Valuation and cost reduction of behind-the-meter hydrogen production in Hawaii

Abstract

A 250kW hydrogen electrolysis facility was recently installed at the Natural Energy Laboratory of Hawaii Authority's (NELHA's) campus. This facility that will begin operation in 2020 to produce hydrogen for fuel cell buses on the island to demonstrate of the application of hydrogen to decarbonize transportation. Given the size of the electrolysis station, it has the potential to significantly increase electricity costs for the campus, which is subject to energy and peak demand charges from the local utility. In this paper, we analyze the cost of hydrogen production at NELHA given the rate structure options available from the utility. Production costs are estimated using optimal versus constant scheduling of the facility to meet the buses’ demand. A model of the electrolysis station is used to capture changes in production efficiency over the power range in the optimization routine. The effects of combining the station and campus load versus standalone operation and increasing solar generation are also explored. The analyses surrounding this scenario show the importance of multiple factors on the potential profitability of hydrogen production in behind-the-meter applications and show trends that could have implications for other similar installations.