The Role of Low-Carbon Hydrogen in Optimising Hydrogen Production Costs and Electrolysis Plant Design

Abstract

Renewable hydrogen has gained significant attention in European regulations as a key element in decarbonising sectors where electrification is challenging. Several studies have analysed the production cost of RFNBO (Renewable Fuel of Non-Biological Origin) hydrogen and the impact of strict production conditions, particularly the temporal correlation between renewable electricity generation and electrolyser consumption (Delegated Act 20231184).In contrast, the role of electrolytic low-carbon hydrogen as defined in of Directive (EU) 20241788, has received less attention. This Directive allows low-carbon hydrogen production using grid electricity, provided it meets emission reduction targets relative to a fossil fuel benchmark.Integrating RFNBO and low-carbon hydrogen offers investment and operational advantages. It minimizes inefficient start-stop cycles, increases annual operating hours, and reduces investment impact by spreading the costs over a greater output.However, the production of low-carbon hydrogen is uncertain as it depends on the emission intensity of the grid. This introduces challenges in designing a system that ensures reliable hydrogen supply while complying with regulatory constraints. This paper explores the role of low-carbon hydrogen in reducing production costs and its impact on plant design. We developed an optimisation model that integrates investment decisions with operational planning under different grid-electricity emission profiles scenarios.