How expensive is hydrogen at the moment? What factors influence the costs? And how will prices develop in the future?

In this article, we take a look at the current price structure and provide an assessment of future developments.

Current hydrogen prices: Large differences depending on origin

The price of hydrogen depends heavily on the production method. A basic distinction is made between

Hydrogen type	Production method	Price range (2025)
Gray hydrogen	Steam reforming from natural gas	approx. 1.50 – 2.50 €/kg
Blue hydrogen	Like gray H₂, but with CO₂ capture	approx. 2.00 – 3.50 €/kg
Green hydrogen	Electrolysis with renewable electricity	approx. 4.00 – 8.00 €/kg

Current cost driver

The current cost drivers for hydrogen production – especially for green hydrogen – are diverse and have a significant impact on its economic viability. Electricity prices, which can account for up to 70% of the total costs of green hydrogen depending on the location and technology, make up the largest share. Added to this are the investment costs for electrolysers and the necessary infrastructure, such as compressors, storage or grid connections.

Economies of scale are another decisive factor: Larger plants can produce hydrogen much more cheaply, as the specific costs per unit fall as the production volume increases. Transportation and distribution costs also play an important role – these vary considerably depending on distance, infrastructure and aggregate state (gaseous, liquid or chemically bound). Finally, political and regulatory framework conditions have a significant impact on the cost structure. These include grid fees, levies, CO₂ pricing and subsidy measures, which can either reduce or increase costs.

Hydrogen prices tomorrow: where will the journey take us?

Experts from research, industry and international organizations such as the IEA, the EU Commission and the Fraunhofer Institute expect that green hydrogen will soon be much cheaper to produce – especially in regions with very cheap renewable energies. In countries such as Australia, North Africa or Chile, the price of green hydrogen could fall to less than 2 euros per kilogram by 2030. Wind and solar energy are so cheap and constantly available there that hydrogen can be produced economically on a large scale.

A cost parity between green and gray hydrogen is also expected in Europe – depending on the expansion of the infrastructure and the development of the CO₂ price. Estimates assume that this so-called “parity point” could be reached from around 2035. Rising CO₂ costs are making fossil production methods more expensive, while green technologies are becoming increasingly cheaper through scaling, automation and innovation.

Another building block is hydrogen imports: the development of international supply chains – by pipeline or ship – makes it possible to bring green hydrogen from particularly favorable production regions to Europe. The necessary infrastructure (e.g. the European hydrogen network) is already being planned or built.

Political measures as price drivers and price sinks

The economic viability of hydrogen does not depend solely on technical innovations and economies of scale – political framework conditions also have a significant influence on supply, demand and price development. Policymakers can actively promote and accelerate the market ramp-up of green hydrogen through targeted measures.
One key instrument is CO₂ pricing, which is making fossil fuels – and therefore also conventionally produced (grey) hydrogen – increasingly expensive. The higher the CO₂ price, the more attractive green hydrogen, which is produced entirely without greenhouse gas emissions, becomes in comparison.

At the same time, government funding programs and investment grants ensure that production facilities for green hydrogen become economically viable. Subsidies for electrolysers, infrastructure projects and research reduce initial costs and enable companies to bring new technologies to market faster.

In addition, politicians are creating targeted demand with so-called hydrogen lead markets – for example in industry, heavy goods transport and energy supply. Clear guidelines and long-term strategies create investment security for companies along the entire value chain. Anyone investing in hydrogen technology today can count on stable political support and a growing demand base.

Instruments such as the EU’s hydrogen bank or national tenders for subsidy premiums (“H₂ contracts for difference”) are also intended to help bridge the price gap to fossil alternatives.

Conclusion

The price of hydrogen is currently still heavily dependent on technology and location – and represents an economic challenge for many applications. However, with a growing market, technological progress and targeted subsidies, prices will fall noticeably in the coming years.