Enabling Industrial Decarbonization: A MILP Optimization Model for Low-carbon Hydrogen Supply Chains

This study develops a an optimization model focused on the layout and dispatch of a low-carbon hydrogen supply chain. The objective is to identify the lowest Levelized Cost of Hydrogen for a given demand. The model considers various elements, including electricity supply from the local grid and renewable sources (photovoltaic and wind), alongside hydrogen production, compression, storage, and transportation to end users. Applied to an industrial case study in Sweden, the findings indicate that the major cost components are linked to electricity generation and investment in electrolyzers, with the LCOH reaching 5.2 EUR/kgH2 under typical demand conditions. Under scenarios with higher peak demands and greater demand volatility, the LCOH increases to 6.8 EUR/kgH2 due to the need for additional renewable energy capacity. These results highlight the critical impact of electricity availability and demand fluctuations on the LCOH, emphasizing the complex interdependencies within the hydrogen supply chain. This study provides valuable insights into the feasibility and cost-effectiveness of adopting hydrogen as an energy carrier for renewable electricity in the context of decarbonizing industrial processes in the energy system.