An up-to-date perspective of levelized cost of hydrogen for PV-based grid-connected power-to-hydrogen plants across all Italy

A. Ademollo, M. Calabrese and C. Carcasci

Applied Energy, 2025, vol. 379, issue C, No S0306261924023419

Abstract: Green hydrogen holds potential for decarbonizing the energy sector, but high production costs are a major barrier. This study provides a comprehensive techno-economic-financial-environmental analysis of PV-based grid-connected hydrogen production plants, targeting hard-to-abate industries having constant hydrogen demand across all Italy. Using real hourly data, the Multi Energy System Simulator (MESS), an in-house developed rule-based tool, was employed and integrated with Genetic Algorithm for optimal plant sizing. The aim is to minimize the Levelized Cost of Hydrogen (LCOH) while complying with regulatory frameworks for green hydrogen incentives access. Key findings show that hydrogen storage is more advantageous than battery storage for supply-side flexibility, and the optimal PV-to-electrolyzer size ratio ranges from 1.8 in Southern Italy to 2.1 in Northern Italy, with hydrogen tank designed for daily storage. Considering photovoltaic, electrolyzer and battery aging models grid dependence increases by 60 % when comparing the first and worst year of operation and leads to a 7 % increase in LCOH. Transitioning from the strictest (hourly) to the least stringent (annual) temporal correlation increases certified green hydrogen by 22 %, while LCOH decreases by only 3 %, suggesting that the environmental benefits of stringent temporal requirements outweigh their moderate economic drawbacks. These findings underscore the need for additional national-level incentives to allow the deployment of this technology and achieving cost parity with grey hydrogen.

Keywords: Multi energy system simulator (MESS); LCOH; Components aging; Green hydrogen incentives; Free cash flow to the firm (FCFF); Energy storage (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1016/j.apenergy.2024.124958

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