Levelized Cost of Hydrogen from offtakers standpoint: An overlooked perspective via case studies in Warrnambool, Australia

Green hydrogen is a promising energy vector for replacing fossil fuels in hard-to-abate sectors, but its cost hinders widespread deployment. This research develops an exact MILP model to optimize the design of integrated green energy projects, minimizing the total annual cost between different power configurations. The model is applied to a case study in regional Victoria, Australia, which supports a fleet of nine fuel cell electric buses requiring 1,160 kg of hydrogen per week. The optimal system includes a 453 kW electrolyzer, 212 kg of storage in compressed hydrogen vessels, 704 kW of solar PV and 635 kW of wind power, firmed with grid electricity. The LCOH is 14.8 A$/kg, which is higher than other estimates in the literature for Australia. This is arguably due to the idle capacities resulting from intermittent hydrogen demand. Producing additional hydrogen with surplus or low-priced electricity could reduce LCOH to 12.4 A$/kg. Sensitivity analyzes confirm the robustness of the system to variations in key parameter costs, resource availability, and estimated energy supply and demand. • The MILP model developed optimizes IGHP design under intermittent hydrogen demand. • Standby and balance-of-plant loads raise baseload and increase costs. • Hydrogen storage improves electrolyzer sizing and lowers CAPEX. • Using the grid to firm renewables is more cost-effective than battery storage. • Selling surplus hydrogen to an external offtaker can reduce the LCOH.