Tool to assess the cost of hydrogen considering its supply chain : A case study of Germany, France and Spain until 2030

Abstract: Hydrogen is envisioned to become a fundamental energy vector within the decarbonization of the energy systems. Despite already being employed in several industries, its production comes almost completely from processes based on fossil fuels. The upcoming challenge towards a hydrogen economy includes the development of low- and zero-carbon processes, the creation of an adequate infrastructure, and the diffusion of new, hydrogen-based applications. Two key factors that will define the success of hydrogen are its sustainability and competitiveness with alternative solutions, e.g., electrification. This study therefore aims at assessing the economic feasibility of hydrogen supply chains, with a focus on their final use in Germany, Spain, and France. The different production methods for each stage (production, transmission and distribution, storage) are discussed and evaluated. Consequently, the entire supply chains are analyzed, comparing domestic production with hydrogen imports from favorable locations. The economic assessment is based on an indicator, the levelized cost of hydrogen, the LCOH. The study results in an Excel-based tool calculating the LCOH for different supply chains. Different scenarios are developed for each end-use country. In Germany, domestic production is compared with imports, also addressing the need for adequate storage. Blue hydrogen imports from close locations present the lowest LCOH, with values as low as 2.1 €/kg in 2030. This requires pipeline transmission and a monthly storage in depleted natural gas or oil reservoirs. Longer storage durations increase the supply security but also the related costs. In Spain, local, small-scale supply chains are evaluated in opposition to central, larger-scale alternatives. Both configurations are competitive with costs around 3.6 €/kg, suggesting that both supply pathways are feasible. This can spark competition between different players towards a hydrogen economy. In France, domestic hydrogen production via electrolysis is studied, considering different electricity sources, such as the power grid, electricity from nuclear plants and from renewable energy sources. Despite the high interest of France in pink hydrogen, renewables produce the cheapest product, at an LCOH of 4.4 €/kg for onshore wind. If this result is compared to the other two countries, French hydrogen is not competitive. However, the focus on solid oxide electrolysis and novel nuclear technologies might determine a decline in hydrogen costs.