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Singapore faces cost, investment hurdles in pushing hydrogen

Photo by Jahoo Clouseau

Significant technological development will enable Singapore to generate 50% of its power from low-carbon hydrogen by 2050.

Natural gas-reliant Singapore is putting a premium on low-carbon hydrogen for its energy transition as it faces land scarcity to accommodate other forms of renewable energy. However, the hydrogen sector is still nascent, posing significant challenges in achieving the Lion City’s target due to cost and investment woes. 

Under the country’s National Hydrogen Strategy, Singapore sees various use cases for hydrogen across industrial, maritime, and aviation sectors. For the power sector, which comprises 39.8% of the primary emissions in 2020, hydrogen is expected to supply half of Singapore’s power needs by 2050.

“Singapore’s National Hydrogen Strategy is a laudable start, but it is too early to conclude whether meeting its target is feasible or not. The target is a sort of conditional target depending on the technological development and international effort levels,” Kim Jeong Won, senior research fellow at the Energy Studies Institute of the National University of Singapore, told Asian Power.

“However, the pace of technological development and diffusion and the level of international commitment in the relatively long term (by 2050) face considerable uncertainty,” she added, noting that hydrogen still accounts for less than 0.2% of the power generation globally. 

Kim said one of the greatest challenges Singapore needs to address is the high cost of low-carbon hydrogen.

Low-carbon hydrogen production costs $3.4 to $12 per kilogram, much higher than the levelised cost of hydrogen from fossil fuels which is around $1 to $3 per kilogram in 2021, according to data from the International Energy Agency.

Won added that deploying large-scale hydrogen will entail infrastructure upgrades or new construction of hydrogen storage and utilisation, requiring huge investments. Add to that the fact that Singapore may not be able to produce green hydrogen domestically due to challenges in deploying renewable energy.

“It will lead Singapore to be a net importer of low-carbon hydrogen, which could be impacted by production and market volatility in exporting countries,” she said.

For the infrastructure development, Are Kaspersen, Associate Partner at Bain & Company Singapore, said the country would have to establish a pipeline network, import terminals, and hydrogen turbines for power generation, amongst others.

It should also ensure that the development is “gradually phased” to replace existing infrastructure.

“There will be transition costs associated with the shift to hydrogen. While costs will come down over time, hydrogen for power generation comes at a cost premium over gas and renewables. Infrastructure investments will also have a material cost impact. Minimising the transition cost, and having a clear plan for who bears the cost will be critical,” Kaspersen said.


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