Estimating Hydrogen Demand in 2030: A Willingness-to-Pay-Based Approach
Achieving greenhouse gas neutrality will require a broad transition to hydrogen across multiple industrial sectors. However, the future demand for hydrogen – both in terms of quantity and price readiness – remains uncertain. This analysis provides an estimate of hydrogen demand in Germany by 2030, taking into account sector-specific willingness to pay.
Methodology and data
Potential hydrogen demand volumes and corresponding parity prices were estimated for the year 2030. The analysis includes the use of synthetic fuels in shipping and aviation, heavy-duty trucks (>12 t), hydrogen as a feedstock in the chemical industry (e.g., for ammonia production), hydrogen reconversion into electricity (via gas turbines and combined cycle power plants), and its use in primary steel production.
The parity price represents the hydrogen price at which a given sector could switch from fossil fuels to hydrogen without incurring additional costs. This price was calculated using an extended version of our unpublished financial gap analysis, which compares the annuitized capital expenditures (CapEx) and operating costs (OpEx) of fossil-based technologies with those of hydrogen-based, emission-free alternatives. It is important to note that while this analysis focuses on parity prices relative to fossil fuels, other emission-neutral technologies may offer more cost-effective solutions. Consequently, the actual cost-competitive price of hydrogen could be significantly lower—or even negative—when compared to alternative clean technologies. For example, heavy goods transport (>12 t) shows the second-highest parity price among the sectors analyzed, suggesting a potentially high hydrogen demand from fuel cell electric trucks (FCETs). However, studies [1] indicate that battery electric trucks (BETs) may be more economical in many use cases. FCETs are therefore likely to be deployed primarily in applications where BETs are technically unsuitable.
In calculating the parity prices, relevant national and European regulations were considered. For aviation, the ReFuelEU Aviation Regulation and § 37 of the Federal Immission Control Act (BImSchG) set minimum quotas for the use of various emission-neutral fuels. Similar requirements apply to shipping under the FuelEU Maritime Regulation. The EU Emissions Trading System (ETS) also differentiates between intra-European and intercontinental routes for both aviation and maritime transport. Non-compliance with these quotas can result in penalties, which were included in the analysis by attributing their cost to the corresponding quota volumes—thereby influencing the sector-specific willingness to pay for hydrogen.
The estimated demand volumes are based on the projected final energy consumption in 2030 for all processes within each sector that could technically be converted to hydrogen. This analysis assesses only the technical feasibility of a switch to hydrogen, without evaluating whether hydrogen is the most likely or cost-effective option compared to alternatives. The final energy consumption data was sourced from the FfE energy system model ISAaR and its sector-specific sub-models, which were developed for various energy and economic analyses. The final energy consumption data for material use was obtained from an external source [2].
Results
A particularly noteworthy result is the exceptionally high parity price of approximately €16/kg H₂ in the shipping sector. This price level is primarily driven by the avoidance of penalties under the FuelEU Maritime Regulation for intra-European routes, despite a comparatively low demand volume of just 2.3 % (see Fig. 1 and Fig. 2). The ETS distinction between intra-European and extra-European transport further segments the calculated volumes. It is important to highlight that there are currently no binding quotas for Renewable Fuels of Non-Biological Origin (RFNBOs) in shipping. If the potential use of biofuels were factored into the analysis, the resulting willingness to pay for hydrogen would be significantly lower.
In aviation, similarly elevated parity prices are observed, primarily due to the penalty mechanisms set out in the ReFuelEU Aviation Regulation and § 37 BImSchG (see Fig. 3). As with shipping, the ETS distinction between intra-European and extra-European flights leads to a more granular allocation of demand volumes. However, in contrast to shipping, explicit sub-quotas for RFNBOs exist in aviation, which cannot be fulfilled with biofuels. Moreover, any shortfall in meeting these quotas must be compensated for in the following year. This regulatory dynamic suggests that the current analysis may underestimate the actual willingness to pay in this sector.
The truck sector also displays a notably high parity price of around €11/kg H₂, exceeding most current projections for hydrogen prices in 2030. This indicates that fuel cell electric trucks (FCETs) could contribute substantially to future hydrogen demand. Nevertheless, the estimated demand volume should be interpreted with caution, as battery electric trucks (BETs) are likely to capture a significant share of this market segment [1].
While aviation, shipping, and heavy-duty transport exhibit the highest parity prices, primary steel production stands out with a negative parity price. This is mainly attributable to the significantly higher CapEx associated with hydrogen-based steelmaking compared to conventional coal-based production. As a result, even if hydrogen were available at zero cost, a switch in 2030 would still incur additional expenses. It is important to note that many steel producers in Germany benefit from substantial public subsidies for investments in direct reduction plants. If such subsidies are realized, the relevant benchmark for assessing willingness to pay would shift from coal to natural gas, requiring an adjustment of the parity price accordingly.
Literature:
[1] NOW GmbH (2024): Marktentwicklung klimafreundlicher Technologien im schweren Straßengüterverkehr. Verfügbar unter: Marktentwicklung-klimafreundlicher-Technologien-im-schweren-Strassengueterverkehr-2024.pdf (Zugriff am 27. März 2025).
[2] EWI – Energiewirtschaftliches Institut (2024): Datengrundlage für die H₂-Bilanz 2024, 2. Halbjahr. Verfügbar unter: https://www.ewi.uni-koeln.de/de/publikationen/datengrundlage-fuer-die-h2bilanz-2024-2-halbjahr/ (Zugriff am 05. März 2025).
Further information:
