From £241 to Sub-£100/MWh: The Roadmap to Affordable Green Hydrogen

Green Hydrogen’s Path to Affordability: Key Insights from RenewableUK and Hydrogen UK Report

Green hydrogen has emerged as a vital component in the global transition to cleaner energy systems. However, its deployment has been hindered by high production costs. A new report by RenewableUK and Hydrogen UK, titled “Splitting the Difference – Reducing the Cost of Green Hydrogen to Accelerate Deployment”, seeks to address this challenge. The report details strategies and recommendations aimed at dramatically lowering the cost of green hydrogen production, unlocking its wide-ranging potential across industries.

Cutting Costs: From £241/MWh to Sub-£100/MWh

One of the report’s most significant goals is to reduce the cost of green hydrogen production from £241 per megawatt hour (MWh), as achieved in the UK’s first Hydrogen Allocation Round in 2023, to below £100/MWh. Achieving this milestone could position green hydrogen as an economically viable alternative for decarbonizing sectors such as steel production, shipping, and aviation, as well as offering a sustainable solution for long-duration energy storage.

The report highlights that electricity accounts for around 70% of the total cost of producing green hydrogen. Consequently, reducing electricity costs is pivotal. Measures like incentivizing electrolysis—a process that uses electricity to split water into hydrogen and oxygen—during the cheapest electricity periods could play a critical role in achieving this cost reduction.

Unlocking Economies of Scale

The report stresses the UK’s immense potential to harness renewable energy sources, such as wind and solar, for hydrogen production. By situating hydrogen production facilities directly at renewable energy generation sites, operational efficiency could improve while lowering costs. This approach could leverage surplus electricity from renewable plants, preventing energy waste while driving down production expenses.

To further unlock economies of scale, the report recommends reforms in hydrogen business models. For instance, the government is urged to establish strike prices that reflect the early-stage nature of green hydrogen technology. Additionally, introducing financial incentives could encourage private investment, helping the industry expand infrastructure and facilities at a faster, more sustainable pace.

Building a Hydrogen Transmission Network

Another essential strategy includes the development of a dedicated hydrogen transmission network. Pipelines connecting Scotland with England and Wales could optimize the distribution of green hydrogen, ensuring it reaches areas with the highest demand. Such infrastructure could significantly enhance supply flexibility and reliability, supporting industrial clusters, rural communities, and urban centers alike.

Clare Jackson, CEO of Hydrogen UK, emphasized the importance of this development, stating that the measures outlined in the report mark pivotal steps toward achieving national energy security and clean energy goals.

Recent Advancements in Hydrogen Technology

Recent breakthroughs in hydrogen technology reinforce the feasibility of these recommendations. For example, advancements in electrolyzer efficiency have drastically reduced energy inputs required to produce green hydrogen. Further innovations, such as AI-driven optimization of electrolyzer operation, are showing promise in minimizing waste and reducing costs further. These technological strides are paving the way for hydrogen to play a central role in the decarbonization of industries traditionally reliant on fossil fuels.

Additionally, international research highlights how countries scaling hydrogen production—such as Germany and Japan—are already achieving cost reductions through integrated renewable energy projects. The UK could follow a similar trajectory by implementing the recommendations outlined in the report.

Affordable Green Hydrogen Could Solve Energy’s Biggest Challenges

Green hydrogen’s versatility makes it an invaluable tool for addressing the most pressing energy challenges. It offers a solution for decarbonizing sectors that are otherwise difficult to electrify, such as heavy industry and long-haul transportation. Steel production, for instance, currently depends on carbon-intensive methods. Integrating hydrogen could reduce emissions significantly without compromising production efficiency.

Similarly, hydrogen’s capability to store excess renewable electricity makes it ideal for addressing the intermittency of wind and solar energy. By storing energy when production exceeds demand and releasing it when needed, green hydrogen could ensure a steady energy supply, even during low-generation periods.

Critically, these applications extend beyond cleaner energy; they contribute to job creation and economic growth. According to RenewableUK, a scaled-up hydrogen industry could create thousands of new jobs and generate billions of pounds in economic activity within the next decade.

A Practical Path Forward

While ambitious, the goals outlined in RenewableUK and Hydrogen UK’s report reflect a clear roadmap toward sustainable energy independence. With the right mix of policy innovation, technological advancement, and private investment, green hydrogen can transform the energy landscape, powering a cleaner, more resilient future. Whether through industrial decarbonization or grid flexibility, its applications are poised to redefine how we think about energy in the years to come.