Integrated assessment of levelized costs of hydrogen production: Evaluating renewable and fossil pathways with emission costs and tax incentives

Abstract

The transition towards a sustainable hydrogen economy is driven by the need to decarbonize energy systems. This study presents a comprehensive analysis of the levelized cost of hydrogen (LCOH) from renewable sources and fossil-based production pathway with carbon capture and storage (CCS). The analysis integrates emissions assessments, tax credits under the Inflation Reduction Act (IRA), and employs sensitivity analyses to provide a holistic understanding of the economic viability and critical cost considerations. The results reveal that hydrogen production pathways that leverage Wyoming's nuclear and wind energy resources can be competitive with fossil-based production by utilizing existing IRA incentives. However, the capital costs of electricity production facilities and electrolyzers greatly influence the LCOH. For fossil-based hydrogen production, the cost of emissions, natural gas and electricity significantly impact the LCOH, underscoring the importance of optimizing energy consumption and securing affordable feedstock. This study identifies blue hydrogen as a balanced strategy for Wyoming to transition into a regional hydrogen hub, providing valuable insights into the economic and environmental considerations for fossil centric energy economies.