Podcast Summary: "Driving Down the Cost of Green Hydrogen"

Catalyst with Shayle Kann
Date: November 13, 2025
Guest: Rafi Garabedian, CEO of Electric Hydrogen
Host: Shayle Kann
Produced by: Latitude Media

Overview

This episode explores the current state, challenges, and path forward for the green hydrogen market as it emerges from the wake of a dramatic hype cycle. Shayle Kann sits down with Rafi Garabedian, CEO of Electric Hydrogen, to dissect why green hydrogen has been so costly, how modularization and system-level innovations are driving real reductions in delivered costs, and where policy, technology, and global markets intersect. The conversation paints both a sober and hopeful picture for the long-term future of green hydrogen as an essential solution to industrial decarbonization.

Key Discussion Points & Insights

1. The Green Hydrogen Hype Cycle (02:46–07:53)

• Rapid Rise and Bust: Hydrogen was heavily promoted as a climate solution from 2021–2024, culminating in over-hyped expectations. However, delivered costs were much higher than anticipated, and several targeted markets (like light-duty transport) didn’t pan out.
• Market Reality Check: The "trough of disillusionment" has set in, with the industry now working to recover with more realistic trajectories and technologies.

Quote (07:12)
"The climb out of the trough of disillusionment is slow and gradual and long and arduous. I think that's where we are in this market today."
— Rafi Garabedian

2. Why Did the Bubble Burst? The Anatomy of High Costs (07:53–12:46)

• Key Reasons for High Costs

  • High Delivered Cost: First-wave projects saw green hydrogen at roughly $6/kg (unsubsidized in Southern Europe), evenly split between CAPEX (capital cost) and OPEX (power costs).
  • Expensive Renewable Power: Rising power prices globally—driven by increased electricity demand (notably from AI/data centers)—raised input costs.
  • Stubbornly High CAPEX: Hoped-for reductions in electrolyzer project costs didn’t materialize. Instead, capital costs escalated, especially from big Western suppliers.

• Increasing Power Prices Example
  “In ERCOT territory, three years ago, you might have paid $35 a megawatt hour [for renewables]. Today you're paying $65, maybe more...” (10:24)—Rafi Garabedian

3. The True Cost Stack: What Makes Green Hydrogen Expensive? (12:46–16:10)

• Project Cost Breakdown:
  • Major capital costs stem not from the electrolyzer hardware, but from the engineering, construction, and integration by EPCs (engineering, procurement, construction companies).
  • Roughly half of total installed cost can be attributed to EPC work: site preparation, buildings, support equipment, and system integration.

Quote (13:28):
"What's really ballooned out of proportion is the EPC or the construction costs."
— Rafi Garabedian

• Challenges
  • Early cost promises ($1,500/kW) gave way to current benchmarks over $3,000/kW ($3/Watt).
  • Costs have not dropped with increased scale as many expected.

4. Solving the CAPEX & Total System Cost Problem (16:10–21:38)

• System-Level Engineering and Modularization

  • Holistic design thinking: Treat EPC costs as part of the technology challenge.
  • Electric Hydrogen’s Approach: Deliver highly dense, modular, “factory built” plants that reduce site-specific EPC overhead.
  • Avoid expensive buildings by establishing outdoor or pre-fab solutions suited for hazardous hydrogen production.

• Clarifying Modularization

  • Not just shipping small stacks to be numbered up (“solar panel” analogy).
  • Instead, aim for large, integrated modular units at true chemical plant scale, pre-assembled and shipped.

Quote (19:18):
"The idea of integrating onto a site hundreds... of very small containerized electrolyzers... turns out to be quite expensive... The footprint of the entire plant ends up being quite large and hence EPC integration costs get large again."
— Rafi Garabedian

5. What Does 'Good' Look Like? New Cost Benchmarks (23:45–25:50)

• Breakthrough Pricing:
  • Electric Hydrogen’s Announced Price: Slightly north of $1,000/kW installed cost (including EPC), a dramatic reduction compared to Western competitors and even Chinese integrators.
  • Market Comparison: Chinese-integrated projects can reach ~$1,500/kW, but still not as low as Electric Hydrogen’s modular systems.

Quote (24:30):
"We're pricing in the European market today with a total installed cost, just north of $1,000 a kilowatt inclusive of EPC... That's somewhere between a half and a third of the competitive benchmark.”
— Rafi Garabedian

6. Will Cheap Chinese Electrolyzers Flood the Market? (25:20–27:44)

• Not Like Solar Panels:
  • Plant integration is far more complex than in solar; cheap stacks don’t translate directly to cheap delivered hydrogen due to persistent EPC/integration costs.
  • Chinese stacks are typically small and require extensive site construction and support.

Quote (25:50):
"A large industrial electrolyzer green hydrogen facility looks more like... a gas generation plant... It's a complicated thing. It's got a lot of pipes and valves and stuff going on...”
— Rafi Garabedian

7. Market Realities and the Role of Policy (28:18–39:35)

• Near-Term Demand is Policy-Driven:

  • Europe leads with policies requiring industrial fuel switching (RED3, RFMBO).
  • Market dynamics are reminiscent of early solar’s feed-in tariff days: high subsidies, not yet sustainable on their own.

• Long-Term Goal: Reaching Fossil Parity

  • “Fossil parity” means green hydrogen and derivatives that can compete with legacy fossil equivalents on straight cost.

Quote (28:18):
"We do recognize, at least at Electric Hydrogen, that we've got to collapse costs towards what we call fossil parity for the molecules that we produce."
— Rafi Garabedian

8. Where Green Hydrogen Could Lead: Case Study—Brazil (32:25–38:21)

• Compelling Market Example: Brazil

  • Huge ag exporter, but imports 90% of nitrogen fertilizer (mostly from Russia) due to lacking natural gas.
  • Local ammonia costs are high ($450–$600/ton), opening space for locally produced green ammonia, especially given cheap hydro-heavy power ($30–$35/MWh).
  • Green hydrogen can nearly compete on cost today and will likely undercut fossil ammonia in the early 2030s.

• Multiple Benefits Beyond Carbon:

  • Energy security, price stability, trade balance.
  • Green is the “icing on the cake,” not the sole justification.

Quote (32:25):
"If you put all that together, you have an interesting proposition for conversion of the Brazilian economy to local production of nitrogen fertilizer... That's a market where we think we can be cheaper than the fossil alternative for a critical piece of Brazil's economy."
— Rafi Garabedian

9. What Will the Next 5–10 Years Look Like? (38:43–40:22)

• Short Term:
  • Patchwork of policy-supported, tactical demonstration and industrial projects in favorable markets (Europe, Brazil, India).
• Medium/Long Term:
  • Projects reach scale, drive cost curve down, and spark demand where fossil parity and additional benefits align.

Quote (39:35):
"I think the next five years looks like very, very tactical kind of one-off projects that are policy driven in places like Europe that have the policy frameworks in place or emerging to motivate consumption of these molecules."
— Rafi Garabedian

10. Why Remain Optimistic? (40:22–42:07)

• Clear Path to Parity:
  • Rapid scale and technology improvement, aiming for “subsidy-free economics.”
• Generational Drive:
  • Younger generations’ climate focus and persistence are motivational.

Quote (40:34):
"I see a clear path to parity with fossil equivalent molecules in a number of industries and a number of places in the world... The other thing that gets me excited is, is my kids, honestly..."
— Rafi Garabedian

Notable Quotes & Timestamps

• 07:12 — "The climb out of the trough of disillusionment is slow and gradual and long and arduous..." (Rafi Garabedian)
• 13:28 — "What's really ballooned out of proportion is the EPC or the construction costs." (Rafi Garabedian)
• 19:18 — "The idea of integrating...hundreds...of small containerized electrolyzers... turns out to be quite expensive." (Rafi Garabedian)
• 24:30 — "We're pricing in the European market today with a total installed cost, just north of $1,000 a kilowatt inclusive of EPC.” (Rafi Garabedian)
• 25:50 — "A large industrial electrolyzer green hydrogen facility looks more like... a gas generation plant." (Rafi Garabedian)
• 28:18 — "We do recognize...we've got to collapse costs towards...fossil parity for the molecules that we produce." (Rafi Garabedian)
• 32:25 — "That's a market where we think we can be cheaper than the fossil alternative for a critical…piece of Brazil's economy." (Rafi Garabedian)
• 39:35 — "The next five years looks like…projects that are policy driven in places like Europe..." (Rafi Garabedian)
• 40:34 — "I see a clear path to parity with fossil equivalent molecules... and the other thing...is my kids, honestly." (Rafi Garabedian)

Structure & Flow

• Begins with a frank assessment of green hydrogen’s boom-and-bust hype cycle.
• Dives into granular cost breakdowns and the specific barriers to cost reduction.
• Explains Electric Hydrogen’s system-level, modularized approach as a breakthrough.
• Addresses global market differences, the limits of the “Chinese solution,” and emerging case studies (especially Brazil).
• Rounds out with a realistic but optimistic projection of the sector’s maturation, reiterating the need for cost competitiveness and multi-dimensional value beyond just "being green."

Conclusion

For those watching the energy transition, this episode provides a grounded, technically illuminating, and globally aware overview of the present and future of green hydrogen. It is essential listening for understanding why the cost of green hydrogen has remained stubbornly high, what true innovations look like, and where—and why—the sector could find commercial, unsubsidized liftoff. The guest’s candor and the host’s incisive questioning give the episode depth and practical foresight.