Why Hydrogen's Total Cost of Ownership Boosts Investor Confidence
London, Monday, 20 October 2025.
Understanding hydrogen’s Total Cost of Ownership (TCO) is key to attracting investment. By analysing production, storage, and distribution costs, we reduce risks and boost financial viability in the hydrogen sector.
The Growing Importance of TCO in the Hydrogen Economy
In recent years, the Total Cost of Ownership (TCO) has emerged as a pivotal determinant for investors eyeing the hydrogen sector. By meticulously analysing the expenses involved in production, storage, and distribution, investors can better evaluate the long-term financial viability of hydrogen projects. This comprehensive understanding of TCO aids in mitigating supply chain risks and enhances the resilience of hydrogen investments [1].
Infrastructure and Cost Efficiency
Infrastructure development plays a crucial role in hydrogen’s TCO. Projects like retrofitting existing gas pipelines for hydrogen use are not only cost-effective but also strategically beneficial. Such initiatives reduce capital expenditures and operational costs, making hydrogen projects more attractive to investors [1]. Moreover, shared infrastructure models in hydrogen hubs and clusters further enhance cost synergies [1].
Storage and Transportation Challenges
The economics of hydrogen storage and transportation are vital components of its TCO. Various storage methods, such as compression and liquefaction, present different cost implications. For instance, underground hydrogen storage can significantly lower long-term costs, making it a compelling option for large-scale deployments [1]. Decentralised storage solutions also offer flexibility and cost benefits [1].
End-Use Applications and Market Dynamics
Hydrogen’s application across industries like transport and power significantly influences its TCO. The integration of hydrogen into fuel cells and hybrid energy systems underscores its potential for cost-effective energy solutions [1]. Additionally, emerging market structures and regulatory policies, such as carbon pricing and hydrogen trading markets, further shape the financial landscape for investors [1].
Global Investment Trends
Globally, hydrogen investment has surged, with the industry surpassing $110 billion [4]. This growth reflects a robust interest in hydrogen technologies, driven by decreasing production costs and technological advancements [4]. Countries like China and North America lead this investment wave, underscoring the strategic importance of hydrogen in future energy portfolios [4].
Mexico’s Green Hydrogen Milestone
A notable achievement in the hydrogen sector is Mexico’s inauguration of its first green hydrogen plant in Querétaro on 17 October 2025. This project, a collaboration between a German and a Mexican company, exemplifies how international partnerships can drive forward hydrogen adoption [3]. With production costs significantly lower than in other countries, Mexico positions itself as an ideal location for renewable energy investments [3].