• Ireland could deliver the cheapest green hydrogen in Europe by 2030
• Production capacity likely to far exceed domestic demand
• Political support and hydrogen strategy needed
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The European Commission believes that hydrogen is “expected to play an important role in decarbonising industry and heavy-duty transport in Europe and globally”. In 2020, the Commission adopted a hydrogen strategy for a climate-neutral Europe. This contains “a vision for the creation of a European hydrogen ecosystem […] as well as for the development of international standards and markets”. Hydrogen is also a mainstay of the “REPowerEU” plan, which was put forward in response to the stresses and disruptions in the global energy market caused by Russia’s war of aggression in Ukraine. The REPowerEU plan aims to both reduce dependency on fossil fuels from Russia and accelerate ecological change.
Against the background of the change from fossil fuels to renewable energies, numerous companies also see hydrogen as the technology of the future. For example, NEL ASA from Norway, the Swedish Powercell Sweden, Ceres Power and ITM Power from Great Britain, the German company SFC Energy, but also companies from overseas, such as the US company Plug Power or Ballard Power from Canada, rely on hydrogen technology .
A country that researchers say is “not yet an attractive option for hydrogen developers” could also become increasingly interesting for these companies in the coming years.
Cheapest hydrogen by 2030
According to a study, one EU country could make a significant contribution to Europe’s transition to net-zero emissions with the help of green hydrogen: Ireland. According to specialist energy market analysis firm Aurora Energy Research, green hydrogen represents a major opportunity for the island nation – it could play a key role in decarbonization across the economy. Thanks to favorable production economics, Ireland’s green hydrogen industry could compete with contemporaries across Europe, according to Aurora Energy Research.
As the analytics company reports, Ireland could deliver the cheapest green hydrogen in Europe by 2030. A model from Aurora shows that under optimal conditions, production in Ireland would lead to leveled costs of €3.50/kgH2 in 2030, which would be eight percent below the production costs in Spain and a full 35 percent below the production costs in Germany.
Ireland’s major competitive advantage comes from its high wind speeds – particularly on the west and north west coasts – compared to other European countries. According to a study by the German-Irish Chamber of Industry and Commerce from 2022, the electricity grid in these areas is not as well developed as in other parts of the country and so hydrogen production is seen by wind farm developers as a means “to support the development of projects in to justify these areas”.
supply and demand
According to Aurora Energy Research, the Irish government is aiming to install two gigawatts of offshore wind power connected to electrolysers by 2030. This would allow Ireland to produce up to 138 kilotons of green hydrogen annually. In addition, according to the analysis company, developers could also produce green hydrogen from excess renewable electricity that would otherwise be curtailed.
Ireland’s target green hydrogen production capacity far exceeds the analysis firm’s forecasts for domestic demand, according to Aurora. According to Aurora’s base-case forecast, Irish hydrogen demand will increase from 11 kilotons this year to 33 kilotons in 2030, with the industrial sector and transport likely to account for the largest share of consumption.
Since production would thus significantly exceed demand in Ireland, the green hydrogen could also be exported. Other countries could even import it cheaper than they could produce it themselves. Aurora explains that, according to its own models, the optimal leveled costs for importing green hydrogen from Cork to Germany in 2030 would be 13 percent below the optimal domestic production costs in Germany.
Political support and hydrogen strategy needed
Still, Aurora Energy Research believes robust policy support is needed to unlock the potential of green hydrogen in Ireland. According to the analytics firm, the optimal cost of producing green hydrogen in Ireland in 2030 would be €89/MWh(th), 82 percent above Aurora’s forecast gas price for 2030. Failure to take the necessary steps to reduce these costs could prevent a market from developing, Aurora says. One measure that could incentivize production, according to the analysis firm, is the “introduction of government-backed hydrogen purchase contracts that would pay for the cost premium.” In addition, “an investment relief for investments in electrolysers could further reduce the costs for recovery per kilogram of hydrogen”.
Marlon Dey, research director for the UK and Ireland at Aurora Energy Research, is quoted in a statement by the analyst firm as saying: “Ireland has the potential to become a green hydrogen power plant: its abundance of high wind speeds represents a key competitive advantage, but one Significant financial support will be critical to boosting the industry, either by aligning hydrogen costs with natural gas prices or by paying the cost difference directly to consumers.”
Nick Byrne, product manager for Ireland research at Aurora Energy Research, also believes that a good hydrogen strategy is needed to make Ireland the cheapest producer of green hydrogen in Europe by 2030: “Despite favorable production economics, Ireland is not yet an attractive option for hydrogen developers. The Aurora’s latest Hydrogen Market Attractiveness report ranks the Republic of Ireland 14th out of the 15 EU countries considered, largely due to the lack of a national hydrogen strategy, but this is set to change in the spring, potentially propelling Ireland to the other end of the rankings , but only if the strategy considers all aspects of the market – political support for supply, demand and infrastructure is crucial.”
It remains to be seen what Ireland’s hydrogen strategy will look like when it is released and whether it can indeed make Ireland the cheapest producer of green hydrogen in the years to come.
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