Modeling of an Electrolysis System for Techno-Economic Optimization of Hydrogen Production

Abstract: In face of climate change, Europe and other global actors are in the process of transitioning to carbon-neutral economies, aiming to phase out of fossil fuels and power industries with renewable energies. Hydrogen is going to play a crucial role in the transition, replacing fossil fuels in hard-to-decarbonize industries and acting as energy carrier and energy storage for renewable electricity. However, the hydrogen production method with the lowest carbon intensity, water electrolysis in combination with renewable electricity, is often not cost competitive to other production methods. Even though policies and initiatives are providing subsidies to scale up low-carbon hydrogen production, companies hesitate to invest due to the complexity of hydrogen production systems and the uncertainties of cost competitiveness. This research aims to develop a tool for optimizing the capacity of a water electrolysis system to produce low-carbon hydrogen and to lay the groundwork for optimizing the operation of electrolysis hydrogen production plants. The objective is to find the optimal plant capacity to achieve the lowest cost of hydrogen production for a defined hydrogen demand and energy supply. The scope is limited to the electrolysis system as optimizing asset which is modeled with technology-specific costs and characteristics, gained from manufacturer interviews and internal company data. This includes the often neglected characteristics of load-dependent efficiency and degradation effects. Further, the tool is enabled to buy and sell electricity on the spot market according to predicted prices in order to minimize the electricity costs. The developed tool is tested, benchmarked and applied to two different industry-based test scenarios in Germany and Portugal. The test scenario in Germany describes a mid-scale hydrogen production case for a transport application with a demand increase over 10 years (80 to 1,800 tons per year) and regional renewable energy supply via power purchase agreements. The lowest costs of hydrogen production for this scenario can be reached with an alkaline electrolysis system of a capacity of 16 MWel considering only renewable energy sources, achieving a LCOH of 4.75 €/kg of green hydrogen. The second test scenario describes a large-scale production case in Portugal for application in the refinery industry. The yearly hydrogen demand increases from 5,000 tons up to 17,100 tons within three years and is assumed to stay constant for the residual years. The electricity for the electrolysis process is secured through large solar PV and offshore wind power purchase agreements. Utilizing the alkaline electrolysis technology with a capacity of 128 MWel, a LCOH of 3.31 €/kg of green hydrogen can be achieved at the output point of the plant. The study concludes that the optimal solution and the achievable hydrogen production costs are highly dependent on the hydrogen demand (quantity and profile), the energy supply (quantity, profile, costs), and the chosen technology (efficiency, degradation, costs) and need to be evaluated under the case-specific prerequisites. The thesis further highlights the significant impact of the electrolysis system efficiency and capital expenditures on the capacity decision and achievable hydrogen production costs.