- Renewable hydrogen imports into the EU from Australia, Chile, and Morocco would be economically attractive in 2030, supporting the bloc’s goal of sourcing half of its hydrogen consumption from imports by 2030, Aurora Energy Research finds.
- Imports of renewable hydrogen from Morocco, transported via ship in liquid form, would be the most competitive supply source compared to domestic hydrogen production by 2030, assuming the end user is in Germany, Aurora’s modelling shows.
- Using a yet-to-be developed cross-border hydrogen pipeline network could reduce costs further—imports from Morocco to Germany via pipeline would cost 20% less than imports via ships in 2030.
- Aurora will present its analysis of the economics of renewable hydrogen imports in a free public webinar on Wednesday, 25 January 2023, at 14:00 GMT / 15:00 CET: register here.
Hydrogen is set to play a major role in the EU’s energy transition. The European Commission’s REPowerEU Plan, which aims to end the bloc’s dependence on Russian fossil fuels and accelerate action to reduce emissions, states that “renewable hydrogen will be key to [replacing] natural gas, coal, and oil in hard-to-decarbonise industries and transport.”1 The plan sets a target of 10 MtH2/year of renewable hydrogen imports by 2030, which would supply half of the EU’s total annual renewable hydrogen consumption. Export availability is set to ramp up in line with import demand—30% of projects currently in development, totalling 31 GW capacity, aim to produce hydrogen for export, Aurora Energy Research’s global electrolyser database shows.2 Importing renewable hydrogen would be economically attractive for the EU, Aurora finds. Imports from Australia, Chile, and Morocco would be priced competitively compared to domestic renewable hydrogen production in 2030, Aurora’s modelling shows, using Germany as a case study.
The levelised cost3 of producing renewable hydrogen at feasible locations in Germany in 2030 ranges between 3.90 and 5.00 EUR/kgH2, Aurora calculates. The range reflects varying solar and onshore wind output across the country, as Aurora considered only hydrogen produced by electrolysers connected directly to renewable assets and isolated from the national electricity network.4 Co-locating an electrolyser with a combination of solar and onshore wind generation results in the lowest production costs.
The EU could feasibly import renewable hydrogen from Australia, Chile, Morocco, and the United Arab Emirates by 2030—all these countries have high renewable power generation potential and existing developer interest in hydrogen export projects. The levelised cost of producing hydrogen at a representative location in each of these countries in 2030 falls below Germany’s production cost range, totaling 3.1 EUR/kgH2 in Australia and Chile, 3.2 EUR/kgH2 in Morocco, and 3.6 EUR/kgH2 in the UAE.
Despite additional transport and conditioning5 costs, imports remain competitive. Importing hydrogen to Germany from Morocco, transported by ship as liquid hydrogen, presents the most competitive option in 2030, costing 4.58 EUR/kgH2.6 Alternative conditioning methods would also be competitive—using liquid organic hydrogen carriers (LOHC) to import hydrogen by ship from Morocco would cost 4.68 EUR/kgH2, while transporting hydrogen as ammonia would cost 4.72 EUR/kg H2, including the cost of re-conditioning the hydrogen into its standard form upon delivery. Imports from Australia and Chile would be competitive only if the hydrogen were transported as ammonia, costing 4.84 EUR/kgH2 and 4.86 EUR/kgH2, respectively. Importing hydrogen from the UAE would not be competitive: the cheapest method—transporting hydrogen as ammonia—would cost 5.36 EUR/kgH2.
Pipelines would provide the cheapest transport option for renewable hydrogen importers in Germany—imports from Morocco via pipeline7 would cost 3.72 EUR/kgH2 in 2030, Aurora’s modelling shows. The EU is not on track to have an operational hydrogen pipeline network that could deliver supplies from Morocco to Germany by 2030. Action to accelerate pipeline development could reduce import costs by at least 20% compared to transporting renewable hydrogen by ship.
The REPowerEU targets require 10 MtH2/year hydrogen production within the bloc by 2030. EU electrolyser capacity would need to total at least 75 GW by 2030 to achieve this target, Aurora calculates. This capacity would not be evenly spread—regions with more favourable geographical conditions for generating renewable power would be more attractive to electrolyser developers, creating the opportunity for intra-EU hydrogen flows. Imports from Spain would be an economically attractive option for German consumers, for example, Aurora finds. The cost of producing hydrogen at a representative location in Spain in 2030 would be 3.10 EUR/kgH2. Imports via pipeline8 would deliver the highest cost savings compared to domestic production, costing 3.46 EUR/kgH2 in 2030.9 The newly-announced extension of the H2Med project to Germany could deliver an operational pipeline network, connecting German consumers to Spanish hydrogen producers by 2030. If pipeline deliveries are not available by 2030, imports via ship would remain economically attractive—liquid hydrogen imports would cost 4.35 EUR/kgH2 in 2030, while LOHC and ammonia imports would cost 4.57 EUR/kgH2 and 4.56 EUR/kgH2, respectively.
Anise Ganbold, Head of Research, Hydrogen, at Aurora Energy Research, commented: “The global momentum behind the hydrogen industry shows no signs of slowing in 2023—export project announcements are coming thick and fast. Our analysis provides a fact check to this and finds that importing hydrogen into Europe even over long distances makes economic sense given the much lower cost of renewable energy in markets such as Morocco and Australia.”
Dilara Caglayan, Senior Associate, at Aurora Energy Research, commented: “Hydrogen is going to be a global commodity. Once the infrastructure is available, pipelines will unleash the cheapest hydrogen import routes to Europe. However, even imports of hydrogen by ship —more expensive than pipelines—will be economically competitive with domestic production.”
- 1 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM:2022:230:FIN
- 2 “in development” refers to projects that have advanced beyond the early planning stage, which Aurora defines as projects lacking key details such as specific locations, technology providers, or target milestone timelines. Projects that aim to produce hydrogen for export account for 83% of the pipeline if the early planning stage is included, totalling 800 GW capacity.
- 3 Cost over full lifetime of electrolyser
- 4 Alternative electrolyser business models involve network, or grid, connections, resulting in hydrogen production from non-renewable sources, unless an electrolyser were connected to a fully decarbonised grid. Aurora does not expect any of the grids considered in this analysis to be fully decarbonised by 2030.
- 5 Hydrogen must be conditioned into a different energy vector to be transported–transporting hydrogen in its standard form requires an economically unfeasible amount of cargo space, due to hydrogen’s low volumetric energy density
- 6 Levelised cost of imports to Wilhelmshaven, Germany
- 7 48” pipeline, includes cost of compressing hydrogen, no reconditioning required
- 8 48” pipeline, includes cost of compressing hydrogen, no reconditioning required
- 9 Levelised cost of imports to Wilhelmshaven, Germany
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From its Oxford academic roots, Aurora Energy Research has grown to become the largest dedicated power market analytics company in Europe, providing data-driven intelligence for strategic decisions in the global energy transformation. We are a diverse team of more than 350 experts with vast energy, financial, and consulting backgrounds, covering power, hydrogen, carbon, and fossil commodities. We are active in Europe, Australia, and the US, working with world-leading organisations to provide comprehensive market intelligence, bespoke analytic and advisory services, and cutting-edge software.