Using Exfin Software to calculate the Levelised cost of hydrogen.

Dolfines, a French company, is developing floating offshore wind platforms that will directly enable hydrogen conversion on the platform. Through the NWE Interreg project, the Marine Energy Alliance (MEA), Dolfines received both technical and commercial services.
Exceedence provided the commercial service to Dolfines, with one of the tasks investigating the Levelised Cost of Hydrogen (LCOH) potential if the total amount of electricity produced from the wind turbine was converted to hydrogen.
Exfin, a techno-financial software tool, allows users to quickly and intuitively build, analyse, and optimise any offshore renewable energy project.

Some of the Key performance indicators (KPI) currently calculated are the Levelised cost of Energy (LCOE), the internal Rate of Return (IRR), and the Net Present Value (NPV).

Key findings

This is an application of the Exfin software to showcase LCOH calculations and potential cost
reduction curves:

1 Exfin can be used to calculate LCOH with some additional manual processing by applying aconversion rate to the calculated yield (MWh) from wind, or other RES to the LCOH unit in kg/H2.

2 With current estimated costs for the hydrogen conversion units, Alkaline is less expensive than PEM, with the former achieving slightly lower LCOH.

3 LCOH is heavily dependent on the LCOE of the renewable energy source.

Case Study: Dolfines.

Exceedence was asked to build two Baseline projects, one for a 6MW wind turbine and 5MW hydrogen conversion unit and the other for a 12MW wind turbine with a 10MW hydrogen conversion unit.

Centrale Nantes provided the wind resource, Dolfines provided the wind turbine costs for the 6MW, and EMEC provided the hydrogen unit cost for both PEM and Alkaline. EXC sourced the remaining project inputs from publicly available information and industry knowledge.

LCOE and LCOH are comparative metrics used in the energy industry to assess the relative merits of generation types. LCOE compares different methods of electricity generation on a comparable basis of Cost per MWh, whereas LCOH is compared on a Cost per kg Hydrogen (H2) basis.
To calculate LCOH, the electricity yield needed to be converted from KWh to kg H2. EMEC and Dolfines suggested a 20% reduction to cover the hydrogen unit’s conversion losses and other losses. The suggested
conversion rate used was thus 55kWh=1kg H2.
While robust, it’s important to note that this method does not factor in the time value of selling hydrogen. This limitation should be considered when interpreting the results.

LCOH is very dependent on the LCOE of renewable energy. The starting LCOE for 2020 is estimated to be €163 per MWh, bringing the starting LCOH using the PEM hydrogen unit to €13.8 per kg H2, as shown in the graph above.
Publicly available estimates for the same year are €11.75 per kg H2, possibly using lower starting LCOE and/or lower H2 CAPEX.

Wind energy analytics on computer screen.

Results

In 2030, the LCOE for FOW is expected to drop to €70 per MWh and €45 per MWh by 2050. If the cost of PEM stays constant, the LCOH in 2030 and 2050 is estimated to be €7.3 and €5.2 per kg H2, respectively. If similar cost reductions are applied to hydrogen units in offshore applications as onshore (40% by 2030 and 80% by 2050), the estimated LCOH drops to €5.9 and €3.4 per kg H2 in 2030 and 2050, respectively. Further refinements in assumptions and cost inputs are needed to reach the 2050 target of €2 per kg H2.

“ “Exfin enabled us to get to key insights quickly and formed an integral part of our decision making on this subject Andreas Emmert, Dolfines

Key Benefits of Exfin

Accurate financial metrics Financial projections based on detailed engineering models and real-world wave, tidal or wind resources.

Accelerated project development Screen out weaker concepts earlier and accelerate the development and refinement of innovative design with genuine prospects.

Design optimisation Explore potential advances in energy generation and identify opportunities for cost reduction

Design understanding Key insights into annual energy production, local power fluctuations, loads in structural members and fatigue life expectancy, based on detailed engineering simulation

Clarity Complete transparency of both financial and engineering design processes

Consistency Suitable for all stages in the design process, from concept development, to model scale prototypes, and right through to full scale versions

Unlock investment Increase investor confidence by de-risking projects

Recognised by industry Validated via industry case studies and technical papers

Environmental and societal benefits Reduces entry barriers to new developers and facilitates growth of wave energy sector in general

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