Here’s Why Hydrogen Investments Could Be the Next Solar

Over the last 10 ten years, the underlying cost of electricity to produce hydrogen has fallen so fast that making hydrogen from wind or solar is now starting to make financial sense. In this Fool Live segment from “The High Energy Show,” recorded on Feb. 15, Motley Fool contributors Travis Hoium and Jason Hall examine a key chart to consider the future market for hydrogen energy.

Travis Hoium: These are some slides from Bloom Energy. Is this showing up right?

Jason Hall: Yeah.

Travis Hoium: This is their cost per kilowatt hour since 2015. Now, this chart is from 2020, so I’d like for them to do these presentations a little bit more often, but you can see that the cost per kilowatt hours coming down really rapidly. This is analogous to what we have seen in wind and solar and that was the driver of the growth in wind and solar over the last decade. We’re seeing similar trends in a few. We’ll talk a little bit about electrolysis in green hydrogen, but when you combine the cost reductions in turning electricity into hydrogen, along with the cost reductions in producing electricity from clean sources, this becomes suddenly really compelling.

Jason Hall: This is the answer to that question I posed at the beginning. It’s how do you get a more energy dense form? Why take green energy, electricity, and turn it into hydrogen. It’s cheap enough now where you can meet the applications that electricity from a solar powered grid doesn’t meet. When the wind is not blowing, when the sun’s not shining and moving vehicles that need a large amount of energy on the vehicle where other storage mediums don’t meet up.

Travis Hoium: It needs those low-cost sources of energy to make any financial sense. Because if you think about oil or natural gas, those are your stored energy sources right there. If you’re running a power plant, why would I even think about running a power plant on hydrogen, which will be a fuel-cell, if the underlying cost of hydrogen is more expensive than natural gas, it would make no sense. What has changed over the last ten years is that the underlying cost of electricity to produce hydrogen has fallen so fast that now we’re starting to get to the point where making hydrogen from wind or solar is starting to make financial sense. That has always been the way that I have written about renewable energy. It’s clean, that’s great, but the reason that it will win long term is because it is the lowest cost form of energy.

These are the charts that are showing why I’m excited about this now, outlandish numbers. Here’s your two-trillion-dollar market. These are really, really big numbers, but they show the scale of what we’re talking about here. This is from Bloom Energy. Bloom Energy is looking a little bit more or less at things like forklifts and more at power plants and powering huge ships, and so that’s what they’re looking at. The C&I business, portion of industrial is basically the market that they’re in today, and they did almost a billion dollars in revenue last year.