A recent study titled “LCOH2 The Netherlands” offers a comprehensive analysis of the cost components involved in producing renewable hydrogen via water electrolysis.
The primary goal of the study was to present a realistic overview of the most significant cost elements and the resulting levelised cost of hydrogen (LCOH2) for renewable hydrogen production through water electrolysis in the Netherlands. The study focused on gathering and analyzing data from various electrolysis projects currently under development or realization, specifically targeting projects with a rated electrical input capacity between 100 MWe and 200 MWe.
The study revealed that the largest contributions to the LCOH2 are the cost of electricity, investment costs, and associated capital costs. The investment costs have been on an upward trend due to increases in energy prices, raw materials, labor costs, and interest rates. Notably, the inclusion of a compressor and location-specific circumstances also contributed to higher investment costs.
One of the significant findings was the sensitivity of LCOH2 to the number of full load hours (FLH). An increase of 500 FLH compared to the base case resulted in a decrease in LCOH2 by approximately €0.8/kgH2, whereas a decrease of 500 FLH led to an increase of almost €1/kgH2. This sensitivity highlights the importance of operational efficiency in minimizing hydrogen production costs.
The study also examined the impact of extra high-voltage (EHS) grid tariffs on LCOH2. The increasing tariffs from the transmission system operator, TenneT, significantly contribute to the overall cost. Depending on future tariff developments, the contribution to LCOH2 could range from €1.02/kgH2 (with a 50% exemption) to €3.04/kgH2 in a pessimistic scenario.
To accelerate the deployment of electrolysis projects, substantial financial contributions from public resources are deemed necessary. The study recommends incorporating the findings into the policy-making process to support the development of renewable hydrogen. Regular updates to the study are also advised to monitor market developments and adjust cost projections accordingly.
Renewable hydrogen is poised to play a crucial role in the energy transition, with significant cost reductions expected as the industry matures. Realizing these cost savings requires the actual implementation of projects, which will drive the development of supply chains, enhance competition, and lead to the standardization of plant designs and components.
