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OSLO, April 6 (Reuters) - Producing hydrogen from renewable energy in the Nordics will not be profitable over the next 20 years but it will still lead to a power demand rise amid the growing electrification of industry, an bi-annual outlook by Norway’s StormGeo Nena Analysis showed.
Green hydrogen is produced by splitting water molecules with a current of renewable electricity and it is touted as a clean replacement for fossil fuels in industries that are otherwise hard to decarbonise.
There are already several plans for using green hydrogen in Nordic countries, including a Swedish project to produce emissions-free steel and a fertilizer plant in Norway.
However, without subsidies, the cost of green hydrogen remains too high to be profitable, even with renewable power available at a low cost, the Oslo-based analysis firm said in its latest Nordic Power Market Outlook up to 2045, seen by Reuters.
The Nordic system price for power would average at 37.30 euros per megawatt hour over the 2022-2045 period, it said. StormGeo expects an average of 34.70 euros per megawatt hour this year.
“Green hydrogen production has the potential to increase electricity consumption very much, but the conclusion in this analysis is that it is most likely that green hydrogen will be unprofitable over the next 20 years and that volumes will be rather limited,” the analysts wrote.
Total power consumption in the region would grow to 526 terawatt hours (TWh) by 2045 from 405 TWh in 2022, driven by the electrification of transport and industry, according to the report.
If fully exploited, green hydrogen production could raise Nordic power consumption by at least 150 TWh, but the analysts said it was likely to rise by 40 TWh by 2045, given its high costs and limits to building the additionally required renewables capacity.
Until at least 2039, it would also be more costly than producing hydrogen from fossil fuels, even when including capture and storage of the carbon dioxide emissions this process releases, they added. (Reporting by Nora Buli; editing by Nina Chestney and Emelia Sithole-Matarise)
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