The cost of green: Analyzing the economic feasibility of hydrogen production from offshore wind power

Abstract

Wind energy is a cornerstone for enhancing grid stability and augmenting energy storage solutions, especially through its synergy with green hydrogen production. While substantial research has analyzed the economic dynamics of offshore wind and green hydrogen, the impact of offshore distances on hydrogen production costs remains underexplored. This study introduces a novel, globally applicable modeling framework for the Levelized Cost of Hydrogen (LCOH), illustrated using the strategically significant Taiwan Strait as a case study. By employing net present value analysis, we compare centralized, distributed, and onshore hydrogen production scenarios, documenting the lowest current LCOH values at $10.27, $10.31, and $11.32 per kg of hydrogen respectively. These findings highlight the cost-effectiveness of the centralized configuration and emphasize the significant costs linked to transmission infrastructure in onshore setups. Looking ahead to 2035, our framework predicts substantial reductions in LCOH, with low-cost scenarios forecasting profitability at just $9 per kilogram of hydrogen. Powered by the universally accessible ERA5 reanalysis dataset, our approach supports analogous assessments worldwide, thereby aiding strategic planning and the deployment of renewable technologies. In-depth sensitivity and Monte Carlo analyses further enhance our understanding of the impacts of offshore distance and other key factors, bolstering the economic evaluation of green hydrogen production. This comprehensive methodology not only assesses present capabilities but also facilitates broad application, fostering the strategic development of renewable technologies globally.