It’s a Big Boys Game – But Many of the Big Boys Don’t Want It or Can’t Afford It!

Key Points

The economic challenges of hydrogen require critically important economies of scale in any business model that stands a chance of working; this is the arena of well-financed companies, not start-ups.
At our very well-attended dinner last week, there was broad consensus that buyers willing to pay a lot more for products with a clean hydrogen component are elusive, but cost-competitive products will take share.
Companies bringing unique technology to the hydrogen party, whether on the production or consumption side, should look for deep-pocketed partners or simply license what they have – less risk and more chance of success.
We continue to see a wave of green European projects passing FID, as companies look to capitalize on grants and government incentives geared to see which country can subsidize the most – blue is so much cheaper.
With crop prices weaker, grey ammonia pricing is not strong (although far from a cyclical low), and this market is influencing price discovery for other colors. We see a grey price rebound, possibly in 2025.

Exhibit 1: Despite the US competitive edge in blue hydrogen, only the best positioned can make the math work.