IRENA | LOW-COST FINANCE FOR THE ENERGY TRANSITION

This report indicates that to achieve the 1.5°C climate goal of the Paris Agreement, the overall share of renewable energy in the primary energy mix will need to rise to as much as 75%, requiring an annual investment of over USD 4.4 trillion. To enable an energy system aligned with the 1.5°C target, investment in energy transition technologies needs to scale up considerably, complemented by a simultaneous redirection of investment away from fossil fuels. 

The global energy transition has reached a critical juncture, at which the deployment of technologies such as green hydrogen, energy storage and offshore wind need to be scaled up rapidly; yet rising interest rates are increasing the cost of capital for project financing, highlighting the profound importance of low-cost finance to the success of the transition.

Interest in renewable hydrogen as an energy carrier and storage medium has grown since the cost of renewable electricity has fallen.
Having said that, inorder for the GreenHydrogen (gH2) cost to reach somewhere near to the $2/kg benchmark by 2030, Bulk of total cost reduction is still expected from renewable electricity prices & from Electrolyzer cost (policies as well to help accelerate the energy transition (e.g. Inflation Reduction Act & REpowerEU))  :

Electrolyzer cost : 
Between 2005 & 2020, Alkaline Electrolyzer has dropped 61% & PEM Electrolyzer dropped 68% in cost. (IRENA analysis)
With manufacturing scale-up & R&D efforts in improving performance/material selection/process efficiency, electrolyzer costs is expected to drop further, Digitization of OEM manufacturing process and models has a key role to play to improve efficiency & rapid scaleup.
 
To achieve low-cost green hydrogen, cost reductions in electrolysers must go hand-in-hand with low electricity costs.
Recently there is considerable increase in the PowerPurchaseAgreement (PPA) price in many of the countries in europe but demand seems better since companies & industries looks to achieve their decarbonization targets to reduce scope-2 emissions.

In order for the Levelized cost of Hydrogen (#LCOH) to reach the $2/kg gH2 benchmark by 2030 (to be competitive with lowest-cost grey hydrogen), electricity should somewhere fall around 20-25 Eur/MWh and the countries with better LCOE is expected to benefit.

Hydrogen Networks