Cost of Green Hydrogen

Abstract

Acting in accordance with the requirements of the 2015 Paris Agreement, Poland, as well as other European Union countries, have committed to achieving climate neutrality by 2050. One of the solutions to reduce emissions of harmful substances into the environment is the implementation of large-scale hydrogen technologies. This article presents the cost of producing green hydrogen produced using an alkaline electrolyzer, with electricity supplied from a photovoltaic farm. The analysis was performed using the Monte Carlo method, and for baseline assumptions including an electricity price of 0.053 EUR/kWh, the cost of producing green hydrogen was 5.321 EUR/kgH₂. In addition, this article presents a sensitivity analysis showing the impact of the electricity price before and after the energy crisis and other variables on the cost of green hydrogen production. The large change occurring in electricity prices (from 0.035 EUR/kWh to 0.24 EUR/kWh) significantly affected the levelized cost of green hydrogen (LCOH), which could change by up to 14 EUR/kgH₂ in recent years. The results of the analysis showed that the parameters that successively have the greatest impact on the cost of green hydrogen production are the operating time of the plant and the unit capital expenditure. The development of green hydrogen production facilities, along with the scaling of technology in the future, can reduce the cost of its production.

1. Introduction

The recent years have brought significant challenges and changes in the energy sector in Poland and worldwide. Growing concerns related to adverse climate change, depletion of traditional fossil fuel sources, as well as increasingly stringent environmental regulations have contributed to taking steps towards green energy transformation.

Green transformation is the process of changing current energy production and consumption systems to be more environmentally friendly and sustainable. One of the main goals is to utilize renewable energy sources (RESs) and reduce carbon dioxide emissions into the atmosphere. A highly promising solution, feasible on a large scale, is the production of green hydrogen from RESs. Unlike the conventional method of hydrogen production from natural gas, green hydrogen is considered environmentally friendly because it does not emit greenhouse gases during production and usage [1]. This hydrogen can be used in various forms of transportation, such as powering heavy-duty vehicles, ships, and aircraft, in the energy sector as an energy carrier, and also for energy storage purposes. Additionally, it finds applications in the chemical industry as a raw material for producing various chemicals, including ammonia or methanol [1,2].

Currently, the whole world is increasingly striving for a revolution in the energy sector, resulting in a series of documents being created to ensure the achievement of climate neutrality by 2050. In October 2021, the Polish government published the PSW2030 document (Polish Hydrogen Strategy until 2030 with a perspective until 2040), which sets out the key goals and actions for the development of the Polish hydrogen economy and, thus, a low-emission and sustainable economy. The plan includes the implementation of hydrogen technologies on a large scale in heating and power generation, as well as the utilization of hydrogen in transportation and other sectors. This is one of the best ways to support the decarbonization of industry. By 2030, the installed capacity of low-emission hydrogen production facilities is planned to reach 2 GW (including particularly electrolyzer installations) [3].

There are many methods of hydrogen production, but to a greater or lesser extent, harmful substances are emitted into the atmosphere during their use, which negatively impacts the environment. The most desirable is green hydrogen, characterized by the cleanliness of its production. Figure 1 illustrates the schematic of green hydrogen production using an electrolyzer. Water enters the water treatment station, where it is appropriately purified and deionized and then directed to the electrolyzer. There, under the influence of supplied electrical energy from renewable sources such as wind farms or solar panels, water is split into hydrogen and oxygen. The resulting products are then either stored/transported in tanks or immediately used in further processes [4,5].

Several types of electrolyzers with different characteristics available on the market can be distinguished:

−

Proton-exchange membrane (PEM) electrolyzers;

−

Alkaline (ALK);

−

Anion-exchange membrane water electrolyzer (AEM);

−

Solid Oxide Electrolyzer Cell (SOEC).

The most commonly used electrolyzers for hydrogen production are alkaline electrolyzers (ALK) and proton-exchange membrane (PEM) electrolyzers. These are plants with well-known technology, which allows them to be widely used in industry. In addition, alkaline electrolyzers are distinguished by their relatively low production cost of about 500–1400 EUR/kW.

Table 1. Parameters for typical water electrolysis technologies [6,7,8].

Parameter	PEM	ALK	AEM	SOEC
Efficiency, %	50–83	50–78	57–59	80–90
Installation lifetime, h	50,000	<100,000	-	<10,000
Temperature range, °C	50–90	60–100	50–70	800–1000
Pressure range, bar	<70	25–30	1–30	1–25
Hydrogen purity, vol%	99.999	99.3–99.9	99.99	-
CAPEX, EUR/kW	1100–1800	500–1400	-	>2000

shows the parameters for typical water electrolysis technologies.

Choosing the right type of electrolyzer and optimizing its parameters can have a major impact on the cost of green hydrogen production. The prices of alkaline electrolyzers and PEMs are projected to decrease in the coming years due to the synergy of research and development initiatives and the learning of this technology over time [9]. In Publication [9], the authors analyzed the economic and competitive dynamics of alkaline electrolyzers and PEMs in relation to the developing hydrogen economy. The authors examined the cost reduction potential of alkaline and PEM electrolyzers by 2050, which was 77% and 79%, respectively. Additionally, the study concluded that proton exchange membrane electrolyzers will dominate alkaline electrolyzers. Despite the positive outlook for falling prices of electrolyzers, research should still be conducted on increasing their efficiency, which, together with the price of RES electricity, is most likely to contribute to the falling price of hydrogen production in electrolysis. In addition, material science research is important as it can help replace expensive materials with cheaper ones and improve the strength of the installation [10,11].

Another important aspect is the scale of electrolyzers under construction, which is highly related to capital expenditures. Electrolyzers with a capacity of 200 kW can have up to 2.3 times higher costs than electrolyzers with a capacity of 1 MW [10]. Mass production will result in lower costs, which will have a positive impact on LCOH. The authors of Publication [10] estimate that by 2030, capital expenditures of electrolyzers operating on a large industrial scale could drop to 240 EUR/kW and, by 2050, to 80 EUR/kW.

Green Hydrogen in the Market

In recent years, green hydrogen has played a crucial role in decarbonizing the energy sector and reducing environmental impact. Based on renewable energy sources, it enables the creation of a sustainable economy, contributing to the reduction in greenhouse gas emissions.

According to the report from the International Energy Agency (IEA) [12], global hydrogen production from all sources reached 95 Mt in 2022, with electrolysis-based hydrogen production being relatively low, below 100 kt. Such low production is attributed to its high manufacturing costs. Currently, the cost of producing green hydrogen is about 4.5 EUR/kgH₂, while the cost of producing hydrogen using fossil fuels with CCS is twice as cheap [11].

The cost of producing green hydrogen is mainly dependent on the price of purchasing electricity from renewable energy sources. Over the past decade, there has been a noticeable dynamic development in renewable energy sources, and this trend continuing in the coming years could lead to a significant reduction in the production cost of green hydrogen.

Table 2. Average production cost of green hydrogen in 2020, 2030, and 2050 [13].

The Energy Source Supplied to the Electrolysis Process	LCOH in 2020 Year, EUR/kgH2	LCOH in 2030 Year, EUR/kgH2	LCOH in 2050 Year, EUR/kgH2
Wind farm	4.15	2.65	1.5
Solar farm	6.5	3.04	1.92

shows the average production cost of green hydrogen for two sources of supplied energy: wind farms and photovoltaic systems based on [13].

The production cost of green hydrogen for electricity supplied from a wind farm in 2020 was 2.35 EUR/kgH₂ cheaper compared to when the energy was supplied from photovoltaic panels. In the forecasts for 2030 and 2050, this difference decreases to only about 0.4 EUR/kgH₂ [13].

Many publications present the present and projected costs of green hydrogen production for different countries of the world. Due to the geographical location of each country, the conditions for the production of renewable energy, and thus hydrogen using this energy, are different. In Article [14], the authors presented, among other things, a techno-economic analysis of green hydrogen production in Australia. They estimated that currently, LCOH ranges from 7.32 EUR/kgH₂ to 9.12 EUR/kgH₂ using wind and solar. The authors estimate that in the next few years, there will be a sharp decline in the capital expenditures of electrolyzers, the price of electricity from solar farms, and, consequently, the cost of producing green hydrogen, which is expected to be 6.27 EUR/kgH₂ and 3.23 EUR/kgH₂ by 2030 and 2040, respectively. In the case of reducing electricity prices from wind farms, LCOH is likely to be 5.04 EUR/kgH₂ and 2.76 EUR/kgH₂ by 2030 and 2040, respectively.

Article [15] presents the competitiveness of green hydrogen production using Power To X technology in Germany and Saudi Arabia for 2030 and beyond. The authors analyzed 16 different scenarios in which the average cost of hydrogen production was 2.23–2.93 EUR/kgH₂ in Saudi Arabia and 2.9–3.5 EUR/kgH₂ in Germany. The analysis showed that despite the additional transportation costs (at an assumed price of 0.95 EUR/kgH₂ it is more cost-effective to supply green hydrogen from Saudi Arabia to Germany than to produce it there. These countries, due to their diverse geographic locations, differ in terms of the predominant type of RES power generation facilities. The publication notes that Germany mainly uses wind farms to produce electricity, while Saudi Arabia uses solar f0arms. The different capital expenditures of these two installations also had an impact on the final cost of green hydrogen production. It was estimated that the investment requirements for green hydrogen production in Saudi Arabia are 25% less than in Germany.

The scalability of green hydrogen production mainly depends on the availability of cheap electricity from renewable energy sources. The decline in the price of energy from these sources over the next few years will have a huge impact on increasing the competitiveness of hydrogen produced with electrolyzers compared to other methods, which are less environmentally friendly. The current forecasts for the price of electricity from RES create promising prospects for the profitability of green hydrogen production. Since 2015, a gradual downward trend has been observed in the cost of hydrogen produced by electrolysis due to the reduced costs of RES electricity and a decrease in the cost of capital expenditures for the electrolyzer [16]. In the context of green hydrogen production, energy storage facilities should not be forgotten either. They are essential for optimizing and stabilizing the process of green hydrogen production, which relies on sources with variable and time-unstable energy generation, such as wind power and solar power [9,17,18].

The utilization of green hydrogen in transportation has contributed to the dynamic expansion of hydrogen refueling stations in Europe and worldwide. In Poland, as of December 2023, there are currently three green hydrogen stations located in Rybnik, Warszawa, and Solec Kujawski, respectively. While the first two are available to all users, the latter was established for internal use by the Solbet company. The Solbet station produces hydrogen through electrolysis based on wind turbines located on the company’s premises, situated less than 100 m away from the refueling point [19,20,21]. The station in Rybnik was established as a result of signing a contract for the delivery of 20 hydrogen buses by NESO (Zero Emission, Cleansing), which started operating in the city in October 2023. The selling price of green hydrogen at the stations in Rybnik and Warsaw is currently 69 PLN/kg (15.62 EUR/kg) [19,22,23]. The average selling prices of green hydrogen in the European Union are lower than in Poland and range from 3.7 to 11 EUR/kg hydrogen [24]. In Germany, at H₂ Mobility stations, starting from October 1st, the price of green hydrogen depends on the level of refueling pressure. For refueling hydrogen under 700 bar pressure, the price is 11 EUR/kg; meanwhile, for refueling at a lower pressure of 350 bar, the price is 9.5 EUR/kg [25,26]. The selling prices of green hydrogen in Poland, unlike other European countries, may vary significantly due to Poland’s heavy reliance on fossil fuels. Poland had a tougher start in the green energy transformation compared to other European countries; however, in recent years, significant progress has been made in reducing the environmental impact of various sectors and increasing the share of renewable energy sources in the overall energy mix [27].

The aspect of green hydrogen production and utilization is addressed in many publications. The authors of Article [28] presented a study of detailed cost and potential curves for green hydrogen for selected 28 countries until 2050. The analyses carried out show a very high hydrogen potential for African and Middle Eastern countries due to geographic locations characterized by high insolation. The results obtained were compared by the authors with the results of the IRENA study and were shown to be higher, influenced by the difference in CAPEX assumptions, WACC, and electrolyzer efficiency. For example, for Australia, the paper’s authors estimated that by 2050, green hydrogen will cost 2.6 EUR/kg, while IRENA estimates this cost at 0.8 EUR/kg.

Green hydrogen can have a wide range of end uses. In Article [29], the authors presented an analysis of systems for substitute natural gas (SNG) and methanol production. An essential component of both these systems is a hydrogen generator, which is powered by surplus electricity from renewable energy sources. In addition, it is worth mentioning that the carbon dioxide used in the process is extracted using carbon capture and storage (CCS) technology from the flue gas of a conventional coal-fired power plant. The article examines the effect of changing parameters on changing the efficiency of SNG and methanol production and the possibility of increasing it using organic Rankine cycle (ORC) modules in both cases. It was shown that the use of ORC modules increases the efficiency of hydrogen and CO₂ conversion.

The economic aspects of producing renewable methanol from green hydrogen and carbon dioxide captured using CCS technology are presented by the authors in Article [30]. The publication compared the prices of the various methanol production processes. It was estimated that the cost of producing methanol from renewable energy sources is the most expensive of all the production technologies analyzed, at 600–1450 EUR/t. The cost of producing methanol from fossil fuels is only 200–250 EUR/t. The high price and its fluctuations when producing methanol with an electrolyzer are influenced by the price of electricity from RES, which affects the price of hydrogen. The publication presents and compares the prices of electricity produced through various renewable energy sources.

Publication [31] analyzed the cost of producing methanol from green hydrogen. The authors showed that the production of methanol from green hydrogen is more expensive than conventional production and calculated that the cost of producing renewable methanol is 1280 USD/t (1195 EUR/t). In addition, they estimated that the price of renewable methanol production is the most influenced by the price of hydrogen and the least influenced by capital expenditures. Despite the higher price, the method has many environmental benefits and will help reduce carbon dioxide emissions.

2. Materials and Methods

This article presents calculations regarding the price of hydrogen produced by an alkaline electrolyzer based on the appropriate assumptions. The energy consumption of the process, unit investment costs, and annual unit operating costs presented in Equations (1)–(3) were calculated based on the methodology outlined in the study [32]. The energy consumption of the process E_C was calculated based on

$$E_C=-2.74 ln\left(pc\right)+68.5$$

(1)

where

pc—production capacity, kgH₂/h.

Unit investment costs i_o were determined from the following formula:

$$i_o=1420 ln ln \left(pc\right)+7900$$

(2)

Annual unit operating costs C_O&M are calculated from the following formula:

$$C_{O\&M}=-55.7 ln ln \left(pc\right)+292$$

(3)

Capital expenditures J_o is the product of unit investment expenditures io and hydrogen power N_o:

$$J_o=i_o·N_o$$

(4)

The cost of equity capital r_w can be determined from

$$r_w=r_f+\left(\beta ·r_R-r_f\right)$$

(5)

where

r_f—risk-free rate, %;

r_R—market return rate, %;

β—risk factor, %.

The discount rate r is

$$r={\displaystyle \frac{J_w}{J_w·C_{C.com}}}·r_w·\left(1-a_t\right)+{\displaystyle \frac{C_{C.com}}{C_{C.com}+J_w}}{r}_{C.com}$$

(6)

where

J_w—cost of own resources, EUR;

C_C.com—cost of a commercial loan, EUR;

a_t—income tax, %.

Discounted capital expenditures $i_o^{*}$ and discounted operating costs $C_{O\&M}^{*}$ are

$$i_o^{*}={\displaystyle \frac{i_o}{N_Z}}$$

(7)

$$C_{O\&M}^{*}={\displaystyle \frac{C_{O\&M}}{N_Z}}$$

(8)

where

N_z—discounted power, kW.

Discounted power is calculated as follows:

$$N_Z=N_{LHV}·B$$

(9)

The B-factor is expressed as

$$B=\sum _{t=1}^n{\displaystyle \frac{{(1-d)}^t}{{(1+r)}^t}}={\displaystyle \frac{1-d}{1+r}}·{\displaystyle \frac{\left[1-{\left(\frac{1-d}{1+r}\right)}^n\right]}{1-\left(\frac{1-d}{1+r}\right)}}={\displaystyle \frac{1-d}{1+r}}·\left[1-{\left({\displaystyle \frac{1-d}{1+r}}\right)}^n\right]={\displaystyle \frac{(1-d)·\left[{\left(1+r\right)}^n-{(1-d)}^n\right]}{{(1+r)}^n·(r+d)}}$$

(10)

where

d—efficiency degradation, -;

r—discount rate, %;

n—lifetime, year.

The A-factor is calculated using the following formula:

$$A=\sum _{t=1}^n{\displaystyle \frac{1}{{(1+r)}^t}}={\displaystyle \frac{{(1+r)}^n-1}{{r(1+r)}^n}}$$

(11)

The discounted liquidation value $l_o^{*}$ is

$$l_o^{*}={\displaystyle \frac{L_o}{N_z}}={\displaystyle \frac{a_1{I}_o}{N_Z}}={\displaystyle \frac{a_1{I}_o·N_{LHV}}{N_{LHV}·B}}={\displaystyle \frac{a_{1}I}{B}}$$

(12)

where

a₁—multiplier = 0.02;

L_o—liquidation value, EUR;

I_o—capital expenditures, EUR;

N_z—discounted power, kW.

The discounted cost of electricity $C_{En}^{*}$ is

$$C_{En}^{*}={\displaystyle \frac{\tau ·E_C·C_{En}}{LHV}}$$

(13)

where

C_En—cost of energy from RES, EUR/kWh.

The discounted cost of demineralized water needed for the process can be calculated using the following formula:

$$C_{H_{2}O}^{*}={\displaystyle \frac{C_{H_{2}O}·y_1·\tau }{LHV}}$$

(14)

where

C_H2O—cost of demineralized water, EUR/kg;

y₁—water production rate, kgH₂O/kgH₂.

By calculating all the values from the above formulas, you can calculate the cost of hydrogen production LCOH:

$$LCOH=i_o^{*}+C_{O\&M}^{*}·A+{\displaystyle \frac{l_o^{*}}{{\left(1+r\right)}^{n+1}}}+C_{En}^{*}+C_{H_{2}O}^{*}$$

(15)

For the purpose of comparison, the conversion of USD to EUR was assumed at the exchange rate (1 USD = 0.95 EUR) (April 2024) [33].

3. Results and Discussion

The assumptions used to analyze the operation of the alkaline electrolyzer are shown in Table 2. The electricity used to produce hydrogen comes from RESs, so the resulting hydrogen is produced without emitting harmful substances into the environment. Data on the cost of producing electricity from a photovoltaic farm were taken from an International Renewable Energy Agency document [34].

The risk-free rate was determined based on quarterly data from the energy regulatory office [35]. Figure 2 shows the development of the value of the risk-free rate over the past 4 years.

The market’s rate of return was also determined from archival data for the past 3 months [36]. The average value was used to calculate LCOH, and the data for the past months are shown in Figure 3. During the analyzed period from 18 October 2023 to 16 January 2024, the value of the risk–return took a negative value most of the time, which indicates the unprofitability of the investment. It only took positive values for 14 days. The main assumptions used in the analysis are shown in

Table 3. Assumptions for analysis.

Parameter	Symbol	Value	Unit
Low heating value of hydrogen	LHV	33.33	kWh/kg
Electrolyzer operating time	$\tau$	6500	h
Production capacity	cp	30	kgH2/h
Degradation of efficiency	d	1.5	%/year
Lifetime	n	25	year
Discount rate	r	5.06	%
Cost of demineralized water	CH2O	0.004	EUR/kg
Cost of electric power	CEn	0.053	EUR/kWh
Multiplier	a1	0.2	—
Demineralized water production rate	y1	8.94	kgH2O/kgH2
Energy consumption	EC	59.18	kWh/kgH2
Unit investment costs	io	3070	EUR/kW
Annual unit O&M costs	CO&M	102.6	EUR/kW
Hydrogen power	No	999.88	kW
Commercial loan interest rate	UC.com	75	%
Share of own funds in investment outlays	UI.w	25	%
Commercial loan interest rate	rC.com	6	%
Cost of own resources	Jw	767,485.38	EUR
Capital expenditures	Jo	3,069,941.5	EUR
The cost of a commercial loan	CC.com	2,302,456.14	EUR
Cost of equity capital	rw	2.77	%
Risk-free rate	rf	2.82	%
Market return rate	rR	−2.64	%
Risk factor	β	1	%
Income tax	at	19	%

.

Table 4. Calculation results.

Parameter	Symbol	Value	Unit
Discounted unit investment costs	$i_o^{*}$	280.84	EUR/kW
Discounted annual unit O&M costs	$C_{O\&M}^{*}$	9.38	EUR/kW
Factor A	A	12.46	—
Factor B	B	10.93	—
Discounted liquidation value	$l_o^{*}$	56.17	EUR/kW
Discounted cost of electricity	$C_{en}^{*}$	693.13	EUR/kW
Discounted cost of demineralized water	$C_{H_{2}O}^{*}$	6.97	EUR/kg
Levelized cost of green hydrogen production	LCOH	5.321	EUR/kgH2

shows the results of calculations made according to the methodology that was needed to calculate the cost of producing green hydrogen LCOH.

Table 4 shows the average cost of green hydrogen production for the cost of electricity from a photovoltaic farm equal to 0.053 EUR/kWh, which amounts to 5.321 EUR/kgH₂. Figure 4 shows the change in the cost of producing green hydrogen with the changing price of the cost of electricity from a RESranging from 0.035 EUR/kWh to 0.24 EUR/kWh. The price range from 0.035 EUR/kWh to 0.075 EUR/kWh refers to the value of the cost of energy before 2020 when the energy crisis occurred and prices rose dramatically. The boundary of pre- and post-crisis prices is marked with a red line in the chart. LCOH decreases/increases by 0.059 EUR/kgH₂ for every decrease/increase in the cost of electricity equal to 0.001 EUR/kWh.

3.1. Monte Carlo Analysis

The Monte Carlo method involves drawing variables at random and analyzing their probability distributions to predict the results. The analysis was performed for selected random variables affecting the cost of green hydrogen production (electrolyzer operating time, discount rate, unit investment cost, annual unit operation and maintenance costs, and cost of electricity) using a normal probability distribution—Gauss. The normal distribution, thanks to its symmetry with respect to the mean value, allows for an analysis that takes into account both increases and decreases in costs with the same probability. In addition, the adoption of such a distribution makes the probability of extreme values (both very low and very high) low. Figure 5 shows a block diagram of the subsequent steps in the Monte Carlo simulation process.

Table 5. Expected values and standard deviations of random variables.

Random Variable	Value	Unit	St. Deviation, %
Cost of electricity	0.053	EUR/kWh	10–50
Unit investment costs	3070.3	EUR/kW	10
Electrolyzer operating time	6500	h	10
Discount rate	5	%	10
Annual unit O&M costs	102.55	EUR/kW	10

shows the expected values and standard deviations of the random variables that were considered using the Monte Carlo method. All calculations were performed for 1000 draws of each random variable.

First, 1000 pseudorandom numbers were generated for each random variable according to Table 5. A standard deviation of 10% and a normal distribution of pseudorandom numbers were assumed. Figure 6 shows the graph of hydrogen production cost and standard deviation individually for all random variables and for all random variables combined. The expected value is the average of all obtained hydrogen production costs based on the generated pseudorandom numbers and is about 5.2 EUR/kgH₂. The determined standard deviation shows which of the random variables has the highest variability in determining the LCOH, and it can be seen that it is the cost of purchasing electricity and the operating time of the plant τ.

Figure 7 shows the cumulative probability distribution of LCOH for each of the random variables, and

Table 6. Cost of hydrogen production for each random variable analyzed for probability P(5,50,95).

Random Variable	Standard Deviation, %	LCOH, EUR/kgH2
		P(5)	P(50)	P(95)
$LCOH\left(\tau \right)$	10	5.01	5.33	5.74
LCOH(r)	10	5.24	5.32	5.41
LCOH(io)	10	5.24	5.32	5.59
LCOH(CO&M)	10	5.07	5.32	5.42
LCOH(Cen)	10	4.86	5.32	5.81
LCOH(all)	10	4.73	5.33	6.04

shows their cost of green hydrogen production for probabilities equal to 5, 50, and 95%. Comparing the results obtained, it can be seen that the characteristics describing the LCOH depending on the cost of electricity are the most stretched, which means that the cost of hydrogen production for this random variable can take for a probability of 5% the lowest value equal to 4.86 EUR/kgH₂, but also for a probability of 95% it takes the highest cost of 5.81 EUR/kgH₂. For a probability of 50% in all analyzed cases, the LCOH is about 5.32 EUR/kgH₂, as shown in the graph by the intersection of the curves at one point.

As previously noted, the cost of electricity purchase C_En has the greatest impact on the variability characteristics of LCOH, so the analysis was extended, and the standard deviation of this random variable was increased.

Table 7. Assumptions of the values of the random variables and their standard deviations.

Random Variable	Expected Value	Unit	Standard Deviation, %
			A	B	C
Cost of electricity	0.053	EUR/kWh	10	30	50
Unit investment costs	3070.3	EUR/kW	10
Electrolyzer operating time	6500	h	10
Discount rate	5	%	10
Annual unit O&M costs	102.55	EUR/kW	10

shows the assumptions of the values of the random variables and their standard deviations. Three variants were determined: A, B, and C, which differ in the standard deviation for the cost of purchasing electricity from a photovoltaic farm. Based on the data in Table 6, the probability reanalysis was performed using the Monte Carlo method, and the results are shown in Figure 8.

Increasing the standard deviation for C_En increased the range of hydrogen production cost values generated. For variant A, the cost of hydrogen production for a probability of 5% is 4.73 EUR/kgH₂, while for variant C, it is 2.49 EUR/kgH₂. For a probability of 50%, the LCOH values are very similar and are in the range of 5.29–5.37 EUR/kgH₂. The cost of hydrogen production for variants A, B, and C for probability P(5,50,95) is shown in

Table 8. Cost of hydrogen production for variants A, B, and C for probability P(5,50,95).

Variant	LCOH, EUR/kgH2
	P(5)	P(50)	P(95)
A	4.73	5.33	6.04
B	3.65	5.37	7.04
C	2.49	5.29	8.13

.

3.2. Sensitivity Analysis

Sensitivity analysis was carried out for the cost of green hydrogen production LCOH as a function of the purchase price of electricity before the energy crisis in 2020, when energy prices ranged from 0.035 EUR/kWh to 0.075 EUR/kWh, and after the energy crisis, when prices rose to 0.24 EUR/kWh. The red dotted line in Figure 9, Figure 10, Figure 11 and Figure 12 marks the base value of the electricity price of 0.053 EUR/kWh. The analysis considered variable values for installation operating time, unit investment costs, discount rate, and operating costs.

Table 9. The range of variability of the analyzed data.

Random Variable	Value	Scope of Analysis	Unit
Unit investment costs	3070.3	2500–3500	EUR/kW
Electrolyzer operating time	6500	6000–7000	h
Discount rate	5	4–6	%
Annual unit O&M costs	102.55	70–130	EUR/kW

shows the range of variability of the analyzed data.

Figure 9 shows the cost of green hydrogen production as a function of variable unit investment costs ranging from 2500 to 3500 EUR/kW and electricity prices. Changing the value of unit capital expenditures significantly affects the cost of green hydrogen production. Reducing i_o allows the LCOH to decrease. For the lowest analyzed value of i_o = 2500 EUR/kW and the lowest analyzed electricity price before the energy crisis equal to 0.035 EUR/kWh, the cost of green hydrogen production is 3.96 EUR/kgH₂. In comparison, for the lowest electricity price after the energy crisis, equal to 0.075 EUR/kWh, and the same value of unit investment, LCOH is 6.33 EUR/kgH₂. From 2020 to 2024, there were large fluctuations in electricity prices. In the least favorable scenario, in which the value of unit investment is assumed to be 3500 EUR/kW and the price of electricity is 0.24 EUR/kWh, the cost of green hydrogen production takes the value of 16.6 EUR/kgH₂.

Another parameter that has a significant impact on the cost of green hydrogen production is the operating time of the installation, which can be variable depending on, for example, the time spent on servicing or repairing possible failures. The cost of green hydrogen production as a function of variable plant operating time in the range from 6000 to 7000 h and electricity prices is shown in Figure 10. A decreasing number of plant operating hours increases the cost of hydrogen production over the entire range of analyzed electricity prices before and after the energy crisis. For an installation operating time of 6000 h and an electricity price of 0.035 EUR/kWh, the LCOH takes on a value of 4.44 EUR/kgH₂. When the operating time of the plant is increased to 7000 h and at the same electricity price, the cost of hydrogen production decreases by 0.33 EUR/kgH₂. For the highest analyzed electricity price and for the highest analyzed plant operating time, the LCOH is 16.23 EUR/kgH₂.

Figure 11 shows the cost of green hydrogen production as a function of the variable value of the discount rate in the range of 4–6% and electricity prices. As the percentage value of the discount rate increases, the cost of green hydrogen production increases. Assuming a discount rate of 4% and an electricity price of 0.035 EUR/kWh, the LCOH is 4.15 EUR/kgH₂. After the energy crisis, for the same value of r and the lowest electricity price of 0.075 EUR/kWh, LCOH takes the value of 6.72 EUR/kgH₂. On the other hand, considering the highest analyzed electricity price of 0.24 EUR/kWh, the cost of hydrogen production reaches a value of 16.49 EUR/kgH₂. It can be noted that from 2022 to the present (2024), for the last 4 years, there have been very large fluctuations, and the cost of green hydrogen production has increased nearly four times.

The effect of variable operating costs ranging from 70 to 130 EUR/kW and the price of electricity on the cost of green hydrogen production is shown in Figure 12. Increased operating costs negatively affect the cost of green hydrogen production by raising its value. For an electricity price of 0.075 EUR/kWh and operating costs of 70 EUR/kW, the cost of green hydrogen production has a value of 6.42 EUR/kgH₂. With an increasing electricity price, the cost of green hydrogen production increases, and operating costs have a negligible impact on this price. Operating costs in the range of 70–130 EUR/kW for a given electricity price change the cost of green hydrogen energy production by less than 0.50 EUR/kgH₂. For the highest analyzed electricity price of 0.24 EUR/kWh and operating costs equal to 130 EUR/kW, the LCOH is 16.54 EUR/kgH₂.

The LCOH results obtained are similar to those presented by other authors in the subject’s literature. During the analysis, the cost of green hydrogen production was studied for different values of the standard deviation of selected parameters, which allowed for the prediction of its future values. For the case in which the standard deviation of the electricity price was 50% and the cumulative probability was equal to 5, the LCOH could reach a value of 2.49 EUR/kgH₂. For such assumptions, the results do not differ from those presented in [14,15] publications, which forecast LCOH in future years. For Australia, a value of 3.23 EUR/kgH₂ is expected by 2030; for Saudi Arabia, 2.23–2.93 EUR/kgH₂; and for Germany, 2.9–3.5 EUR/kgH₂. In all cases analyzed, it is emphasized that the main factor affecting LCOH is the price of electricity from RES.

The share of renewable energy in Poland has been successively increasing over the past few years [37]. With further development, the price of electricity from these sources is expected to fall, which will affect the cost of producing green hydrogen. Offshore wind power projects now underway in Poland are also not insignificant. By 2030, installed capacity from these sources is expected to be 5.9 GW, and by 2040, 11 GW [27]. The development of offshore wind energy will have a key impact on the expansion of the country’s hydrogen economy, as highlighted in the document Polish Hydrogen Strategy to 2030 with an Outlook to 2050 published by the government [3,38]. The analysis performed allows forecasting the possible costs of producing green hydrogen in the coming years with changing selected parameters, such as the price of electricity from RES or capital expenditures. The results obtained can have a major impact on decisions made by decision-makers and stakeholders in the energy industry. Projections indicating a decreasing LCOH can help shape future decisions of the government and institutions responsible for energy policy in a given country, encouraging the promotion of hydrogen economy investments. Predicting costs can influence the assessment of hydrogen’s competitiveness compared to other energy sources, which can lead to the introduction of tax credits and appropriate regulations that will contribute to the development of these technologies. For technology manufacturers and investors, these forecasts will help estimate the profitability of investments in green hydrogen generation. It is also worth mentioning international cooperation, which may expand as interest in and development of hydrogen energy increases.

4. Conclusions

The cost of producing green hydrogen is closely related to the cost of purchasing electricity from renewable energy sources. Based on the results obtained, it can be concluded that among the selected random variables—plant operating time, discount rate, unit capital expenditures, operating costs, and the cost of purchasing electricity from renewable energy sources—the latter has the greatest impact on the variability of the cost of LCOH for a standard deviation of 10%.

Based on the characteristics obtained, it can be seen that, assuming a standard deviation of 10% for all random variables and a cumulative probability of 5%, hydrogen production can achieve a cost equal to or less than 4.73 EUR/kgH₂ and this is by 0.59 EUR/kgH₂with respect to the base price of green hydrogen production. As mentioned earlier, the cost of purchasing electricity from RES has the greatest impact on the cost of hydrogen production. Increasing its standard deviation successively to 30 and 50% increases the range of LCOH values obtained, and for the smallest cumulative probability equal to 5%, hydrogen production can reach a cost of 2.49 EUR/kgH₂ or less.

The sensitivity analysis conducted confirmed that the price of electricity has a key impact on the cost of green hydrogen production, while other analyzed parameters have a much smaller impact. The range of electricity prices before and after the energy crisis caused the cost of electricity production to fluctuate by about 14 EUR/kgH₂. For the lowest analyzed electricity price of 0.035 EUR/kWh, the cost of green hydrogen production was about 4 EUR/kgH₂, and for the highest analyzed electricity price achieved after the energy crisis and equal to 0.24 EUR/kWh, the cost was about 16.5 EUR/kgH₂.

Developing technologies belonging to renewable energy sources is essential to achieve competitive prices for the production of green hydrogen compared to its production by other, less environmentally friendly methods. Reducing the cost of producing energy from renewable sources is key to lowering the cost of producing green hydrogen and using it on a larger scale. Government support programs and renewable energy subsidies are also important and can positively influence the development of these technologies.