Renewable hydrogen and ammonia production: Location-specific considerations and competitive market dynamics in Europe

Abstract

The transition to clean energy in Europe is closely tied to the viability of renewable and low-carbon hydrogen and ammonia production. However, many hydrogen projects remain in the conceptual and feasibility stages, with only a few advancing to the final investment decision, often constrained by the need to ensure profitability. This study presents a new modeling framework complemented by the European Union’s policy and regulatory environment, assessing the cost-effectiveness of hydrogen and ammonia production. Our analysis reveals that incorporating technical constraints such as minimum part-load leads to a 4 % variation in the estimated levelized cost of ammonia. Through a comparative evaluation of European port locations investing in onsite assets, we identify weather uncertainty and renewable energy potential as the most critical factors influencing cost-effectiveness, followed by local financing terms. Business models that capitalize on advantageous power purchase agreements, frequent access to low-cost electricity through grid sourcing, low grid emissions, and favorable network tariff structures can significantly enhance their competitive edge. Our findings underscore the importance of policies that leverage locational advantages, suggesting that Europe’s clean energy transition can be accelerated by tailored support strategies that exploit regional strengths. This research contributes to ongoing discussions on renewable fuel production, hydrogen modeling, and the intersection of policy and regulation.