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

Andrea Dumančić (), Nela Vlahinić Lenz and Lahorko Wagmann
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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

Sustainability, 2024, vol. 16, issue 4, 1-23

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.

Keywords: profitability model; hydrogen production technology; green hydrogen; wind power; energy transition (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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