We Can Rescue Green Hydrogen By Throwing A Lot Of Money At It – But Why?

Key Points

The economics of intermittent hydrogen are poor, and you need both very low capital costs and very low power costs to make any sort of return – even with 45V – those investing today hope for something more.
The lobbying around changes to 45V is driven by the severe challenges with finding conditions that allow you to benefit from the incentive and make money. Temporal matching with intermittent power is the real killer.
Other regions are also falling short, though “contract for difference” incentives could work, where governments are willing to shoulder the huge subsidy that will create. But even then, physical power availability is a hurdle.
The incentive (taxpayer) cost of removing carbon for blue hydrogen is much lower than for green – the incremental cost of removing the extra carbon is therefore very high – DAC based credits would be far cheaper.
In the projects section we show several in Europe that are being aggressively subsidized and still look barely profitable without premium prices, and we look at incremental carbon improvements for ammonia.

Exhibit 1: The box represents where implied capital costs are today – you need negative valued power for this to work.