The Region That Wants Hydrogen the Most Can Least Afford It

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.