Off-grid hydrogen production: Analysing hydrogen production and supply costs considering country-specifics and transport to Europe

Abstract

Hydrogen plays a pivotal role in transitioning to CO2-free energy systems, yet challenges regarding costs and sourcing persist in supplying Europe with renewable hydrogen. Our paper proposes a simulation-based approach to determine cost-optimal combinations of electrolyser power and renewable peak power for off-grid hydrogen production, considering location and energy source dependencies. Key findings include easy estimation of Levelized Costs of Hydrogen (LCOH) and optimal plant sizing based on the regional energy yield and source. Regional investment risks influence the LCOH by 7.9 % per 1 % change of the Weighted Average Cost of Capital. In Central Europe (Austria), hydrogen production costs range from 7.4 €/kg to 8.6 €/kg, whereas regions like Chile exhibit cheaper costs at 5.1 €/kg to 6.8 €/kg. Despite the favourable energy yields in regions like Chile or the UAE, domestically produced hydrogen can be cost-competitive when location-specific risks and transport costs are taken into account. This underlines the critical role of domestic hydrogen production and cost-effective hydrogen transport for Europe's future hydrogen supply.