Path to Hydrogen Competitiveness: A Cost Perspective

This latest Hydrogen Council report shows that the cost of hydrogen solutions will fall sharply within the next decade – and sooner than previously expected. As scale up of hydrogen production, distribution, equipment and component manufacturing continues, cost is projected to decrease by up to 50% by 2030 for a wide range of applications, making hydrogen competitive with other low-carbon alternatives and, in some cases, even conventional options.
Significant cost reductions are expected across different hydrogen applications. For more than 20 of them, such as long-distance and heavy-duty transportation, industrial heating, and heavy industry feedstock, which together comprise roughly 15% of global energy consumption, the hydrogen route appears the decarbonisation option of choice – a material opportunity.
The report attributes this trajectory to scale-up that positively impacts the three main cost drivers:

• Strong fall in the cost of producing low carbon and renewable hydrogen;
• Lower distribution and refuelling costs thanks to higher load utilisation and scale effect on infrastructure utilisation; and
• Dramatic drop in the cost of components for end-use equipment under scaling up of manufacturing.

To deliver on this opportunity, supporting policies will be required in key geographies, together with investment support of around $70 billion in the lead up to 2030 in order to scale up and achieve hydrogen competitiveness. While this figure is sizable, it accounts for less than 5% of annual global spending on energy. For comparison, support provided to renewables in Germany totalled roughly $30 billion in 2019.
The study is based on real industry data, with 25,000 data points gathered and analysed from 30 companies using a rigorous methodology. The data was collected and analytical support provided by McKinsey & Company, and it represents the entire hydrogen value chain across four key geographies (US, Europe, Japan/Korea, and China). Data was also reviewed by an independent advisory group comprised of recognised hydrogen and energy transition experts.
You can download the full report from the Hydrogen Council website here
The executive summary can be found here