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Profitability Model of Green Hydrogen Production on an Existing Wind Power Plant Location

Author

Listed:
  • Andrea Dumančić

    (Faculty of Economics and Business, University of Rijeka, 51000 Rijeka, Croatia)

  • Nela Vlahinić Lenz

    (Faculty of Economics and Business, University of Rijeka, 51000 Rijeka, Croatia)

  • Lahorko Wagmann

    (Croatian Energy Regulatory Agency, 10000 Zagreb, Croatia)

Abstract

This paper presents a new economic profitability model for a power-to-gas plant producing green hydrogen at the site of an existing wind power plant injected into the gas grid. The model is based on a 42 MW wind power plant, for which an optimal electrolyzer of 10 MW was calculated based on the 2500 equivalent full load hours per year and the projection of electricity prices. The model is calculated on an hourly level for all variables of the 25 years of the model. With the calculated breakeven electricity price of 74.23 EUR/MWh and the price of green hydrogen production of 99.44 EUR/MWh in 2045, the wind power plant would produce 22,410 MWh of green hydrogen from 31% of its total electricity production. Green hydrogen injected into the gas system would reduce the level of CO 2 emissions by 4482 tons. However, with the projected prices of natural gas and electricity, the wind power plant would cover only 20% of the income generated by the electricity delivered to the grid by producing green hydrogen. By calculating different scenarios in the model, the authors concluded that the introduction of a premium subsidy model is necessary to accelerate deployment of electrolyzers at the site of an existing wind power plant in order to increase the wind farm profitability.

Suggested Citation

  • Andrea Dumančić & Nela Vlahinić Lenz & Lahorko Wagmann, 2024. "Profitability Model of Green Hydrogen Production on an Existing Wind Power Plant Location," Sustainability, MDPI, vol. 16(4), pages 1-23, February.
    • Handle: RePEc:gam:jsusta:v:16:y:2024:i:4:p:1424-:d:1335494
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    References listed on IDEAS

    as
    1. Andrea Dumančić & Nela Vlahinić Lenz & Goran Majstrović, 2023. "Can Hydrogen Production Be Economically Viable on the Existing Gas-Fired Power Plant Location? New Empirical Evidence," Energies, MDPI, vol. 16(9), pages 1-20, April.
    2. Qusay Hassan & Imad Saeed Abdulrahman & Hayder M. Salman & Olushola Tomilayo Olapade & Marek Jaszczur, 2023. "Techno-Economic Assessment of Green Hydrogen Production by an Off-Grid Photovoltaic Energy System," Energies, MDPI, vol. 16(2), pages 1-20, January.
    3. Ruhnau, Oliver, 2022. "How flexible electricity demand stabilizes wind and solar market values: The case of hydrogen electrolyzers," Applied Energy, Elsevier, vol. 307(C).
    4. Al-Qahtani, Amjad & Parkinson, Brett & Hellgardt, Klaus & Shah, Nilay & Guillen-Gosalbez, Gonzalo, 2021. "Uncovering the true cost of hydrogen production routes using life cycle monetisation," Applied Energy, Elsevier, vol. 281(C).
    5. Tania Itzel Serrano-Arévalo & Javier Tovar-Facio & José María Ponce-Ortega, 2023. "Optimal Incorporation of Intermittent Renewable Energy Storage Units and Green Hydrogen Production in the Electrical Sector," Energies, MDPI, vol. 16(6), pages 1-25, March.
    6. Mikovits, Christian & Wetterlund, Elisabeth & Wehrle, Sebastian & Baumgartner, Johann & Schmidt, Johannes, 2021. "Stronger together: Multi-annual variability of hydrogen production supported by wind power in Sweden," Applied Energy, Elsevier, vol. 282(PB).
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