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NW European hydrogen demand forecast at up to 700 TWh by 2050: report

Highlights

200 TWh demand under low demand scenario

Blue cheaper than green until 2040s

Local CCS cheaper than Norwegian imports

London — Demand for hydrogen in Northwest Europe could rise to between 200 TWh and 700 TWh by 2050 under low and high demand scenarios, Aurora Energy Research said Sept. 1 in a report covering the energy systems of Germany, Belgium and the Netherlands.

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The first applications for low-carbon hydrogen would be as feedstock for chemicals and refineries, and for new processes in steel and cement production, the report said.

Production of blue hydrogen, made from reforming natural gas with carbon capture and storage, would be "much cheaper" than that for green hydrogen, produced from electrolysis using renewable electricity, until into the 2040s, the report said.

Blue and green costs would only converge around 2045, Aurora said, electrolyser stack cost reductions being offset by rising power prices over the forecast period.

Aurora put levelized costs of production in 2020 (HHV, real, 2018) at around Eur40/MWh (Eur1.6/kg) for conventional H2, Eur50/MWh (Eur2/kg) for blue H2 and Eur80/MWh (Eur3.2/kg) for green H2.

S&P Global Platts on Aug. 27 assessed conventional hydrogen (Dutch, SMR including capex, carbon) at Eur1.24/kg, blue hydrogen (SMR with CCS, including capex, carbon) at Eur1.31/kg and green hydrogen (PEM electrolysis including capex) at Eur3.43/kg.

"Large-scale electrolysis should be jointly deployed with seasonal hydrogen storage and renewables power generation to assure low operational costs," Aurora said.

Using the conventional generation mix in German electrolysis, meanwhile, did not delivery carbon benefits over blue hydrogen again until the 2040s.

Based on average power system emissions, H2 produced by electrolysis becomes less carbon intensive than blue H2 only after 2045 in Germany, the report said.

CCS close to cluster source

Meanwhile, carbon capture and storage applications close to continental European clusters should be explored, Aurora said.

"There are important industrial clusters where domestic CCS is more economical than H2 imports from Norway," it said.

Dutch reservoirs provided the cheapest CCS today, while German reservoirs came at similar costs, but with significantly higher capacity if the process was to be accepted.

"We need vast amounts of storage, even with all salt caverns converted into H2 storage, electrolysers are exposed to high power prices," the report said.

Inter-continental transport of H2 via new pipelines or shipping should be minimized because of the costs involved, it said.

"Invest in localized production or re-purpose existing gas networks, albeit at extra cost," the report advised.

S&P Global Platts Analytics' H2 global production database identifies 1 GW of announced electrolyzer capacity set to come online across the next five years, 52% of which by end-2022.

There are 162 CCS projects active globally, 31% of which are in the US, according to Platts Analytics' Aug. 24 H2 Market Monitoring report.