Green hydrogen is a fundamental energy resource to support and accelerate the energy transition, with a national objective already identified: produce 0.7 megatons per year by 2030, dedicating over 3.6 billion euros of funds which it is further enhancing. «The development and adoption of this energy source are determined by various elements, which currently have different levels of maturity», explains Giacomo Chiavari, EY Europe West strategy and transaction energy leader. There is the Government’s commitment with regulatory and financial interventions, and technological evolution and pressure towards the decarbonisation of a growing number of sectors through the ETS is progressing, creating a more onerous carbon tax.
The other factors
«Other factors, such as the availability and cost-effectiveness of the supply of green electricity and access to incentives that enable grid parity and the business model to be adopted (between own, centralized or imported decentralized production), are not still ripe”.
Precisely on this point, Chiavari proposes an alternative reading, which could make green hydrogen a competitive energy source already today.
Accelerate competitiveness
«To have green hydrogen at low cost, the incoming green energy needs to become as cheap as possible. Instead, every time gray hydrogen, produced from gas, becomes more expensive, the price of green energy rises in parallel, only due to an upward dragging effect», explains Chiavari.
«If instead the production of hydrogen could have green energy available at the cost at which it is produced, and not at the value, which is determined by many other dynamics, this would help a lot. Levelized cost of energy (LCOE), i.e. the average revenue per unit of electricity generated needed to recover the costs of building and operating a power plant over an assumed operational and financial life cycle, argues that renewable plants can produce energy profitably at 40.45 euro megawatt hour, but in recent months it has also reached 300, 400 euro, and this undermines the hydrogen mechanism. What would accelerate it is to ensure that those who produce green hydrogen are able to purchase the raw material at cost price, with no mark-up».