BloombergNEF said in a new report that it expects clean hydrogen supply to increase 30-fold to 16.4 million tonnes (MT) per year by 2030, driven by supportive policies and a maturing project pipeline. However, it claimed that governments around the world will still miss their targets, and most projects will be suspended or postponed.
“The vast majority of projects announced by 2030 do not currently have the necessary conditions in place to, in our view, make them successful and realize them. [final investment decisions],” shared Adithya Bhashyam, lead author of the report pv magazine. “The majority of electrolysis projects in our forecast, 60%, are still in the early stages of planning; they haven’t done detailed technical studies yet and so on. They really depend on the implementation of the policy to move forward.”
In its bottom-up analysis, BloombergNEF said it expects only 30% of the 1,600 projects announced so far will actually come to fruition by 2030. It claimed that the remaining 70% will be postponed or canceled mainly due to low demand for hydrogen.
The announced projects would produce 64.6 tons. According to BloombergNEF’s ‘Hydrogen Supply Outlook’ report, the 477 projects likely to proceed would produce 16.4 tonnes. The current demand for gray hydrogen is 95 tons.
Image: BNEF
Green hydrogen projects are lagging behind the most.
“Electrolyzer projects will be significantly below the government’s targets for electrolysis deployment,” said Bhashyam. “Government targets for the use of electrolysis amount to 114 GW at the national level. If you add the EU target of domestic production of 10 MT of hydrogen, that means another 120 GW. So on electrolysis capacity, we say that they, including the EU, will miss their targets by more than half. There is a huge gap between ambitions and reality.”
BloombergNEF said it expects electrolysis capacity to be located mainly in China, with 37% of global capacity, followed by Europe with 27%. However, the installed electrolysis capacity will not meet global promises, mainly due to the low demand for green hydrogen from the global economy. That said, electrolyzer production capacity is well in line with green hydrogen targets.
“The stack assembly capacity for electrolyzers announced by developers worldwide could reach 54 GW by the end of 2024, rising to more than 70 GW by the end of 2025. Most of these suppliers, especially in western markets, cannot live up to this nameplate. capacity because they don’t have the upstream supply chain,” said Bhashyam. “But even if you add a huge discount to the currently available production capacity, we are in a situation of oversupply.”
Green, blue, gray
BloombergNEF said green hydrogen production should reach 9.6 tons per year by 2030, while blue hydrogen would reach 6.8 tons per year. The global targets for blue hydrogen are less ambitious, but these projects are currently more advanced than for green hydrogen production.
“About 95 GW of electrolyzers could be operational by the end of 2030, almost ten times the capacity that is already beyond the final investment decision today,” BNEF said. “About 40% of this 95 GW is over [final investment decision] or in advanced planning, compared to 60% for all low-carbon projects [hydrogen] supply, showing the lower maturity of electrolysis projects compared to blue [hydrogen].”
The report states that most of the forecast electrolyser capacity (~58 GW) is determined by announced policies and is therefore still subject to uncertainty about policy implementation.
The United States will likely lead the blue hydrogen market. The world’s top economy should become the largest producer of low-carbon hydrogen by 2030, accounting for almost 37% of global supply, most of it blue. The US market is expected to lag behind Europe and China until 2027, but will overcome both regions in 2028.
Bhashyam said Germany is increasingly reluctant to adopt blue hydrogen. Europe’s largest economy coordinates its energy policy with future exporters such as Australia and Canada.
“Blue hydrogen projects are quite advanced, they are close to an FID and have done all the required technical studies,” says Bhashyam.
He added that not all low-carbon hydrogen would replace gray hydrogen.
“There are new applications of low-carbon hydrogen, for example as a fuel for ships or to make steel,” he said.
The report states that governments are likely to miss their collective hydrogen demand targets by almost two-thirds by almost two-thirds due to insufficient policy support. China, Europe and the United States could account for more than 80% of low-carbon hydrogen. Latin America and Australia are expected to play a minor role in the global low-carbon hydrogen market until 2030.
“Export markets such as Latin America do not have strong policies for local hydrogen use. Now they have proposed a huge pipeline of projects focused on exports, but we don’t see enough demand from importers for the majority of these projects to go ahead in 2030,” said Bhashyam, adding that markets like Canada are in a better position. due to subsidies for export projects.
Main risks
BloombergNEF said it sees two main uncertainties: the deployment of hydrogen in China and the eventual revision of announced policies, mainly due to the upcoming elections.
“BNEF’s outlook takes into account policy delays, but major changes in announced programmes, such as a US realignment [Inflation Reduction Act] tax credits following the November presidential election would impact this forecast,” the company said. “New policies or advanced projects that do not use FID could also change BNEF’s prospects.”
Bhashyam noted that the upcoming elections in Europe could also affect green hydrogen projects, but to a lesser extent.
“The European commitment is, in our opinion, quite strong because of the announced policies that Europe has proposed at EU level, but also at Member State level. In electrolysis, many of our forecasts in Europe are based on the fact that announced auctions for hydrogen production continue to take place,” said Bhashyam, adding that changes to these auctions could slow the pace of green hydrogen adoption in Europe change.
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