Global crunch in gas supplies and soaring gas prices boost ‘green’ hydrogen and make 'blue' hydrogen production far more expensive than its cleaner green alternative telegraph.co.uk/business/2021/…
Hydrogen does not generate CO2 when burned, so it can replace fossil fuels in a range of uses such as heavy machinery and even home heating. The 'green' hydrogen is also produced without generating CO2, unlike 'blue' hydrogen, made from natural gas.
Blue hydrogen (from fossil fuels, with carbon capture) is cheaper than green hydrogen (from renewables) and, until recently, the crossover point was projected at the end of this decade. 
But, after gas soaring prices, green hydrogen is now the cheapest to produce, new research has suggested. According to ICIS (a market intelligence group), making hydrogen from renewables now in Britain costs almost 1/5 less than using power produced by natural gas.
The UK Govt has put hydrogen at the heart of its plan for a “green industrial revolution”. Producing it cleanly is a major obstacle to wider use, given the high costs involved. Globally, blue hydrogen typically costs about $1-$2 a kg, compared with $3-$8 a kg for green hydrogen.
Almost all of the hydrogen produced in the UK comes from natural gas, a huge source of emissions, and hence require carbon capture. But soaring natural gas prices have changed the equation, at least for the time being.
A global crunch in gas supplies means that gas prices in Britain are now trading at about 180p to 200p per therm, up from about 30p per therm last summer. ICIS said the price of blue hydrogen jumped from £1.43 per kg on April 1 to £4.16 per kg on November 8.
Too little green hydrogen is produced and traded in the UK for there to be an observable market price. However, ICIS estimates that £45 per MWh is a typical price paid by companies that buy electricity through contracts directly with offshore wind farms or other renewable sites.
For green hydrogen producers, this would imply a price for green hydrogen of £3.39/kg - 18.5% lower than that produced from natural gas. Green hydrogen is likely to have become cheaper in September when natural gas climbed above £52 MWh.
It is not clear for how long gas prices will remain as high as they are now. Prices climbed 7% on Thursday to 193p per therm, having hovered around that level in recent days, after the Belarusian president warned he could shut off gas flows to Europe.
Traders are waiting to see whether Russia will send new supplies, but many analysts expect prices to remain high throughout the winter until extra gas comes online around the world. Even then, rising carbon costs on fossil fuels could keep green hydrogen more competitive.
According to ICIS, “Green hydrogen prices are expected to decline further as technology prices fall and additional wind capacity comes online.”
Aim-listed ITM Power, which makes electrolysers for green hydrogen, bought land for a second UK factory set to employ about 300 people. It will spend up to £55m for a factory in Tinsley, Sheffield, producing 1.5 gigawatts of electrolysers, to be up and running by the end of 2023.
It also plans to work with Sheffield University on setting up a new hydrogen research centre at the university.
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