Due to the recent spike in gas prices, green hydrogen made with renewable energy is currently cheaper to produce than grey hydrogen made from natural gas, according to London-based analytics company ICIS.
ICIS calculated that the price of grey hydrogen reached highs of £6 per kilogram (kg) in the UK in early October, an increase from £1.43/kg in April. Meanwhile, the price of green hydrogen under a renewable energy power-purchase agreement (PPA) of £45 per megawatt hour (MWh) has remained constant, at £3.39/kg.
This price correlation extends to Europe, says ICIS. “Gas and power prices have surged across the continent, therefore any [renewable] PPA-derived hydrogen around the region we modelled would likely be competitive now.”
Although the price of blue and grey hydrogen would fall with a drop in the cost of natural gas, the price volatility seen this year highlights the risks of continuing to rely on imported fossil fuels for Europe’s energy, the analysis concludes.