Conditions for low cost green hydrogen production: mapping cost competitiveness with reduced-form marginal effect relationships

Thomas Longden, Frank Jotzo, Andreas Loschel

Research output: Working paper

Abstract

Green hydrogen holds promise as a zero-carbon energy carrier if production costs fall
low enough to achieve cost-competitiveness with alternatives. We specify reducedform marginal effect relationships that capture the underlying dynamics of existing
structural models of hydrogen production via electrolysis. These specifications provide
the marginal effect of electricity costs, electrolyser capital costs and capacity utilisation
factors on the cost of producing hydrogen. And we use them to identify the potential
combinations of cost components that meet threshold production costs under which
green hydrogen will be cost-competitive. In the near-term, there is particular promise
for low cost green hydrogen production where electrolysers are co-located with
renewable energy parks to use electricity that would otherwise be curtailed. Or when
they operate during periods of low or negative prices in electricity grids. Green
hydrogen stand-alone operations could be commercially viable with continued
reductions in renewable energy generation and electrolysers
Original languageEnglish
PublisherCrawford School of Public Policy
Number of pages34
Publication statusPublished - Aug 2021

Publication series

NameCCEP Working Paper
PublisherAustralian National University
No.21-07
NameZero-Carbon Energy for the Asia-Pacific ZCEAP Working Paper
PublisherAustralian National University
No.ZCWP05-21

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