Seven companies, including developer ACWA Power and Spanish utility Iberdrola, have formed a joint initiative to scale up production of “green” hydrogen in the next six years and bring down costs, they said on Tuesday.
“Green” hydrogen is a zero-carbon fuel made by electrolysis, using renewable power from wind and solar to split water into hydrogen and oxygen.
It is increasingly being touted as a way to decarbonise emissions-intensive heavy industry and transport sectors, but currently costs of production are too high to be competitive with other fuels.
The so-called Green Hydrogen Catapult initiative also includes Italian gas group Snam, renewable energy investor CWP Renewables, low-carbon technology group Envision, renewable energy developer Ørsted, and fertiliser company Yara.
It aims to deploy 25 gigawatts (GW) of renewables-based hydrogen production to 2026, and to halve the current cost of the fuel to below $2 per kg.
Its goal will require investment of around $110 billion – to be raised from a mix of debt and equity providers, with some public co-investment – and deliver more than 120,000 jobs, it said.
Industry experts say a $2/kg price will make green hydrogen more competitive with other fuels and encourage more large-scale projects.
“From an industry perspective, we see no technical barriers to achieving this, so it’s time to get on with the virtuous cycle of cost reduction through scale up,” said Paddy Padmanathan, chief executive of ACWA Power.