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Azerbaijan can produce competitive green hydrogen for the EU -FIGURES

20 February 2025 16:47 (UTC +04:00)

Azerbaijan’s levelized cost of hydrogen (LCOH) for green and blue hydrogen production could be competitive with the average cost of green hydrogen produced in Europe, APA-Economics reports citing Azerbaijan’s National Strategic Hydrogen Outlook, published by the European Bank for Reconstruction and Development (EBRD) on behalf of and in cooperation with the Ministry of Energy of Azerbaijan and Worley Consulting Group Limited.

The report estimates hydrogen production costs for projects starting in the early 2030s, considering Azerbaijan’s renewable energy potential and international gas price forecasts. If carbon capture and storage (CCS) technology proves effective, blue hydrogen is expected to have the lowest production cost among hydrogen types.

The report highlights that Azerbaijan can produce green hydrogen at competitive prices for the European market, opening export opportunities. The costs of green hydrogen production could decrease further with the use of Chinese-manufactured electrolysers.

Estimated LCOH values for "blue" and "green" hydrogen in Azerbaijan and the EU:

kg/euro	LCOH	Operating expenses (OPEX)	Costs in principle (CAPEX)	Fuel costs
Production of "blue" hydrogen in Azerbaijan	2.87	1.98	0.31	0.59
Production of "green" hydrogen in Azerbaijan (medium-scale production)	4.02	2.52	1.2	0.3
Production of "green" hydrogen in Azerbaijan (optimized scale production)	3.6	2.55	0.84	0.21
"Green" production in Europe (average)	5.05	2.74	1.85	0.46

However, transporting hydrogen from Azerbaijan to the EU will increase costs. The report estimates that a new pipeline will likely be required for transportation, adding approximately €0.8 per kilogram to the overall cost.

Currently, Azerbaijan produces grey hydrogen, which is obtained from natural gas and used in oil refining. Grey hydrogen is the cheapest form of hydrogen production but has high carbon emissions.

In contrast, blue hydrogen is also produced from natural gas but utilizes CCS technology to capture and store carbon emissions, reducing environmental impact. Green hydrogen, the cleanest form, is produced by splitting water molecules using electricity generated from renewable energy sources.