New green hydrogen production costs are set to be up to 18% cheaper than running existing grey hydrogen production by decade-end, according to BloombergNEF.

Researchers said in a forecast update that this case will apply to five major economies around the world, thanks to economies of scale, supportive policy and cheap renewables supply.

“In Brazil, China, India, Spain and Sweden, green hydrogen from new plants is going to start undercutting grey hydrogen from existing plants by the end of the decade,” says BNEF hydrogen analyst Adithya Bhashyam. “Remarkably, this holds true even for green hydrogen plants built without subsidies.”

The tipping point will be crucial to enabling faster decarbonisation rates in different industries and sectors, Kallanish notes.

Currently, green hydrogen is the most expensive type of hydrogen in 28 countries modelled by BNEF. The global average price for hydrogen produced through electrolysis using renewable power stands at $6.40/kilogram. In comparison, grey hydrogen – produced with natural gas and no abatement – costs $2.13/kg on average to be produced. Meanwhile, the production cost for blue hydrogen – produced with natural gas and carbon capture technology – stands at $3.10/kg.

However, as production costs vary from market to market, the study shows grey hydrogen can cost as little as $0.98/kg to be produced. Green hydrogen, on the other hand, can cost as little as $4.5 and as much as $12/kg. Blue hydrogen costs vary from $1.8 to $4.7/kg.

Bhashyam adds that “using Western-made alkaline systems, green hydrogen beats out blue hydrogen by 2030 in all but a handful of modelled markets.”