Green Hydrogen Costs of Production to Drop to US$2.5/kg by 2030, and US$1.80 by 2040, Clearing the Way for Heavy Industry Decarbonization

Green hydrogen is emerging as an essential commodity for decarbonizing hard-to-abate industries. Yet, despite its clear sustainability benefits, the high production cost—known as the Levelized Cost of Hydrogen (LCOH)—has, to date, limited both investment in and demand for green hydrogen. However, ABI Research, a global technology intelligence firm, predicts that global LCOHs will reach a cost-competitive level by 2030 and undercut polluting alternatives by 2040, paving the way for industrial adoption.

“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.

These findings are from ABI Research’s The Economic Viability of Green Hydrogen for Industry and Enterprises report. This report is part of the company’s Smart Energy for Enterprises & Industries research service, which includes research, data, and ABI Insights.