6. R enewable Hydrogen Cost Curves In this section, we analyze renewable hydrogen cost curves to assess the relative competitiveness of the three reference scenarios. In general, cost curves are graphs of production costs as a function of total quantities produced. In free-market economies, stakeholders optimize production by minimizing costs associated with each level of production. In order to highlight key cost-competitiveness factors between reference scenarios, production costs in each curve are also represented as a function of renewable electricity, electrolysis, and operating costs.
6.1. Cost Curves in the Hydrogen Independence Scenario EU renewable hydrogen cost curves elucidate the competitiveness of both the Hydrogen Independence scenario and overall EU hydrogen production in the scenarios that include imports. Depending on how much hydrogen can be produced internally at a competitive price, EU production will supply a larger or smaller share of total demand compared to imports. Renewable hydrogen cost curves for the member states that have the potential to become regional exporters67 show significant differences in production costs between EU countries (see Figure 8), ranging from 2.7 to 4.4 USD/kg. Ireland, Cyprus, and Portugal have the most competitive potentials with production costs below 3 USD/kg thanks to wind energy resources with high capacity factors.68 On the other hand, Romania and Hungary have the least competitive potentials due to solar energy with low capacity factors that lead to production costs of over 4 USD/kg.
67 Member states in which production potential exceeds projected internal demand of hydrogen. 68 Wind power typically allows for higher electrolyzer loads thanks to its higher capacity factors. As reported by the International Renewable Energy Agency (IRENA) (2021) Renewable Power Generation Costs in 2020, onshore wind has an average capacity factor of 36%, compared to only 16% for solar. Thus, renewable hydrogen potentials tied to wind energy yield lower electrolysis costs.
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