Dutch Study Estimates Green Hydrogen Cost as Low as €7.2 per Kilogram

en.Wedoany.com Reported - On October 9, a research team from the University of Groningen in the Netherlands published the results of an economic study of a large-scale green hydrogen project. Using a 200 MW water electrolysis hydrogen production facility in the Rotterdam-Rijnmond industrial cluster as a model, the study calculated the levelized cost of hydrogen production under different power supply methods. Among them, when using renewable energy power purchase agreements or a hybrid power supply scheme, the hydrogen production cost was approximately €7.2 to €7.3 per kilogram, lower than the €7.7 per kilogram when purchasing electricity directly from the wholesale power market.

The study set up three power supply schemes: purchasing electricity through the wholesale power market, signing renewable energy power purchase agreements, and a hybrid power supply scheme combining dedicated renewable energy generation facilities with power purchase agreements. The researchers compared the production costs, project cash flows, and financing feasibility of each scheme. The model results showed that even with the lower-cost power supply methods, none of the three schemes met the financial feasibility requirements without additional support mechanisms.

The study further used Monte Carlo simulation to analyze the impact of different revenue guarantee conditions on the investment risk of green hydrogen projects. Under the scenario where a contract for difference covers all hydrogen production and the contract term reaches 15 years, the probability of a negative net present value for the integrated renewable energy hydrogen production scheme dropped to 0% to 6%. Compared with schemes with shorter contract terms or covering only part of production, long-term revenue guarantees correspond to lower investment loss risk.

The researchers also compared the effects of different contract for difference coverage ratios and contract terms. The relevant simulations showed that revenue guarantee arrangements can stabilize future cash flows of projects and reduce financing costs. The study proposed that green hydrogen support mechanisms should allow integrated projects with supporting renewable energy generation and projects powered by power purchase agreements to participate together, while coordinating production-side support policies with measures for renewable hydrogen demand.

This study conducted cost and financing scenario calculations for industrial-scale water electrolysis hydrogen production facilities, and did not involve investment approval, equipment procurement, or construction commencement for new hydrogen production plants.