Optimizing the Operation of an Electrolyzer with Hydrogen Storage Using Two Different Methods: A Trade-Off Between Simplicity and Precision in Minimizing Hydrogen Production Costs Using Day-Ahead Market Prices

Abstract

The potential for hydrogen is high in industrial processes that are difficult to electrify. Many companies are asking themselves at what cost they can produce hydrogen using water electrolysis with hydrogen storage. This article presents a user-friendly and less computationally intensive method (called method 1 in the following) for determining the minimum of the levelized cost of hydrogen (LCOH) by optimizing the combination of electrolyzer size and hydrogen storage size and their operation, depending on electricity prices on the day-ahead market. Method 1 is validated by comparing it with a more accurate and complex method (called method 2 in the following). The methods are applied to the example of a medium-sized industrial company in the mechanical engineering sector with a total natural gas demand of 8 GWh per year. The optimized LCOH of the analyzed company in method 1 is 5.00 €/kg. This is only slightly higher than in method 2 (4.97 €/kg). The article shows that a very good estimate of the LCOH can be made with the user-friendly and less computationally intensive method 1. For further validation of the methods, they were applied to other companies and the results are presented below.