green hydrogen: time to scale up docs/m... · 2020. 12. 3. · green hydrogen: time to scale up...

Green Hydrogen: Time to Scale UpEuropean Hydrogen Forum

Martin Tengler

Lead Hydrogen Analyst, BloombergNEF

November 26, 2020

1 European Hydrogen Forum | November 26, 2020

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Strategies for a cleaner,

more competitive future


BNEF coverage




The Hydrogen Economy Outlook A free summary of the key messages

is available at about.bnef.com/blog.

13 reports


Why hydrogen?


Chemicals

ProductsBuildings

Fuel for

Hydrogen is well placed to decarbonize many sectors

H2

Residential &

Commercial

Industry

Steel Cement

Paper Food

Aluminum

Transport

Power

Electricity

Peaking Plants

Fertilizers

Plastics

Fuel refining

Feedstock forHeat for

Steel Glass

Metallurgy Food

Source: BloombergNEF

Why hydrogen?


Production costs


Source: International Energy Agency, Morgan Stanley. See notes pane for notes.

Production of hydrogen today is already a big, and polluting, businessSupply and demand for hydrogen globally, 2018 Key statistics, 2018

● 117MMT produced

● $130 billion in sales

● Over 99% derived

from fossil fuels

● Releases 830MtCO2

(2.2% of global energy

related CO2)

● Consumes around 6%

of natural gas and 2%

of coal

Production costs


Source: BloombergNEFSource: BloombergNEF

Alkaline electrolysis Proton exchange membrane electrolysis

Renewable hydrogen can be made using renewable electricity

Aqueous electrolyte solution

Oxygen

Hydrogen

- +

Source

H2

H2O

O2

OH-

Cathode Anode

Diaphragm

-

-

Cathode reaction: 4e- + 4H2O → 2H2 + 4OH-

Anode reaction: 4OH- → O2 + 2H2O +4e-

Total reaction: 2H2O → 2H2 + O2

H+

+-

Source

Cathode Anode

PEM

O2

H2O

H2

Oxygen

Hydrogen+

++

+

Anode reaction: 2H2O → O2 + 4H+ + 4e-

Cathode reaction: 4e- + 4H+ → 2H2

Total reaction: 2H2O → 2H2 + O2

Production costs


0.0

3.7

7.4

11.2

14.9

18.6

22.3

26.0

29.8

33.5

37.2

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2019 2030 2050

$/MMBtu2019$/kg

Renewable H2

Source: BloombergNEF. Note: renewable hydrogen costs based on large projects with optimistic projections for capex.

Renewable hydrogen is currently expensive, but costs are coming downForecast global range of levelized cost of hydrogen production from large projects

Low-cost hydrogen from fossil fuels without CCS

Production costs



Benchmark system capex based on large-scale electrolyzers, 2014 and 2019

The cost of electrolyzers has been falling

$2.0/W

$1.2/W

2014(Western-made)

2019(Western-made)

2019(Chinese-made)

Alkaline

-40%

$2.8/W

$1.4/W

2014(Western-made)

2019(Western-made)

2019(Chinese-made)

Proton Exchange Membrane

-50%

Not made

(yet)

Production costs



Benchmark system capex based on large-scale electrolyzers, 2014 and 2019

Electrolyzers cost up to 83% less in China

$2.0/W

$1.2/W$0.2/W

2014(Western-made)

2019(Western-made)

2019(Chinese-made)

Alkaline

-40%

-83%

$2.8/W

$1.4/W

2014(Western-made)

2019(Western-made)

2019(Chinese-made)

Proton Exchange Membrane

-50%

Not made

(yet)

• Cheaper raw

materials and labor

• Higher factory

utilization rates

• Lower spending on

R&D and marketing

Production costs


BNEF coverage




Source: Paul Maycock, BloombergNEF

A history of solar module pricesPV module experience curve

0.1

1

10

100

1 10 100 1,000 10,000 100,000 1,000,000

historic prices (Maycock) Chinese c-Si module prices (BNEF) Experience curve at 28.8%

2003

1976

19852008

Cumulative capacity (MW)

2015

2019

Per-W price in 2019 dollars

Production costs



A history of wind turbine prices

0

1

2

3

4

2000 2005 2010 2015 2020 2025 2030

Contract signing year

$m/MW (2019 real)

BNEF Vestas Gamesa Siemens SGRE Nordex Acciona

Senvion LBL (U.S.) BNEF WTPI BNEF offshore SGRE offshore

Offshore forecast

Onshore forecast

Production costs



Most competitive source of new bulk generation, 2014

Onshore wind

Offshore wind

Utility PV – fixed axis

Utility PV – tracking

Natural Gas – CCGT

Coal

Not covered

Production costs



Most competitive source of new bulk generation, 1H 2020

Onshore wind

Offshore wind

Utility PV – fixed axis

Utility PV – tracking

Natural Gas – CCGT

Coal

Not covered

Production costs


BNEF coverage




Source: Japan METI, BloombergNEFSource: O. Schmidt, A. Hawkes, A. Gambhir & I. Staffell, BloombergNEF

Learning rate of alkaline electrolyzers Learning rate of PEM fuel cell systems in

Japan

Electrolyzer costs should continue to fall if scale-up occurs

1956

2014

100

1,000

10,000

1 10 100

Cumulative installed capacity (GW)

2015$/kW

18% learning rate

2009

2017

100

1,000

10,000

100,000

1,000 10,000 100,000 1,000,000

Cumulative installations

$/system

20% learning rate

Production costs


Source: BloombergNEF. Note: Assumes large-scale system sizes of 3MW in 2019, 10MW in 2022, 30MW in 2025, 100MW in 2030 and 400MW in 2050.

150128

115

80

200181

163

135

98

0

50

100

150

200

250

201

9

202

2

202

5

203

0

204

0

205

0

2019$/kW

Optimistic

Conservative

How much electrolyzer costs fall will depend on deployment (Chinese alkaline)System capex forecast of Chinese-made alkaline electrolysis projects (large-scale projects)

Production costs


Source: BloombergNEF. Conservative: 46MW of PEM systems commissioned by 2025. Optimistic: 335MW of PEM systems commissioned by 2025.

How much electrolyzer costs fall will depend on deployment (western PEM)System capex forecast of 4MW-scale PEM electrolysis projects

Production costs

1044

824

440

187 95

1,4001,278

1,172

1,008

485

217

0

200

400

600

800

1,000

1,200

1,400

1,600

201

9

202

2

202

5

203

0

204

0

205

0

2019$/kW

Optimistic:

335MW by 2025

Conservative:

46MW by 2025



Utility-scale PV levelized cost, 2015-50 Onshore wind levelized cost, 2015-50

Renewable electricity costs will keep falling

0

50

100

150

200

250

2015 2020 2025 2030 2035 2040 2045 2050

$/MWh (2019 real)

Japan

Germany

China

India

U.S.

0

50

100

150

200

250

2015 2020 2025 2030 2035 2040 2045 2050

$/MWh (2019 real)

Japan

Germany

China

India

U.S.

Production costs


0.0

3.7

7.4

11.2

14.9

18.6

22.3

26.0

29.8

33.5

37.2

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2019 2030 2050

$/MMBtu2019$/kg

Renewable H2

Source: BloombergNEF. Note: renewable hydrogen costs based on large projects with optimistic projections for capex.

Renewable hydrogen is currently expensive, but costs are coming downForecast global range of levelized cost of hydrogen production from large projects

Production costs

Low-cost hydrogen from

fossil fuels without CCS


0.0

3.7

7.4

11.2

14.9

18.6

22.3

26.0

29.8

33.5

37.2

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2019 2030 2050

$/MMBtu2019$/kg

Renewable H2

Source: BloombergNEF. Note: renewable hydrogen costs based on large projects with optimistic projections for capex. Dashed boxes are for illustration only.

Green H2 costs could fall even faster with larger electrolyzer deploymentForecast global range of levelized cost of hydrogen production from large projects



Production costs


0.0

3.7

7.4

11.2

14.9

18.6

22.3

26.0

29.8

33.5

37.2

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2019 2030 2050

$/MMBtu2019$/kg

Renewable H2

Source: BloombergNEF. Note: renewable hydrogen costs based on large projects with optimistic projections for capex. Dashed boxes and line are for illustration only.

Carbon pricing could make hydrogen from fossil fuels without CCS more expensiveForecast global range of levelized cost of hydrogen production from large projects



Production costs


Source: BloombergNEF. Note: renewable hydrogen costs based on large projects with optimistic projections for capex. Natural gas prices range from $1.1-10.3/MMBtu, coal from $30-

116/t. Dashed boxes are for illustration only.

Capturing the carbon would cost more than renewable hydrogen Forecast global range of levelized cost of hydrogen production from large projects

1 2 3 4 5 6

0.0

3.7

7.4

11.2

14.9

18.6

22.3

26.0

29.8

33.5

37.2

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2019 2030 2050

$/MMBtu2019$/kg

Renewable H2

Production costs

Low-carbon H2

(coal with CCS)

Low-carbon

H2 (natural

gas with CCS)


Source: BloombergNEF. Note: renewable hydrogen costs based on large projects with optimistic projections for capex. Dashed boxes are for illustration only.

Renewable hydrogen could even compete with natural gasForecast global range of levelized cost of hydrogen production from large projects

0.0

3.7

7.4

11.2

14.9

18.6

22.3

26.0

29.8

33.5

37.2

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2019 2030 2050

$/MMBtu2019$/kg

Renewable H2

Global natural gas price range

$12/MMBtu

$2/MMBtu

Production costs


Source: BloombergNEF. Note: LCOH assuming our optimistic projection for alkaline electrolyzer costs. Costs would be 6% higher in 2030 and 18% higher in 2050 if the conservative

projection for electrolyzer costs is used instead.

Renewable hydrogen could be produced for $0.8 to $1.6/kg in most parts of the world before 2050Levelized cost of hydrogen production from renewables, 2050 ($/kg)

0.84

0.98

0.79

0.92

0.76

1.60

1.64

1.17

0.76

1.15

0.99

1.150.73

0.84

Production costs


How are we doing on scale-up?



BNEF, March 2020: the signs that H2 is scaling up are not yet there

450

0 100 200 300 400 500

Investment required by 2030

billion USD


Hydrogen roadmaps keep comingJune 2020: Germany

Source: Bloomberg


Hydrogen roadmaps keep comingJuly 2020: European Union

Source: Bloomberg


Hydrogen roadmaps keep comingSeptember 2020: France

Source: Bloomberg


Hydrogen roadmaps keep comingOctober 2020: Spain

Source: Bloomberg


Hydrogen roadmaps keep comingOctober 2020: Portugal

Source: Bloomberg


Source: World Energy Council, BloombergNEF

National hydrogen strategies as of November 6, 2020

10 Available

12 In preparation

16 Support for pilot and demonstration projects

16 Initial policy discussions

5 No activity

104 Not assessed


Source: BloombergNEF. Note: this map is only for illustration purpose and only shows national targets.

Countries with carbon neutrality targets as of November 2, 2020

8 Legislated

16 Proposed or announced legislation

64 In discussions

None



BNEF, November 2020: signs that hydrogen is scaling up have emerged

500

450

0 100 200 300 400 500

Investment available

Investment required by2030

billion USD


Source: BloombergNEF. Note: Portugal and Spain’s targets are undergoing consultation. Lowest value used when target expressed as range. Gap to target as share

of EU’s goal of 40 gigawatts of renewable electrolyzers by 2030. 2019 data used for GDP and renewables capacity.

EU member state electrolyzer deployment targets for 2030

34%

25%

13%

8%

17%

16%

13%

9%

10%

4%

6%

8% 5%

62%

58%

51%

Share of EU renewables capacity

Share of EU GDP

Share of gap to EU hydrogen target

Germany

France

Spain

Netherlands

Portugal




EU not on track to meet 40GW electrolyzer goal by 2030

34%

25%

13%

8%

17%

16%

13%

9%

10%

4%

6%

8% 5%

62%

58%

51%


Share of EU GDP


Germany

France

Spain

Netherlands

Portugal


Source: BloombergNEF New Energy Outlook 2020

If we scale up production, green hydrogen demand could skyrocketHydrogen demand in the NEO Climate Scenario – Clean Electricity and Green Hydrogen Pathway

0

100

200

300

400

500

600

700

800

2015 2020 2025 2030 2035 2040 2045 2050

Mt

Industry Power Transport Buildings

Steel

Cement

Other Industry

Petrochemicals

Power

Heavy trucks

Cars

Light trucks and busesShippingRail

ResidentialCommercial


Source: BloomergNEF

Event Effect

1) Net-zero climate targets are legislated Makes it clear that the hard-to-abate sectors will need to decarbonize

2) Standards governing hydrogen use are

harmonized and regulatory barriers removed

Clears or minimizes obstructions to hydrogen projects

3) Targets with investment mechanisms are

introduced

Provides a revenue stream for producers, increases competition, builds capacity

and experience, and gives equipment manufacturers confidence to invest in plant

4) Stringent heavy transport emissions standards

are set

Provides an incentive for manufactures to produce, and users to buy, fuel cell trucks

and ammonia-powered ships

5) Mandates and markets for low-emission

products are formed

Provides an incentive for manufacturers to produce low-emission goods (e.g. steel,

cement, fertilizers, plastics) that will often require the use of hydrogen

6) Industrial decarbonization policies and

incentives are put in place

Helps to coordinate infrastructure investment and scale efficient use of hydrogen.

Provides incentives for hydrogen use

7) Hydrogen-ready equipment becomes

commonplace

Enables and reduces the cost of fuel switching to hydrogen

Seven signposts of scale-up


The European Union could set the rules of the game for decades to come

Source: Bloomberg


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mailto:[email protected]

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