power.
  • With the inevitable rollback of hydrogen ambitions this year, participants need to decide whether alternatives are better than no investments – while some hydrogen infrastructure makes sense, much does not – not yet.
  • As power concerns grow in Europe and the US, we see more projects in developing countries with significant solar resources – although these are still economically challenged by a lack of local infrastructure and demand.
  • Meanwhile, ammonia prices are falling as global natural gas prices fall and supply looks robust – this will inevitably influence 2024 investment decisions for blue hydrogen projects in the US.

Exhibit 1: While the sums of money in this analysis are vast, they are likely far too low, and analysis is lacking everywhere around how inflationary it will be to get this hydrogen – demand may be lower, but value higher.



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