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Hydrogen price
Hydrogen price can be influenced by consumer willingness to pay , taxes , or subsidies such as the European Hydrogen Bank ’ s fixed premium per kilogram of green hydrogen . Inflexible electrolysers have a linear relationship with hydrogen price as they do not change the operation , while flexible ones show non-linear sensitivity , as higher hydrogen prices result in higher utilisation . The same hydrogen price interventions benefit less flexible electrolysers more , but more flexible electrolysers need lower prices to break even than less flexible electrolysers .
Renewable Energy Directive ( RED )
As mentioned , green hydrogen production requires renewable energy , which can be sourced through behind-the-meter generation or PPAs . The RED outlines criteria for PPAs , including additional renewable installations and simultaneous production and consumption of renewable electricity with monthly correlation until 2030 and hourly correlation thereafter . We also found that the hourly correlation scheme decreases NPV compared to the monthly correlation for all electrolysers , but has less impact on flexible electrolysers . Highly flexible electrolysers need lower premiums to break even , at 3.92 EUR / kg in our case .
CapEx
Reducing upfront costs with CapEx subsidies like the Dutch OWE can make hydrogen production more viable . CapEx impacts NPV linearly regardless of flexibility , but only the flexible electrolyser in our study breaks even with just a CapEx subsidy ( 78 %), while the others need subsidies exceeding the initial investment .
Hydrogen price vs CapEx interventions
To reach NPV = 0 in the fully flexible case , either a 3.92 EUR / kg premium for green hydrogen or a 78 % CapEx subsidy is needed . We compared these subsidy schemes in terms of cost , offtake , and grid utilisation to understand systemic impact . The CapEx subsidy is more efficient per 1 EUR spent , but the hydrogen subsidy doubles hydrogen production and full load hours , benefiting offtakers and reducing grid utilisation during peak hours .
Offtake
Running the electrolyser 24 / 7 with fluctuating energy prices negatively impacts the business case compared to flexible operation . But even in flexible cases , high hydrogen output requirements can lead to production during unprofitable periods . With a minimum load of 25 %, the base case electrolyser already operates for at least 2,190 hours per year . A flexible electrolyser can optimise production by selecting hours with the lowest prices , producing the same amount with 25 % better NPV . The benefit of flexibility diminishes as the offtake requirement increases .
Combined interventions
We applied a mix of interventions for a more realistic case : PPA scheme with hourly correlation , minimum offtake requirement of 2,540 kg / day ( equivalent to 5,000 full load hours per year ), green price premium of 3.5 EUR / kg , and a 50 % CapEx subsidy .
Flexibility provides the same amount of hydrogen with a better business case and lower LCOH than baseload production . The LCOH improves by 20 % in the base case and 30 % in the fully flexible case . The breakdown for the base case ( 25 % minimum load ) LCOH is shown in Figure 2 , with electricity constituting the highest portion , followed by CapEx and grid cost . Arbitrage profit decreases LCOH more than the CapEx subsidy .
Other considerations
While based on the current regulatory and market landscape in the Netherlands , this study serves as a proxy for projects in North-Western Europe . It focuses on the economic aspects of hydrogen production excluding safety , operational ,
14 Hydrogen Tech World | Issue 18 | October 2024