Operational Strategies and Cost Dynamics of Hydrogen Production: A Case Study in Malaysia

Abstract In pursuit of achieving Net Zero Carbon Emissions (NZCE) by 2050, PETRONAS, Malaysia's leading energy company, has set ambitious decarbonization targets. Among the emerging pathways, hydrogen emerges as a promising alternative to traditional fossil fuels. This paper presents a comprehensive study focusing on the economic and environmental aspects of hydrogen production, specifically looking at Proton Exchange Membrane (PEM) electrolyzers for a refueling station in Malaysia. Using advanced simulation tools like Symmetry iCON v2023.2, this study examines the operational parameters and performance characteristics of PEM electrolyzers. Through detailed analysis, factors affecting operational efficiency, such as cell voltage degradation, operational temperatures, operating pressure, and feed water flow rate, are explored. The findings highlight the importance of maintaining a minimum feed water volume flow rate to optimize operational temperature, while increasing operating pressure emerges as a feasible strategy to reduce both Capital Expenditure (CAPEX) and Operational Expenditure (OPEX). Furthermore, the study reveals the impact of operational strategies, such as isothermal operation, on Plant Power Consumption and module operating potential, revealing potential efficiency gains of up to 15%. Notably, the analysis also highlights the complex relationship between hydrogen and oxygen crossover within the electrolyzer, emphasizing the need for careful management to mitigate compressor power consumption. From a cost perspective, the study shows that achieving a Levelized Cost of Hydrogen (LCOH) between $3-7/kg is possible, depending on operational improvements and local energy sources. However, to maximize the environmental advantages of hydrogen production, more work is needed to make sure the energy grid is cleaner compared to conventional steam methane reforming (SMR) processes. This research provides valuable insights by presenting a method for simulating PEM electrolyzers on a process system level, giving a comprehensive understanding of the economic and technical aspects, as well as emissions implications. Additionally, by concentrating on hydrogen production in Malaysia, it advances our knowledge of hydrogen's potential in meeting affordability and sustainability objectives, in line with PETRONAS's NZCE 2050 target and wider energy transition goals.