Baku: Azerbaijan’s levelized cost of hydrogen (LCOH) for both green and blue hydrogen production is projected to be competitive with the average cost of green hydrogen produced in Europe.
According to Azeri-Press News Agency, Azerbaijan’s National Strategic Hydrogen Outlook, published by the European Bank for Reconstruction and Development (EBRD) in collaboration with the Ministry of Energy of Azerbaijan and Worley Consulting Group Limited, outlines these projections.
The report presents hydrogen production cost estimates for projects expected to commence in the early 2030s, taking into account Azerbaijan’s renewable energy potential and international gas price forecasts. The report indicates that if carbon capture and storage (CCS) technology is effectively implemented, blue hydrogen could emerge as the lowest-cost production option among hydrogen types.
Azerbaijan’s potential to produce green hydrogen at competitive prices for the European market is emphasized in the report, indicating promising export opportunities. The cost of green hydrogen production could be further reduced by leveraging Chinese-manufactured electrolysers.
The report provides estimated LCOH values for both blue and green hydrogen produced in Azerbaijan compared to averages in the EU. For blue hydrogen in Azerbaijan, the LCOH is estimated at 2.87 euros per kilogram, whereas medium-scale green hydrogen production is estimated at 4.02 euros per kilogram, and optimized-scale production at 3.6 euros per kilogram. In contrast, the average LCOH for green hydrogen production in Europe stands at 5.05 euros per kilogram.
However, transporting hydrogen from Azerbaijan to the EU will inevitably increase costs. A new pipeline is anticipated to be necessary for this purpose, potentially adding approximately 0.8 pounds per kilogram to the overall cost.
Currently, Azerbaijan produces grey hydrogen, derived from natural gas and employed in oil refining. While grey hydrogen is the least expensive form of hydrogen production, it is associated with high carbon emissions. Blue hydrogen, in contrast, is also produced from natural gas but incorporates CCS technology to mitigate environmental impact by capturing and storing carbon emissions. Green hydrogen, the cleanest form, is produced by using renewable energy sources to split water molecules.