The Danish Energy Agency, located at Carsten Niebuhrs Gade 43 in the heart of Copenhagen, has recently published a significant update to its Technology Catalogue on hydrogen production via electrolysis. This January 2024 revision provides a comprehensive overview of the components that constitute a green hydrogen production plant and presents the latest techno-economic data, reflecting the evolving landscape of hydrogen technology.
Since the data’s previous publication in 2021, the industry has witnessed substantial shifts in expectations for hydrogen production via electrolysis. Notably, the investment cost (CAPEX) estimates for a 100 MW green hydrogen production plant in 2025 have surged by approximately 60% for Alkaline and 25% for PEMEC technologies. Additionally, plant efficiencies have been revised downward by about 10%, leading to increased power consumption costs.
The global installed capacity for electrolysers at the end of 2023 was a mere 1 GW, with roughly a quarter of that within the EU. This figure stands in stark contrast to the ambitious goals set by the European Union in 2020, which aimed for 6 GW of renewable hydrogen electrolysers by 2024 and 40 GW by 2030. The slower-than-anticipated development can be attributed to a variety of factors, including rising plant CAPEX, complex project development, increased capital costs, funding challenges, a scarcity of new renewable energy sources, insufficient long-term offtake agreements, and regulatory delays.
The updated Technology Catalogue delves into the intricate details of plant components and their associated CAPEX breakdown, shedding light on the complexities of establishing a green hydrogen plant. It has become increasingly clear that the multifaceted nature of such plants was not fully appreciated by the broader audience a few years ago.
The electrolyser unit, while central, is just one of many components in a green hydrogen production plant. For instance, the CAPEX of electrolyser stacks accounts for only about 20% of the total CAPEX for a 100 MW alkaline plant in 2025. The balance of the plant, including water treatment, nitrogen supply, cooling systems, control systems, infrastructure, and indirect costs, such as EPC, could represent roughly one third of the overall CAPEX.
The updated chapter also highlights how scaling affects CAPEX, with the majority of cost savings realised once plants reach around 100 MW in power input. Beyond this size, limited cost savings are expected from scaling. The cost and accessibility of main inputs (power) and outputs (hydrogen) are significantly influenced by the size of the hydrogen plant.
Despite the increased CAPEX estimates for 2025, power consumption costs remain a significant component of the total cost, reflecting lowered efficiency expectations. Access to new low-cost renewable power, either sourced behind the meter or from the grid, is crucial for producing cost-competitive green hydrogen. The grid power must fulfil the definition of renewable fuels of non-biological origin (RFNBO), have a large number of low-price hours, or availability of low-cost Power Purchase Agreements (PPAs), and offer competitive tariff designs for large power consumers.
From a power market and cost perspective, Denmark is poised to become an attractive location for large power consumers. With plans for a significant offshore wind buildout and a potential quadrupling of production of onshore renewable energy by 2030 compared to 2021, Denmark’s power production could double, surpassing 90% RE in the grid. This would qualify hydrogen produced from on-grid power as RFNBO and provide access to abundant RE capacity that can be sourced behind the meter. Coupled with modernised tariff designs and relatively low wholesale power prices, Denmark’s market offers a compelling proposition for the green hydrogen industry.
The Danish Energy Agency’s updated Technology Catalogue chapter serves as a crucial resource for stakeholders navigating the complexities of green hydrogen production, offering clarity and direction in an ever-evolving industry. •
