Hydrogen Farms Baseline Economic Model

Abstract

This paper presents a comprehensive economic assessment of hydrogen farms based on two distinct production technologies. The first technology involves the use of alkaline electrolysers, evaluated under two scenarios: integration with 600 MW and 900 MW combined-cycle gas turbine (CCGT) packages. The second technology focuses on proton exchange membrane (PEM) electrolysers, also analysed under the same two CCGT capacity scenarios. Across all four scenarios, the analysis incorporates the inclusion of hydrogen storage systems and a range of critical safety equipment, such as hydrogen detectors and sensors, gas detection control panels, pressure-relief valves (PRVs), flame detectors, fire suppression systems, high-pressure rupture discs, blast-proof walls, and alarm and warning systems. Alkaline electrolysers constitute most of the capital investment in alkaline hydrogen farms. In the case of a farm utilising 600 MW of combined-cycle gas turbines (CCGTs), electrolysers account for approximately 90.48% of the total capital cost of USD 0.8156 trillion, with CCGTs contributing 4.09% and hydrogen storage and safety equipment comprising the remaining 5.43%. For a similar farm equipped with 900 MW CCGTs, the total capital cost is slightly lower at USD 0.8137 trillion, where alkaline electrolysers represent 90.70%, CCGTs 3.86%, and hydrogen storage and safety systems 5.44% of the overall investment. Proton exchange membrane (PEM) electrolysers represent the largest portion of capital investment in PEM-based hydrogen farms. For a configuration incorporating 600 MW combined-cycle gas turbines (CCGTs), PEM electrolysers account for approximately 91.92% of the total capital cost of USD 1.007 trillion, with CCGTs contributing 3.31% and hydrogen storage and safety equipment comprising 4.77%. In comparison, the capital cost for a similar farm with 900 MW CCGTs is slightly lower at USD 1.005 trillion, where PEM electrolysers make up 92.10%, CCGTs account for 3.13%, and hydrogen storage and safety systems remain at 4.77% of the total investment. This study provides a foundational examination for strategic decision-makers during the transition of an economy from oil-based to non-carbon energy exports, alongside achieving zero carbon emissions. The central premise revolves around the provision of environmental performance while simultaneously avoiding economic downturns. It situates the study within Libya’s broader decarbonisation strategy and explicitly includes an additional 470 MW CCGT configuration, expanding the range of system scales assessed. The study adopts a 25-year operational lifespan, applying a cumulative cost approach that integrates both capital expenditure and long-term O&M. It presents lifetime cost figures, USD 1.2166 trillion for the alkaline 600 MW setup and USD 1.3585 trillion for the PEM counterpart, highlighting the scale of investment required. The study also explains the higher operation and maintenance (O&M) burden of PEM systems due to their sensitive components and maintenance demands, while emphasising the cost advantages of alkaline systems and stronger economies of scale when upsized. The study highlights clear differences between PEM and alkaline electrolysis technologies, especially in terms of costs and scalability. Although PEM systems are more expensive upfront—mainly due to their complex materials and shorter operational lifespan—they make better use of space and have a more compact design. On the other hand, alkaline electrolysers, which take up more land, prove to be more affordable both initially and over the system’s lifetime. Notably, scaling alkaline systems from 600 MW to 900 MW shows modest but valuable cost savings, underscoring the impact of economies of scale. These insights are particularly relevant for regions like Libya, where land is not a limiting factor and cost-efficiency is essential for project feasibility.

Keywords

Hydrogen farm / Alkaline electrolyser / Proton exchange membrane electrolyser / Hydrogen storage / Safety equipment / Combined-cycle gas turbine / Energy oil export

Author Contributions

Conceptualisation, E.A., P.H. and P.P.; investigation, E.A., P.H. and P.P.; writing—original draft preparation, E.A., P.H. and P.P.; writing—review and editing, E.A., P.H. and P.P.; supervision, P.H. and P.P. All authors have read and agreed to the published version of the manuscript.

Ethics Statement

Not applicable.

Informed Consent Statement

Not applicable.

Data Availability Statement

The original contributions presented in this study are included in the article. Further inquiries can be directed to the corresponding authors.

Funding

This research received no external funding.

Declaration of Competing Interest

The authors declare no conflicts of interest.

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