case for green hydrogen
Investment, intervention and the role of green hydrogen in decarbonisation
New analysis from LCP’s Energy Analytics team follows the launch of the Government's hydrogen and net zero strategies and the ambition to build 5GW of low-carbon hydrogen by 2030.
In this report we look at the key role of green hydrogen in the UK’s decarbonisation and the support required to achieve these goals. We explore the investment opportunities associated with varying electrolyser capacity, the need for government intervention and share our views on how the market will develop.
- £13bn of investment could be needed to build 26GW of green hydrogen by 2050, with considerable support needed from government.
- Government support of £9-20/MWh could be needed for future electrolysers, totalling £0.5bn to £1bn per GW over their lifetime.
- Green hydrogen would make up 16% of total hydrogen supply under the Climate Change Committee’s (CCC) Further Ambition scenario.
While early electrolyser projects are forecast to be profitable even at the higher end of build cost, as more electrolysers are built and compete with each other, these opportunities become susceptible to cannibalisation. This makes future projects’ profitability more sensitive to CAPEX assumptions, competition and additional support.