Economic Analysis of P2G Green Hydrogen Generated by Existing Wind Turbines on Jeju Island

Every wind turbine is subject to fluctuations in power generation, depending on climatic conditions. When electricity supply exceeds demand, wind turbines are forced to implement curtailment, causing a reduction in generation efficiency and commercial loss to turbine owners. Since the frequency and amount of curtailment of wind turbines increases as the amount of renewable energy become higher on Jeju Island in South Korea, Jeju is configuring a Power to Gas (P2G) water electrolysis system that will be connected to an existing wind farm to use the “wasted energy”. In this study, economic analysis was performed by calculating the production cost of green hydrogen, and sensitivity analysis evaluated the variance in hydrogen cost, depending on several influential factors. Approaches to lower hydrogen costs are necessary for the following reasons. The operating company needs a periodical update of hydrogen sale prices by reflecting a change in the system margin price (SMP) with the highest sensitivity to hydrogen cost. Technical development to reduce hydrogen costs in order to reduce power consumption for producing hydrogen and a decrease in annual reduction rate for the efficiency of water electrolysis is recommended. Discussions and research regarding government policy can be followed to lower the hydrogen cost.