The Agency for the Cooperation of Energy Regulators (ACER) stressed on Tuesday 2 December, in a new report on the monitoring of European hydrogen markets, that their development was hampered by “high costs and slow transposition”.
As in its previous report for 2024, market growth remains well below European and national targets. Electrolyser capacity increased by 51% to 308 MW in 2024, but this is still well below the EU target of 6 GW by 2024 and 40 GW by 2030.
What’s more, hydrogen from renewable sources is still four times more expensive than hydrogen from fossil fuels (€8/kgH2, compared with €2/kg). The report notes that electricity supply costs (excluding network tariffs) can represent up to 50% of the production costs of renewable hydrogen. These costs could be exacerbated by higher network tariffs.
For ACER, it is essential that the development of the network “is aligned with demand development in order to reduce the anticipated risks”.
Low-carbon hydrogen (produced from natural gas and carbon capture and storage) could help to develop the market, according to the Agency, but the uncertainties linked to costs and technical aspects “need to be carefully assessed”.
Targeting projects ready to switch to renewable hydrogen to “stimulate demand”. The European Commission has already allocated more than €20 billion to hydrogen, and on Monday 1 December presented its list of priority cross-border energy infrastructure projects eligible for funding from the Connecting Europe Facility (CEF). Of these, 100 are devoted exclusively to hydrogen and electrolysers, which has been criticised by civil society organisations (see EUROPE 13763/9).
Among its recommendations, ACER calls for funding to be prioritised and targeted at projects in hard-to-decarbonise sectors that are ready to switch to renewable, low-carbon hydrogen in order to stimulate demand.
It also calls for accelerated decarbonisation of the energy sector in order to reduce electricity costs and improve the use of electrolysers.
Finally, the report indicates that only Denmark and Ireland have notified the transposition of the Renewable Energy Directive (RED III), which sets binding targets for renewable fuels of non-biological origin (RFNBO). “This delay increases investor uncertainty and further hinders market deployment”, the report says.
Link to the report: https://aeur.eu/f/jsm (Original version in French by Pauline Denys)