Of 47 million tonnes (Mt) of annual capacity planned in 2030, just 10% has identified a buyer according to BloombergNEF’s database of hydrogen offtake:
➡️ 1 Mt is covered by a binding contract with an offtaker.
➡️ 0.5 Mt has a pre-contractual agreement which has a good chance of becoming binding
➡️ 2.9 Mt only has offtake covered by a non-binding memorandum of understanding, which might never become binding.
That leaves 90% of the 47 million tonnes which hasn’t even identified a buyer.
Offtake is generally considered a prerequisite for a project to reach final investment decision (FID), because banks are reluctant to sign off on loans without a clear source of future revenue.
Since construction takes 2-3 years to complete after FID, many projects will need to push for binding contracts by 2026 to come online as scheduled.
It’s time to dial down expectations. Europe’s goal to produce and import 20 million tonnes of clean hydrogen by 2030 is now widely seen as completely unrealistic.
Only 4% of hydrogen projects get financed, because as yet there is no business case for clean hydrogen.
And we can start by cleaning up the existing ~90 million tonnes of annual hydrogen production, requiring close to 1 TW of electrolyser capacity, before we need to consider using hydrogen as a fuel.
