Economics of Renewable Hydrogen Production Using Wind and Solar Energy: A Case Study for Queensland, Australia

This study presents a technoeconomic analysis of renewables-based hydrogen production in Queensland, Australia under Optimistic, Reference and Pessimistic scenarios to address uncertainty in cost predictions. The goal of the work was to ascertain if the target fam-gate cost of AUD 3/kg (approx. USD 2/kg) could be reached. Economies of scale and the learning rate concept were factored into the economic model to account for the effect of scale-up and cost reductions as electrolyser manufacturing capacity grows. The model assumes that small-scale to large-scale wind turbine (WT)-based and photovoltaic (PV)-based power generation plants are directly coupled with an electrolyser array and utilises hourly generation data for the Gladstone hydrogen-hub region. Employing first a commonly used simplified approach, the electrolyser array was sized based on the maximum hourly power available for hydrogen production. The initial results indicated that scale-up is very beneficial: the levelised cost of green hydrogen (LCOH) could decrease by 49% from $6.1/kg to $3.1/kg when scaling PV-based plant from 10 MW to 1 GW, and for WT-based plant by 36% from $5.8/kg to $3.7/kg. Then, impacts on the LCOH of incorporating curtailment of ineffective peak power and electrolyser overload capacity were investigated and shown to be significant. Also significant was the beneficial effect of recognising that electrolyser efficiency depends on input power. The latter two factors have mostly been overlooked in the literature. Incorporating in the model the influence on the LCOH of real-world electrolyser operational characteristics overcomes a shortcoming of the simplified sizing method, namely that a large portion of electrolyser capacity is under-utilised, leading to unnecessarily high values of the LCOH. It was found that AUD 3/kg is achievable if the electrolyser array is properly sized, which should help to incentivise large-scale renewable hydrogen projects in Australia and elsewhere.