Singapore’s 50% hydrogen dream hits price wall

Some of the challenges the city-state is facing are capital costs and the absence of supply chains.

Hydrogen is projected to supply up to 50% of Singapore’s power by 2050, but high import-related logistics costs and the current price premium over natural gas remain significant hurdles to large-scale adoption.

“As a land- and resource-strapped economy, Singapore views hydrogen not as an immediate substitute for natural gas, but as a future baseload fuel that can complement solar, regional electricity imports and other low-carbon solutions,” RHB said in its report entitled “Singapore’s Energy Transition Four Switches, One Market.”

Hydrogen combustion produces no carbon emissions at the point of use, and established technologies such as gas turbines and fuel cells are already capable of operating on hydrogen, making it an attractive candidate for deep decarbonisation of the power sector once supply chains mature.

However, RHB noted that clean hydrogen is currently far more expensive than natural gas due to high capital costs, energy intensity and the absence of large-scale global supply chains. These challenges are even fuelled by the need to import most hydrogen, given the limited domestic renewable capacity.

Morgan Stanley said in a separate report that higher base load demand in economies such as Singapore from data centres and new generation manufacturing leads to higher needs for peak load gas-based generation.

“We estimate 20GW of gas-based generation (almost equal to ~10% of new demand creation for natural gas in Asia, especially Malaysia, Singapore, Japan, partly India and even China) to balance grids, support battery and renewable infrastructure, and, in large part, just produce base load power,” the report read.

Singapore is also eyeing long-term liquefied natural gas (LNG) supply contracts for its power sector starting early 2026 to support its low-carbon energy goals through 2035.

Singapore GasCo Pte. Ltd. CEO Alan Heng has said that this process will commence in the first quarter of 2026.

“Once we issue our request for proposals, we will build a portfolio tailored for Singapore,” he said.

RHB noted that Singapore is already “laying early groundwork to preserve future optionality.”

“A key near-term focus is ammonia as a hydrogen carrier: EMA and the Maritime and Port Authority of Singapore have shortlisted consortia, and in Oct 2025 appointed a Keppel-led consortium to conduct FEED studies for a low- or zero-carbon ammonia power generation and bunkering project on Jurong Island,” RHB said.