A group of researchers from Griffith University in Australia has created a new method to evaluate the levelized cost of hydrogen (LCOH) that includes overload capacity and power-dependent efficiency of the electrolyzer as new parameters.
“We decided to adopt the techno-economic modeling approach based as closely as possible on the actual system's performance. Because failure to include the variability in electrolyzer efficiency, as is often observed in green hydrogen studies, results in a substantial overestimation of hydrogen production costs,” corresponding author, Mostafa Rezaei, told pv magazine.
The novel methodology considers the electrolyzer's input power, the occasional electrolyzer operation under overload conditions, and the actual operating characteristics based on the electrolyzer type. Furthermore, it includes the electrolyzer system's calendar life and the stacks' usage life in operational hours, as well as the learning rate to predict the routine end-of-life electrolyzer stack replacement cost. Moreover, it includes economies of scale and the cost of desalinated water and required land.
“Our analysis is based on the direct connection of PV power generation plant and nearly direct connection of wind turbine (WT) plant and an electrolyzer array,” the group explained. “This approach reduces initial investment costs by eliminating (PV) or reducing (WT) the need for power converters, reducing system complexity, and minimizing power losses. In our study, we concentrate on two electrolysis options, chosen based on their technology readiness levels: Alkaline (ALK) and PEM technologies.”
The new model was used to analyze the LCOH in different regions of Australia designated as hydrogen hubs. “Although the methodology developed here is applied specifically to these regions, it is equally applicable to any other region in the world,” highlighted the academics. “In the context of this study, therefore, we investigate Bell Bay in Tasmania, Eyre Peninsula in South Australia, Gladstone and Townsville in Queensland, Latrobe Valley in Victoria, Hunter Valley in New South Wales, and Pilbara in Southern Australia.”
Based on previous literature, sizing, and production were calculated using hourly solar and wind power profiles specific to the hydrogen hubs. The weighted average cost of capital (WACC) was between 2% and 8%.
Based on these values, the research team also assessed whether the target cost of AUD 2-3 ($1.32-1.98) per kilogram—as set by Australia's National Hydrogen Roadmap—is achievable.
“Under the base-case scenario for the PV-based plant and the examined range for the scale, the target value could only be reached in the Pilbara region. The threshold scale for achieving the target value is 350 t/day, which would require a 2.1 GW PEM electrolyzer,” the scientists stressed. “Under the base-case scenario for the wind-based plant, Eyre Peninsula and Pilbara show the highest potential. However, the target value remains unachievable at any hub.”
Employing sensitivity analyses, the academics found that WACC, scaling factor, capital expenditure (CAPEX), electrolysis efficiency, and overload impact the LCOH. They found that a WACC of 6%, PV scaling factor (SF) of 0.85, and PEM stack SF of 0.84, employed in the Gladstone region, are sufficient to reach an LCOH of 3 AUD/KG. “Alternatively, if significant economies of scale cannot be captured, then WACC = 6%, PV SF = 0.88, PEM stack SF = 0.87, along with a 1% per year increase in electrolysis efficiency would suffice,” they added.
Their findings results were presented in “Levelised cost of dynamic green hydrogen production: A case study for Australia's hydrogen hubs,” which was recently published in Applied Energy.
“Australia has certainly the potential to become a powerhouse in cost-competitive renewable hydrogen. However, without significant scale-up, the country risks falling behind in this crucial industry,” concluded Rezaei. “Introducing a carbon cost based on the carbon intensity of hydrogen production methods can significantly enhance the cost competitiveness of green hydrogen at certain hubs.”
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