Renewable hydrogen imports could become more economically attractive for the EU than producing the fuel closer to home, a new report from Aurora Energy Research has found.
Imports from Australia, Chile, and Morocco would be priced competitively compared to domestic renewable hydrogen production in 2030, Aurora’s modelling shows, using Germany as a case study.
The European Commission’s REPowerEU Plan, which aims to end the bloc’s dependence on Russian fossil fuels and accelerate action to reduce emissions, states that “renewable hydrogen will be key to [replacing] natural gas, coal, and oil in hard-to-decarbonise industries and transport.” The plan sets a target of ten million tonnes of hydrogen per year of renewable hydrogen imports by 2030, which would supply half of the EU’s total annual renewable hydrogen consumption. Export availability is set to ramp up in line with import demand – 30 per cent of projects currently in development, totalling 31 gigawatts (GW) of capacity, aim to produce hydrogen for export.
The levelised cost of producing renewable hydrogen at feasible locations in Germany in 2030 ranges between 3.90 and 5.00 EUR/kgH2, Aurora calculates. The range reflects varying solar and onshore wind output across the country, as Aurora considered only hydrogen produced by electrolysers connected directly to renewable assets and isolated from the national electricity network. Co-locating an electrolyser with a combination of solar and onshore wind generation results in the lowest production costs.
The EU could feasibly import renewable hydrogen from Australia, Chile, Morocco, and the United Arab Emirates by 2030 – all these countries have high renewable power generation potential and existing developer interest in hydrogen export projects. The levelised cost of producing hydrogen at a representative location in each of these countries in 2030 falls below Germany’s production cost range, totaling 3.1 EUR/kgH2 in Australia and Chile, 3.2 EUR/kgH2 in Morocco, and 3.6 EUR/kgH2 in the UAE.
“The global momentum behind the hydrogen industry shows no signs of slowing in 2023 – export project announcements are coming thick and fast,” said Anise Ganbold, head of research, hydrogen, at Aurora Energy Research. “Our analysis provides a fact check to this and finds that importing hydrogen into Europe even over long distances makes economic sense given the much lower cost of renewable energy in markets such as Morocco and Australia.”
Despite additional transport and conditioning costs, imports remain competitive. Importing hydrogen to Germany from Morocco, transported by ship as liquid hydrogen, presents the most competitive option in 2030, costing 4.58 EUR/kgH2. Alternative conditioning methods would also be competitive – using liquid organic hydrogen carriers (LOHC) to import hydrogen by ship from Morocco would cost 4.68 EUR/kgH2, while transporting hydrogen as ammonia would cost 4.72 EUR/kg H2, including the cost of re-conditioning the hydrogen into its standard form upon delivery. Imports from Australia and Chile would be competitive only if the hydrogen were transported as ammonia, costing 4.84 EUR/kgH2 and 4.86 EUR/kgH2, respectively. Importing hydrogen from the UAE would not be competitive: the cheapest method – transporting hydrogen as ammonia – would cost 5.36 EUR/kgH2.
“Hydrogen is going to be a global commodity. Once the infrastructure is available, pipelines will unleash the cheapest hydrogen import routes to Europe,” said Dilara Caglayan, senior associate at Aurora Energy Research. “However, even imports of hydrogen by ship – more expensive than pipelines- will be economically competitive with domestic production.”