Green hydrogen is currently one of the hottest topics in the energy sector. As many countries look for more sustainable energy sources, high hopes have been set for hydrogen. Green hydrogen could offer a solution for tackling the critical challenges presented by climate change mitigation.
As renewable energy becomes more widely available, more green hydrogen companies are popping up in the market. The industry is still emerging. Producing green hydrogen requires access to renewable energy sources such as wind or solar, and many players are struggling with the fluctuating renewable energy supply and prices.
Green hydrogen walking on a tightrope with renewable energy
For any hydrogen producer, energy is by far the biggest expense. In fact, it can account for up to a staggering 85% of the operating expenses. Even small changes in electricity prices can have a tremendous impact - either positive or negative - on the financials of a hydrogen producer.
Energy can account for up to 85% of the operating
expenses in green hydrogen
The paradox for hydrogen producers is that they need renewable energy to provide green hydrogen. The more renewable energy there is in the market, the more the electricity prices fluctuate. Consequently, the turbulent prices create a massive financial risk for the hydrogen companies.
If a hydrogen producer cannot optimize its energy sourcing most efficiently, it simply won’t be able to compete in the market. Furthermore, attracting investors will become a hurdle.
The best way to reduce the financial risks of green hydrogen
So how can a hydrogen producer fight the challenges and risks of fluctuating energy prices? With energy optimisation.
As energy is such a major part of the financials in hydrogen, energy optimisation is the most critical competitive advantage for hydrogen producers. With energy optimisation, a hydrogen producer can buy and use electricity when it’s at a low price. Similarly, it can pause its operations temporarily when prices are spiking. In this way, the producer can make sure it always buys electricity at the lowest possible price.
Would you like to hear more about how energy optimisation benefits the green hydrogen industry? Stay tuned for more information soon!
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