4. Cost Assessment

COST ASSESSMENT

Methodology for Costing

Incorporated into the H2ool is a costing system. This program takes the governing feature of individual components and produces a capital cost. These values are then added together giving the user a approximate cost for the system. Detailed below are the individual ways in which the cost of individual components was calculated.

Solar Array

The H2ool determines the size of solar array needed to meet the user demand. Various costs of large scale photovoltaic manufacturers, like Trina Solar (CCL, 2018) and Axitech Power (OGE, 2018.), were analysed and then a cost per m^2 of solar array was obtained. The cost per m^2 of the average solar cell came to £70.

Compressor

The power requirement is calculated by the H2ool and number of compression stages required is drawn. The unit cost per kW of a reciprocating compression stage was taken as £400 (Luyben, 2018) in relation to the system developed. The compression system can then be calculated.

Electrolyser

In the case of the electrolyser, a literature review was conducted, taking a range of prices of electrolyser from across the market and calculating a price per kW (M. Sayed., 2017), hence a value for the price of the electrolyser per kW was obtained. The H2ool will then calculate the power requirement of the electrolyser to produce the required amount of hydrogen. This power is then used to calculate the total cost.

Fuel Cell

A similar approach is used to cost the fuel cell. The price per kW according to various sources came to around £4000/kW (Edwards, 2008). The H2ool again, calculates the power requirement of the fuel cell and a total price of fuel cell is obtained.

Storage

System storage cost is calculated by determining the number of 24,000L Calor CNG storage tanks required to store the total amount of hydrogen at any one time, calculated by the H2ool. This cost came to £14,200 per tank.

Table 1: Components deterministic feature and cost

Figure 1 : Solar Array Sizing

Current System

Location

To give an idea of current capital costs, a location was chosen of high irradiance to provide evidence of the systems potential. Below an irradiance map (Figure 2) shows the state of Arizona in the U.S.A.

Cost Comparison

As a futures project, it was estimated early on than the system would be of high capital costs. The graph below (Figure 3) gives a rough idea of the cost difference between a state of the art Tesla Power Wall (Tesla, 2018) with installed solar power and the VisionH2 solar-hydrogen-system.

Levelised Cost of Electricity (LCOE)

As the capital costs are extremely high, the Levelized Cost Of Electricity or LCOE is exceedingly high at £1.09/kWh. The table below compares current (unsubsidised) costs of other energy systems. To reach these costs, a 20 year payback period was assumed with an 8% interest rate. Values for alternate systems were estimated from their subsidised costs (Lazard 2017). Its worth also noting that although LOCE is greater, no other of these energy systems hold storage capabilities as VisionH.

Future Cost Predictions

Solar Array

The solar array makes up a large portion of the costs due to the excessive size, although research predicts that mono-crystaline silicon is a mature technology (Lazard, 2017). The graph below shows the stationary cost per MWh in 2017.

Fuel Cell & Electrolyser

The extraction of hydrogen from water by electrolysis is one of the most expensive parts of the system. However, development has been underway for many year in order to improve the efficiency of the electrolysers on the market.

Studies have predicted in years to come, fuel cell and electrolyser costs will fall rapidly. The fuel cell and the electrolyser determine the cost of the system as they are far more complex than other parts (Table 2). The graphs below show the trend in price per kW of each technology.

Electrolyser: It is estimated that the cost per kW of electrolysis, the lower trend on Figure 5, can be seen to drop from approx. £1100/kW to approx. £830/kW by 2030. This is backed up by The Institute of Energy and Climate Research Germany (Sayed, 2017).

Fuel Cell: Assuming a 3% increase year on year in fuel cell efficiency from current costs, estimates show that fuel cell technology could cost more than 50% less by 2040.

Below shows a table of the estimated decrease in price of the system.

With the decrease in price over the next few decades, the total capital cost of the system proposed is estimated to drop dramatically. In 2040, the system total including maintenance and installation, is estimated to cost over 2.5 times less than its original price (£27,150,000), at £10,900,000.

Comparing the LCOE of these future systems unsubsidised costs of other energy systems shows the potential for 2040.

Figure 2 : Direct Normal Irradiation USA (NREL, n.d.)

Fuel Cell

Electrolyser

Figure 3 : Cost comparison of current system

Table 2 : Unsubsidised Costs of Energy Systems (2018)

Figure 4: Predicted Cost of Solar Array

Figure 5: Future Costs of Fuel Cell & Electrolyser

Table 3 : Unsubsidised Cost o Energy System (2018 - 2040)

Figure 6: Cost Comparison of Future System

Government Subsidy

To have any chance at becoming feasible in the market, like any new technology, subsidies must be made towards the technology. This is especially important for VisionH as the current costs of system outweigh the current benefits.

The UK government offers “green subsidies” or “green levies” to help pave the pathway to a low-carbon economy. Just a few of these subsidies that could apply to VisionH are listed below:

The Renewables Obligation (RO) – is an obligation set up by the government to support large scale electricity generation. Through this subsidy, the government puts an obligation on all licenced electricity suppliers, like EON, to source a proportion of electricity supplied to customers from renewable energy means
Feed in Tariffs – Usually aimed at public renewable energy generation although still applies. Energy produced can be paid for by Energy companies if energy is fed back into the national grid.
Smart Systems and Flexibility Plan – A recent subsidy put aside by the government. The government is expected to invest around £265M in smart system research, development and demonstration.

References:

CCL. (2018)Trina Solar. [Online] Available at: https://www.cclcomponents.com/trina-solar-275w-honey-polycrystalline-solar-module-60-cell-silver-frame?gclid=Cj0KCQjwtOLVBRCZARIsADPLtJ2YOnl-I36lDAydGorGSdAGa7q3jVA8tH22Ho1FchOfYTxZh2A1PIcaAoGIEALw_wcB [Accessed on 09/04/2018]

Edwards, P.P. (2008) Hydrogen and Fuel Cells: Towards a Sustainable Energy Future. [Online] Available at: https://ac.els-cdn.com/S0301421508004503/1-s2.0-S0301421508004503-main.pdf?_tid=89be7f0b-4965-4849-a3aa-6e49e8e10dba&acdnat=1521486590_c91b57feedf73d09e09e7063bab45cfc [Accessed on 10/03/2018]

Lazard (2017) Lazard's LCOE Analysis. [Online] Available at: https://www.lazard.com/media/450337/lazard-levelized-cost-of-energy-version-110.pdf [Accessed on 23/02/2018]

Luyben W.L. (2018) Capital Cost of Compressors for Conceptual Design. [Online] Available at: https://www.sciencedirect.com/science/article/abs/pii/S0255270117313168 [Accessed on 11/05/2018]

M. Sayed. (2017)The Investment Cost of Electrolysis. [Online] Available at: https://ac.els-cdn.com/S0360319917344956/1-s2.0-S0360319917344956-main.pdf?_tid=83ce75d6-f5f9-402d-ade7-51c12901d6e6&acdnat=1521481783_da1499b8abef83a71c82d527d696e5f7 [Accessed on 23/02/2018]

NREL (n.d) National Renewable Energy Laboratory. [Online] Available at: https://www.nrel.gov/gis/solar.html [Accessed on 10/05/2018]

OGE (2018) Axitech Power. [Online] Available at: http://www.off-grid-europe.com/axitec-power-ac-250p-156-60s-250w-polycrystalline-solar-panel?gclid=Cj0KCQjwtOLVBRCZARIsADPLtJ2bwvy0dPHLvNxSlZ_HWSRX47qVNTrWU7Mf63DEsjig1zKRcFFAvWoaAidhEALw_wcB [Accessed on 23/02/2018]

Tesla (2018) PowerWall. [Online] Available at: https://www.tesla.com/en_GB/powerwall [Accessed on 09/04/2018]