• Producing green hydrogen in Ireland could cost as little as €3.50/kgH2 in 2030, delivering the cheapest green hydrogen in Europe, new analysis by Aurora Energy Research finds.
• Policy ambitions and forecast curtailment indicate that Irish green hydrogen production could surpass projected domestic demand by more than 100kt/year(1) by 2030, enabling the growth of an export industry, Aurora’s modelling shows.
• More robust policy support is needed to realise Ireland’s green hydrogen potential: unsubsidised green hydrogen would cost at least €40/MWh(th), or 82%, more than natural gas in 2030, Aurora calculates.
• Aurora will present its analysis of the role of green hydrogen in the Irish power market in a free public webinar on Wednesday, 8 March 2023, at 10:30 GMT: register here.

Green hydrogen presents an important opportunity for Ireland. As a zero-emission alternative to fossil fuel usage across the economy, it could play a major role in decarbonisation. And thanks to favourable production economics, an Irish green hydrogen industry could compete with contemporaries across Europe, fuelling not only Ireland’s transition to Net Zero, but that of Europe as a whole.

Ireland could produce the cheapest green hydrogen in Europe by 2030, new analysis by Aurora Energy Research finds. Production under optimal conditions(2) would result in a levelised cost(3) of €3.50/kgH2 (real 2021) in 2030, 8% lower than optimal production costs in Spain and 35% lower than in Germany, Aurora’s modelling shows. Ireland’s competitive advantage stems from its high wind speeds, particularly in the west, compared to other European countries, and rising congestion within the electricity transmission system.

Ireland’s targeted green hydrogen production capacity far exceeds Aurora’s projections for domestic demand. The government aims to install 2GW of offshore wind generation connected to electrolysers by 2030, which could produce up to 138kt of green hydrogen annually, Aurora finds. Developers could also produce green hydrogen from surplus renewable power that would otherwise be curtailed.(4)

Irish hydrogen demand rises to 33kt in 2030 under Aurora’s base case forecast, from 11kt in 2023. The industrial sector is projected to account for the highest share of consumption, followed by transport. Production could also be exported: the optimal levelised cost of green hydrogen imports shipped from Cork to Germany in 2030 would be 13% lower than optimal domestic production costs in Germany, Aurora’s modelling shows.

Despite the cost advantages, robust policy support is needed to unleash Ireland’s green hydrogen potential. The optimal cost of producing green hydrogen in Ireland in 2030 is equivalent to €89/MWh(th), 82% higher than Aurora’s forecast gas price(5) in 2030. A lack of action to reduce this premium could prevent a market from developing. Introducing government-backed hydrogen purchase agreements that would pay for the cost premium could incentivise production, whilst capital expenditure relief on investments in electrolysers could further reduce the costs to be recovered per kilogram of hydrogen.

Marlon Dey, Head of Research, UK and Ireland, at Aurora Energy Research, commented:
“Ireland has the potential to become a green hydrogen powerhouse: its abundance of high wind speeds presents a key competitive advantage, but significant financial support will be critical to kickstarting the industry, either by bringing hydrogen costs in line with natural gas prices, or by paying the cost difference to consumers directly.”

Nick Byrne, Ireland Research Product Manager, at Aurora Energy Research, commented:
“Despite favourable production economics, Ireland is not yet an attractive option for hydrogen developers. Aurora’s latest Hydrogen Market Attractiveness Report ranks the Republic of Ireland 14th of the 15 EU countries considered, primarily because it lacks a national hydrogen strategy. This is due to change in the spring, potentially propelling Ireland to the other end of the rankings, but only if the strategy addresses all aspects of the market—policy support for supply, demand and infrastructure is crucial.”

1. One kilo-tonne of hydrogen can be used to fuel 240 buses for one year, produce 20kt of steel or generate 22.5GWh of electricity
2. A 100MW electrolyser connected to 150MW of onshore wind and 20MW of solar photovoltaic generation, not connected to the all-island electricity transmission system, and located in Connacht. Aurora considered alternative electrolyser and renewable generation asset sizings, business models and locations within the all-island power market in its assessment of the optimal conditions for green hydrogen production.
3. Cost over full lifetime of electrolyser
4. Generation is curtailed when renewable power plants are disconnected from the grid. Some generators choose to disconnect assets from the grid when renewable power supply exceeds total power demand, causing power prices to fall to zero. Generators can also be instructed to disconnect assets when renewable power supply exceeds the capacity of the local transmission network, preventing power from being delivered to consumers. The Single Electricity Market Operator (SEMO) issues these instructions. Wind farm curtailment in the all-island power market averaged 1.2TWh—or 4% of total wind generation—in 2020-2022. Curtailment across all renewable generation will rise to 2.8TWh in 2030, Aurora forecasts.
5. Including the carbon price per MWh of natural gas fuel