Getting Cheap Power Is More Challenging Than Equipment!

The Hydrogen Economy #83

Getting Cheap Power Is More Challenging Than Equipment!

• News Update
• Projects Update
• Ammonia/Methanol Update

Key Points

• We provide our views on a leaked draft of the state aid rules for the European Commission’s upcoming Clean Industrial Deal, which appears too scattered to bolster Europe’s green hydrogen ambitions per our initial view.
• While renewable energy projects are a part of the deal, we think incentives in this area do not go far enough to push down industrial electricity prices to cut green hydrogen production costs, which will also entice buyers.
• We discuss incentives targeting electrolyzers and other capital costs and the likely benefits of importing more project capital components from lower-cost regions and redirecting this money to build out power sources.
• We show the European electricity CPI relative to the US electricity CPI and compare these to natural gas price movements – European electricity prices have risen with its natural gas prices; the US is cheaper on both fronts.    
• Otherwise, we look at recent ammonia and methanol price and margin movements, highlight a few global hydrogen project announcements, and flag several relevant industry trends worth considering in 2025.

Exhibit 1: IEA estimated final electricity prices for large industrial consumers in energy-intensive industries.

Source: IEA – Electricity 2025 Report