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A U.S. solar farm. Other sun-rich nations such as Morocco are set to produce cost-competitive green hydrogen by the end of the decade, making the country an attractive import partner for European industries in need of the fuel. |
Despite Europe's ambitious targets for local hydrogen production, rising demand from industries looking for greener alternatives to gas is set to intensify the focus on imports of the fuel.
But beyond being needed to fill a potential demand shortfall, imported hydrogen could also be cheaper than the volumes made in Europe by the end of this decade, think tank Aurora Energy Research said in a Jan. 26 report.
EU and national hydrogen strategies acknowledge that there will not be complete self-reliance in the production of the fuel. Europe's largest hydrogen user, Germany, has allocated €2 billion of its €9 billion hydrogen budget economy to imports and has already signed partnership agreements with the likes of Morocco.
"Even for a country a sizeable as Germany, it would be challenging to meet all future hydrogen demand domestically from renewables — hence a natural question is whether imports could also provide a cost-effective option," Aurora said.
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Based on production cost alone, solar-powered green hydrogen from Morocco will beat Russian, Dutch or Norwegian blue hydrogen, made with natural gas and carbon capture, on price by 2030.
But long-distance shipping adds to the bill. Aurora analysts considered the cost of transforming the fuel into one of five "energy vectors," such as ammonia or compressed hydrogen, used to transport it to consumers in northwest Europe. On top of that comes the cost of transport such as trucking, sea freight and pipelines.
All of these factors included, blue hydrogen made in the Netherlands is set to be the cheapest source of low-carbon hydrogen available to off-takers in northern Germany by 2030.
Blue hydrogen made in Norway, transported via pipeline as compressed hydrogen, is a close second followed by solar-powered green hydrogen from Morocco shipped as ammonia.
Green hydrogen made in Germany will be much more expensive than those options, Aurora said. This is the case even amid falling renewables costs and improving electrolyzer technology, which are set to enhance the economics of green hydrogen.
As a result, European countries "should consider imports alongside locally produced hydrogen," the study recommended.
On the sell side of that equation is significant export potential for countries outside Europe such as Chile, Morocco, Canada and Russia.
"By looking at the costs involved in producing this hydrogen, and bringing it to Europe, we found that imported hydrogen could be cost-competitive with hydrogen produced in Europe, despite the conversion and transportation costs involved," said Anise Ganbold, head of global commodities at Aurora.