Azerbaijan reveals production costs of blue, green hydrogen

Azerbaijan can enter the hydrogen market with competitive prices both domestically and internationally, especially in Europe, Report informs, citing the National Hydrogen Strategy jointly prepared by the Azerbaijan Energy Ministry and the European Bank for Reconstruction and Development (EBRD).

The strategy highlights that blue hydrogen will be the most cost-effective type of hydrogen for Azerbaijan, assuming the viability of carbon capture and storage (CCS) technology. The projected cost for blue hydrogen is 2.87 euros per kilogram, with the breakdown being 1.98 euros for energy costs, 0.31 euros for capital expenditure (CAPEX), and 0.59 euros for operating expenses (OPEX).

Conversely, producing green hydrogen from renewable energy sources is currently more expensive. For a plant with average production volumes, the cost is estimated at 4.02 euros per kilogram (2.52 euros for energy costs, 1.2 euros for CAPEX, and 0.3 euros for OPEX). However, with production process optimization, this cost could potentially be reduced to 3.60 euros per kilogram (2.55 euros for energy costs, 0.84 euros for CAPEX, and 0.21 euros for OPEX).

In comparison, the average price of green hydrogen within the European Union (EU) is approximately 5.05 euros per kilogram, comprising 2.74 euros for energy, 1.85 euros for CAPEX, and 0.46 euros for OPEX.

The export of Azerbaijani hydrogen to the EU presents significant opportunities for the country. However, this may require the construction of a new pipeline, which will increase supply costs by approximately 0.8 euros per kilogram. Nevertheless, even considering transportation costs, Azerbaijani hydrogen remains competitive in the European market.

The strategy notes that further price reduction of green hydrogen is possible by using Chinese-made electrolyzers.

Currently, the CESI company is conducting studies on hydrogen transportation options. The results of this analysis are expected to help identify the most cost-effective supply route.

Azerbaijan is evaluating two options for exporting green hydrogen: the first involves using the Southern Gas Corridor to transport a natural gas and hydrogen mixture to European markets, and the second considers the construction of an autonomous hydrogen pipeline.