Hydrogen: Production in the EU is cheaper than imports by ship

According to calculations by the Institute of Energy Economics, current hydrogen production costs in Germany are around EUR 240/MWh and could fall to around EUR 200/MWh by 2030. Importing green hydrogen via pipeline from Europe or North Africa could be cheaper than domestic production in the medium term (approx. EUR 150-170/MWh). Shipping imports, on the other hand, could be significantly more expensive (approx. EUR 250-300/MWh) due to losses during conversion and transport. Methanol and other derivatives could be transported more cheaply due to their high energy density, making production in other regions of the world economically attractive.

This is shown by the brief analysis “Global Production and Delivery Costs of Green Hydrogen” by the Institute of Energy Economics at the University of Cologne (EWI). The analysis is based on the update of the EWI Global PtX Cost Tool, which was published in June. It enables the analysis of production and transport costs for green hydrogen and various derivatives such as ammonia and methanol worldwide. The research was supported by the “Förderinitiative Wasserstoff” of the Gesellschaft zur Förderung des Energiewirtschaftlichen Instituts an der Universität zu Köln e.V. and the Horizon 2020 research project “sMArt Green Ports as Integrated Efficient multimodal hubs” (MAGPIE, ID: 101036594).

Hydrogen from Germany more expensive in the short term than previously assumed

The production costs for green hydrogen are currently significantly higher than previously assumed. This is mainly due to high investment costs for electrolyzers. This is also shown by the update of the EWI Global PtX Cost Tool: With electrolysis costs of approx. EUR 2,400/kW, production costs in Germany currently stand at EUR 244/MWh (approx. EUR 7.3/kg). By 2050, costs could fall to between EUR 136 and EUR 96/MWh. “However, we only see such a cost reduction if there are significant learning and economies of scale effects in the investment costs of electrolyzers,” says Dr.-Ing. Ann-Kathrin Klaas, who carried out the tool update together with David Wohlleben, Tobias Leibfritz, and Michael Moritz.

The EU plans to import around half of its hydrogen demand by 2030. In its National Hydrogen Strategy, Germany assumes an import share of 50-70 percent in 2030. In Germany, production costs could be around EUR 200/MWh in 2030, according to calculations using the updated EWI Global PtX Cost Tool. Countries in Europe and North Africa with pipeline connections achieve lower import costs of around EUR 150/MWh thanks to good potential for renewable energies. In the case of shipping transport, efficiency losses during the conversion process and transport result in significantly higher costs of more than EUR 200/MWh, making maritime imports significantly more expensive than production in Europe in this scenario.

Importing methanol by ship could be cheaper than EU production

Importing hydrogen by ship involves high conversion and transport losses. The situation is different for hydrogen derivatives such as methanol, which are directly used in Germany. The cost of importing green methanol to Germany by ship could be less than EUR 400/MWh in 2030, compared to EUR 480/MWh for domestic production. Favorable import countries include China, Kenya, Morocco, Mexico, and Saudi Arabia. “The high energy density of the derivatives is a particular advantage for ship transport,” says Klaas.

The EWI Global PtX Cost Tool analyzes the production of hydrogen and hydrogen derivatives in plants with integrated renewable electricity generation. The tool enables the analysis of production and transport costs for hydrogen and its derivatives ammonia, methane, methanol, and Fischer-Tropsch fuels. Transport is via pipeline (new or repurposed) or ship (liquefied, with LOHC, or as a derivative). The tool distinguishes between two scenarios (baseline, optimistic) and two delivery profiles (volatile, baseload). For the update, important input parameters such as the investment costs of renewable energy plants and electrolyzers as well as the weighted average cost of capital (WACC) were updated. Furthermore, battery storage was integrated when using PV energy for hydrogen production.