Hydrogen is no longer just the smallest element – it’s now powering a global economic force, with investments soaring. What’s driving this shift?
Hydrogen, one of the most abundant elements in the universe, is at the heart of an unprecedented economic revolution.
Once primarily confined to heavy industries, its applications are undergoing a fundamental shift as new technologies and international regulations expand hydrogen’s role, particularly in producing clean energy.
As the price of renewable electricity continues to fall, the production of green hydrogen is becoming increasingly viable. Hydrogen has now grown into a multi-billion-dollar industry, with global investments surpassing $570 billion, positioning it as a key player in the clean energy transition.
A Three-Layered Cake
“We can divide the hydrogen supply chain into three main sectors,” explains Dr. Tomer Yehoshua, Head of Business Development at Hydrolite. “Production and supply, infrastructure, and end-use and offtake.” Here’s the breakdown:
Production and supply are the backbone of the hydrogen economy, supporting everything from production facilities to transportation systems. “This sector includes production sites, pipelines, storage facilities, all essential for making hydrogen widely accessible,” according to Dr. Yehoshua. He notes that the focus is shifting toward building the necessary infrastructure to support the hydrogen economy’s growth, ensuring it can be scaled further.
Infrastructure is another critical piece of the puzzle. It can be moved via pipelines, trucks, or ships. “The transportation sector ensures that hydrogen produced in specific locations can be delivered to end-users, whether for industrial use or energy production,” Dr. Yehoshua emphasizes. The complexity of hydrogen transportation lies in maintaining its quality and safety during long-distance transfers.
The final stage of the hydrogen economy focuses on end-users, including industries like steel production, transportation, and energy generation. End-users utilize hydrogen for various applications, such as fuel for hydrogen-powered vehicles or replacing coal in industrial processes. This sector is key to reducing carbon emissions across different industries, as hydrogen offers a clean alternative to traditional fossil fuels.
According to Dr. Yehoshua, the production sector currently attracts the most investment within the hydrogen economy. “With the increasing demand for clean energy and the rising number of hydrogen production projects, this part of the industry sees the largest investment and financial returns,” he adds. “As technology advances and green hydrogen production becomes more cost-effective, this sector will continue driving the economic growth of hydrogen.”
How Much Does It Cost?
“To produce a kilogram of green hydrogen through electrolysis, you need between 45 and 55 kWh of green electricity, which must come from green sources like solar or wind,” he explains. Thanks to ongoing reductions in the cost of solar and wind energy, the price of green hydrogen is expected to decline significantly over the coming decade.
According to a recent report by McKinsey, by 2030, the cost of producing green hydrogen could drop to $2.5 per kilogram, making it competitive with grey hydrogen, which is produced using traditional fossil fuels.
At the core of this shift lies AEM technology, which powers Hydrolite’s electrolyzer. “Our electrolyzers are designed to be more affordable and efficient than traditional methods, as they don’t rely on rare metals or expensive materials,” says Dr. Yehoshua. As AEM technology advances, the scalability of hydrogen production is expected to increase, further driving down costs and solidifying hydrogen’s role in the global energy market.
However, it’s not just falling costs driving this shift. Around the world, governments are implementing new regulations and incentives to promote hydrogen as a clean energy source. From tax credits to infrastructure development, these measures are creating a more favorable environment for hydrogen projects.
This is especially evident in regions like Europe, North America, and China, where hydrogen infrastructure is being developed to support the growing demand for this versatile fuel.
In the Forefront of Change
Looking ahead, the future of the hydrogen economy appears bright. “We expect that within a few years, the cost of green hydrogen will match that of grey hydrogen, making it the fuel of the future,” Dr. Yehoshua predicts. As renewable energy continues to evolve and regulatory frameworks become more supportive, hydrogen is poised to play a pivotal role in the world’s energy transition.
Hydrogen’s potential goes beyond being merely a clean fuel – it represents a critical component of a sustainable economic future. With innovative companies like Hydrolite at the forefront, the hydrogen economy is poised to reshape industries, reduce global carbon emissions, and lead the way to a cleaner, more sustainable world.