APUEA Magazine-no.6 September 2019

APUEA Magazine | No.6 / September 2019
1.
2.
Target the high cost of electricity by tying on-site solar
directly with the electrolyzer. In the base scenario,
electricity is purchased at grid rates 90% of the time; the
remaining 10% of the time, output is ramped up to capture
low-cost excess wind and solar. However, utility solar
prices have dropped considerably over the year to below
$0.04/kWh, although not necessarily for Japan. While
obtaining electricity supply from co-located solar does
reduce electricity costs by eliminating grid electricity
purchases, it makes the system ineligible to participate in
grid services, reducing revenues.
Change the fuel mix to target the higher-value transportation
fuel segment. The competitive price for hydrogen
as a fuel in Japan is $8/kg, while the competitiv price fore
3.
hydrogen as a feedstock is $1.40/kg. This could be an
effective near-term strategy, as it could take considerable
time to decarbonize industrial processes, whereas Japan
has a large heavy-duty vehicle fleet with a turnover rate of
less than 15 years.
Wait until electrolyzer prices drop. Current electrolyzer
costs are around $2,000/kW, but are forecasted to reach
$1,000/kW after 2030 as volumes increase and
performance improves. Because the electrolyzer itself is
the largest component of system costs, the impact on
economics is considerable.
On-site Solar Generation, Investment & Lifetime Revenue Comparison
Net present value ($)
$40,000,000
$30,000,000
$20,000,000
$10,000,000
ROI: -44%{
Feedstock revenue
Fuel revenue
Frequency regulation revenue
Hydrogen storage cost
Electricity cost
Electrolyzer cost
$0
Total cost
Grid services
revenue
Transportation
fuel revenue
Industry
feedstock
revenue
Total revenue
Product Mix Optimization, Investment & Lifetime Revenue Comparison
Net present value ($)
$40,000,000
$30,000,000
ROI: 9.3% {
Feedstock revenue
$20,000,000
$10,000,000
Fuel revenue
Frequency regulation revenue
Hydrogen storage cost
Electricity cost
Electrolyzer cost
$0
Total cost
Grid services
revenue
Transportation
fuel revenue
Industry
feedstock
revenue
Total revenue
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