Bloomberg updates hydrogen price outlook. Production costs will fall more slowly

The price of green hydrogen in 2050 will be significantly higher than originally expected. This is due to less optimistic expectations for the decline in electrolyzer costs. The Czech Hydrogen Strategy may be outdated because of obsolete estimates of green hydrogen prices.

Bloomberg NEF (BNEF) has revised its forecasts and significantly raised its estimated LCOH (levelized cost of hydrogen) for green hydrogen in 2050. BNEF now estimates that by 2050 the LCOH could fall to between $1.60 and $5.09, depending on the production location—three times higher than its previous forecasts.

BNEF cites the cost of electrolyzers themselves as the main reason for the higher expected LCOH. The hydrogen industry is currently struggling as a result of numerous cancelled projects and low demand for green hydrogen.

Low demand for green hydrogen produced by electrolyzers is reflected in the small number of hydrogen projects with buyers lined up in advance. According to BNEF analysts, the vast majority of European projects to build hydrogen electrolyzers have not secured buyers for the hydrogen they will produce. Globally, the figure is almost 90%.

In some sectors, such as steelmaking, many analysts agree that using green hydrogen will be key to decarbonization. We can already see the first long-term contracts for green hydrogen deliveries to produce steel in these sectors. In other sectors, however—including transport, heat production, energy storage, oil refining and fertilizer production—there is uncertainty over whether green hydrogen is the best and cheapest way to cut emissions.

Michael Barnard, chief strategist at TFIE Strategy, indicates in his analysis that steelmaking will be the only sector to see significant growth in green hydrogen consumption. Barnard expects demand for green hydrogen to stagnate or decline in other sectors.

This uncertainty could lead to decisions on decarbonization using green hydrogen being postponed, or to alternative emissions-reduction methods being prioritized.

Hydrogen for decarbonization in Czechia may be more expensive than the Czech Hydrogen Strategy assumes

The updated Czech Hydrogen Strategy envisages significant hydrogen deployment across many sectors in the Czech Republic. However, the strategy adopts assumptions about hydrogen LCOH from a 2021 study that may already be outdated.

A higher price—up to three times higher than previous estimates, according to BNEF—could lead to lower demand for hydrogen technologies in sectors where alternatives are available, such as transport and heating. This raises the question of what role hydrogen would play in decarbonizing the Czech Republic if its price were higher than the Hydrogen Strategy assumes.