Green hydrogen is emerging as a crucial solution for decarbonizing industries that are difficult to electrify. Despite its clear environmental advantages, the high production cost—referred to as the Levelized Cost of Hydrogen (LCOH)—has hindered both investment and demand. However, ABI Research, a global technology intelligence firm, forecasts that by 2030, global LCOHs will become cost-competitive, and by 2040, they will be cheaper than polluting alternatives. This cost reduction is expected to drive wider industrial adoption of green hydrogen.
“With rapid reductions in production CAPEX, mainly driven by increased electrolyzer efficiencies and lower costs, expected by 2027, and the achievement of significant economies of scale across facilities predicted by 2030, global green hydrogen production costs are forecast to drop from an average of US$6-7/kg to approximately US$2.5/kg by the end of the decade. Additionally, by 2040, we expect LCOHs to have reached US$1.80/kg, primarily driven by falling prices for renewable energy. By 2050, green LCOHs will reach around US$1/kg as the market matures,” explains Daniel Burge, Research Analyst at ABI Research.
Electrolyzer producers, including ITM Power, Plug Power, Siemens Energy, LONGi, Peric, Thyssenkrupp, and Green Hydrogen Systems, are driving a significant proportion of the CAPEX decline. Supporting technology vendors, such as Danfoss, Schneider Electric, and SunGreen H2, will play a key role in reducing OPEX costs. As for green hydrogen producers, Linde, Shell, Adani Energy, Sinopec, Equinor, and ENI will be vendors to watch as plants reach maturity.
Heavy industries’ adoption of green hydrogen will be fundamental to meeting sustainability commitments and net zero targets at the company, national, and regional levels. For aviation, steel, shipping, chemical, and petrochemical industries under pressure to decarbonize, cost is crucial in shaping demand for H2. “The success of projects depends largely on how accurately these costs can be predicted. Subsequently, heavy industry vendors must be keenly aware of when green LCOHs will be reached, and where—and at what time—demand in specific markets will develop,” Burge concludes.
