ISPT Public Report Gigawatt Green Hydrogen Plant
ISPT Public Report Gigawatt Green Hydrogen Plant
ISPT Public Report Gigawatt Green Hydrogen Plant
Gigawatt
green hydrogen
plant
State-of-the-art design and
total installed capital costs
© ISPT 2020
Summary
There is a sense of urgency for green hydrogen to achieve the European Green Deal and realise
Europe’s clean energy transition. The EU ambition is to install at least 40 gigawatt (GW) of renewable
hydrogen electrolysers by 2030, producing up to 10 million tonnes of renewable hydrogen.1
Clearly, this requires upscaling of water electrolysis technology. The current state-of-the-art is at 10 MW
scale, whereas GW scale green hydrogen plants are needed. For instance, a 1 GW green hydrogen plant
could produce around 10% of the present annual hydrogen demand of the (petro)chemical industry in the
Netherlands.
The technical study presented here is part of the Hydrohub GigaWatt Scale Electrolyser project
that aims to reduce capital expenditures (capex) and deliver conceptual designs (blueprints) for GW
water electrolysis facilities in the five main industrial clusters in the Netherlands. We have prepared a
baseline design with a cost breakdown as first phase of the project to assess the economics of a GW
green hydrogen plant which can be built in 2020. This design was completed for both Alkaline and PEM
electrolyser technology. In the next phase of this project we will develop advanced design options for
further reduction of the capex.
We demonstrated in this report that the capex is higher than usually reported because of different
definitions. If we use similar definitions, like direct costs for system supply and installation, our cost
estimate is in line with reported values. For end-users (owners, investors and operators) complete
and real costs are applicable meaning that total installed costs must be taken into account for final
investment decisions.
We determined Total Installed Costs (TIC) for a greenfield GW green hydrogen plant in a port area in the
Netherlands. This includes all direct costs for equipment, materials and installation on site.
Also, services need to be added, divided in indirect and owners costs, and a contingency provision, which
is commonly applied to cover risks and unknown scope. The total installed costs breakdown and direct
costs distribution are given in figure 1 and 2 for Alkaline and PEM technology.
Our conclusion is that the total installed costs of a GW scale industrial electrolysis plant amount
to 1400 €/kW for Alkaline electrolyser technology and 1800 €/kW for PEM electrolyser technology.
This includes indirect and owners costs as well as contingency for investment decision. The costs
of power supply and electronics, balance of plant, and utilities and civil are equally important as the
cost of Alkaline electrolyser stacks. The costs for PEM stacks are higher and are about the same as
the sum of the other areas. Cost reductions are therefore needed in all mentioned areas.
1
https://ec.europa.eu/commission/presscorner/detail/en/ip_20_1259
2
Capex cost breakdown Alkaline technology
Total Installed Costs 1400 Euro/kW
Direct Costs 800 Euro/kW
9%
23 %
5%
14 %
56 %
6%
15 %
15 % 13 %
Figure 1: Breakdown of the total installed costs for 1 GW green hydrogen plant based on Alkaline technology.
23 % 11 %
7%
56 %
6% 3%
27 %
8%
15 %
Balance of plants
Indirect costs Civil, Structural & Architectural
Owners costs Utilities and Process Automation
Contingency Power supply and electronics
Direct Costs Stacks
Figure 2: Breakdown of the total installed costs for 1 GW green hydrogen plant based on PEM technology.
3
Table of content
Introduction 5
Conclusions 19
Follow-up 20
Colophon 22
Introduction
Green hydrogen can replace natural gas as energy carrier and industry feedstock to reduce CO2 emissions.
This transition requires very large volumes of green hydrogen and investment in many gigawatt (GW)-
scale green hydrogen plants. These plants will be powered by wind and solar power. An example is the $5
Billion Production Facility with water electrolysis and ammonia production with over 4 GW of renewable
energy in the Kingdom of Saudi Arabia, for which a first agreement has recently been signed. 2
In the Netherlands, the ambition is to realise 3-4 GW green hydrogen plants in 2030. 3 One of the
pioneering projects is the joined development of Ørsted and Yara aiming at replacing fossil hydrogen
with renewable hydrogen in the production of ammonia.4 The produced hydrogen is either delivered
directly to industrial end-users or transported through a hydrogen pipeline (backbone), which allows for
transport and buffering. The national gas grid operator Gasunie is working on the realisation of hydrogen
infrastructure envisaged to be operational in 2025. This infrastructure connects the five Dutch industrial
clusters with each other, with storage facilities in the Netherlands and with the adjacent infrastructure at
the border points. 5
The ISPT (Institute for Sustainable Process Technology) is leading a consortium with industrial partners,
namely DOW, Gasunie, Nouryon, OCI Nitrogen, Ørsted, Yara, and knowledge institutes, working together in
the Hydrohub GigaWatt Scale Electrolyser project. The aim is to reduce the capex and levelised costs of
hydrogen6 (LCOH) produced by water electrolysis towards 2030.
We developed a state-of-the-art design and cost estimate for a 1 GW water electrolysis plant producing
hydrogen in an industrial cluster the Netherlands in 2020. Alkaline and PEM electrolyser technologies are
considered as these are most mature. This study is building on a previous regional study 7, which delivered
user requirements for a GW plant in the Netherlands through potential locations, industry demand, plot
plans and infrastructure connections. This design provides the present reference level (baseline) for the
next phase of this project. In this next phase we will develop advanced design options to further reduce
the capex.
For the levelised costs of hydrogen besides capital expenditures also operational expenditures (opex) are
important. That is going to be another chapter in this Hydrohub GigaWatt Scale Electrolyser project.
2
https://www.acwapower.com/news/air-products-acwa-power-and-neom-sign-agreement-for-5-billion--production-facility-in-neom-
powered-by-renewable-energy-for-production-and-export-of-green-hydrogen-to-global-markets/
3
https://www.klimaatakkoord.nl/documenten/publicaties/2019/06/28/national-climate-agreement-the-netherlands
4
https://orsted.com/en/media/newsroom/news/2020/10/143404185982536
5
https://www.gasunienewenergy.nl/projecten/waterstofopslag-hystock/market-consultation-hydrogen-storage
6
Levelised Costs of Hydrogen (LOCH) refers to the total of discounted capex and opex divided by annual hydrogen production and is
expressed in Euro/kg H2
7
Public summary I, Integration of GW green hydrogen plants in five industrial regions, ISPT, 2020
https://ispt.eu/publications/?project-tag=SI-20-07
5
Starting points of the baseline design
A large group of experts from industry, engineering and academia worked together in multidisciplinary
teams per area to define the scope and to deliver a baseline design. Special attention was given to the
interfaces to ensure the operational viability of the system. For each area a consortium partner took the
lead, with other partners in a support role and ISPT as coordinator and technical supervisor.
8
Ørsted, Actual Generation Offshore Wind North Sea, capacity 957 MW, 2018
6
1000
900
800
700
600
MW
500
400
300
200
100
0
January 2018
Figure 3: North Sea wind profile illustrated for the month of January, year 2018 is used in full capacity calculation
(source: Ørsted)
7
Modular design of a 1 GW green hydrogen plant
Based on the described starting points a modular state-of-the-art design was made in this study.
Figure 4 depicts a block diagram for the GW green hydrogen plant (Alkaline). A greenfield plant design is
made, excluding 380kV transport and hydrogen backbone.
Figure 5 and 6 schematically show modular designs for Alkaline and PEM plant configurations. The
figures illustrate how large numbers of electrolyser stacks are grouped with shared transformer-rectifiers,
separators and gas treatment.
There are differences between Alkaline and PEM as PEM requires more electrolyser stacks and no
compressors.
The state-of-the-art 1 GW green hydrogen plant is visualised in an artist impression for Alkaline
technology in figure 7.
Hydrogen
30 Bar
Transformers
380 kV
Oxygen Dryers
Transformers
150 kV
Oxygen
Oxygen gas / liquid separator
Transformers Compressors
33 kV
Hydrogen
Hydrogen gas / liquid separator
Electrolyte/water Deoxidiser
Rectifiers
Electrolyser park
432 Alkaline
1485 PEM
8
HV transformers MV Transformers Rectifiers Electrolysers Separation Scrubber Heat Exchanger Compression Deoxidiser Dryer
380kV 150kV H2 O2 H2 O2 H2 O2 H2 H2 H2 H2
Lines (sub) AC/DC Stacks Units Units Electrolyte Units / stages Units Units
Subsystem 1
1.1
1 1.2
1.3
2.1
2 2.2
2.3
3.1
3 3.2
3.3
4.1
4 4.2
4.3
Illustration of typical modular design for Alkaline technology. One subsystem represents 25% of the full configuration.
9
10
HV transformers MV Transformers Rectifiers Electrolysers Separation Scrubber Heat Exchanger Compression Deoxidiser Dryer
380kV 150kV H2 O2 H2 O2 H2 H2 H2 H2
Lines (sub) AC/DC Stacks Units Units Units / stages Units Units (+1 regen.)
Subsystem 1
1.1
1.2
1.3
1 1.4
1.5
1.6
2
3
4
Figure 6: Illustration of typical modular design for PEM technology. One subsystem represents 25% of the full configuration
Figure 7: Artist impression of a state-of-the-art 1 GW green hydrogen plant based on Alkaline technology
11
State-of-the-art GW green hydrogen plant
The baseline design comprises the following areas, which are described here.
• Electrical installations
Electrolyser stacks operate at low voltage and use direct current (DC). Connecting them to the national
electricity grid of 380 kV thus requires high voltage power transformers and switchgear in three steps
(380/150kV; 150kV/33kV and 33kV/1kV). Rectifiers are needed to convert the alternating current (AC) of the grid
to direct current (DC) and to control the power quality. This is also called power electronics.
• Electrolyser equipment
The Alkaline or PEM electrolysers split water electrochemically into hydrogen and oxygen. The stacks are
connected to the DC supply and downstream gas-liquid separators. For Alkaline we need 432 stacks and for PEM
this is 1485 stacks to meet 1GW capacity. Alkaline uses electrolyte, which is water/KOH solution, whereas PEM
uses pure water.
• Utilities
These ensure availability of consumables and auxiliaries that are necessary for continuous operation. This
includes, amongst others, a demineralised water plant, cooling water towers, piping and connections for water
intake and discharge, instrument air, nitrogen. Also interconnecting piping for utilities to other areas is included.
12
13
Cost estimating principles
A bottom-up cost estimate for realising a 1GW green hydrogen plant has been prepared following
common practices in the chemical industry. Each of the expert teams provided a design document
defining the scope based on deliverables, like heat and material balance, drawings and sized equipment
lists. Based on these specifications a cost estimate of the required capital expenditures for the equipment
supply was made. Costs for installation, mounting and erection on site were added as well as indirect
costs and contingency using multipliers. This leads to the estimate for the total installed costs, which is
used for financial investment decisions. The breakdown is as follows:
• Direct costs
This comprises all expenses for supply of equipment of the scope items mentioned earlier and
installation, mounting and erection on site, including interconnecting piping and all materials and
services from contractors and suppliers.
• Indirect costs
These consist of, amongst others, expenses for engineering, project management, construction
supervision and management, and commissioning costs. Also 10% allowances to cover (known)
uncertainties, e.g. in amount of materials and prices, have been applied over direct costs.
• Contingencies
In this feasibility phase, not all equipment, materials and installation is detailed in engineering
deliverables, which means that the project definition is still at a rather low level. It is engineering
practice to include contingency to cover risks (e.g. delays) and unknown scope, which lead to higher
costs. Based on the achieved project definition in this study a percentage of 30% of the base estimate
was applied.
14
Total Installed Costs
We estimate the total installed costs of a GW green hydrogen plant to be 1400 €/kW for a plant using
Alkaline technology, and 1800 €/kW for a plant using PEM technology. When expressed in terms of
hydrogen production the estimated total installation costs would be 3100 €/(kg/day) for Alkaline and
4400 €/(kg/day) for PEM technology. The use of the latter numbers is preferred, since it is based on the
amount of hydrogen produced instead of the electricity input. In these numbers the difference between
Alkaline and PEM is higher than the difference in capex due to the present higher efficiency of Alkaline
technology.
Figures 8 and 9 provide a more detailed breakdown of the total installed costs. The figures show that,
next to the stacks, the power supply and electronics and balance of plant significantly contribute to
the direct costs. In the case of Alkaline technology, the capital expenditures required for each of these
parts equal those for the electrolysis equipment. Also, utilities and civil costs contribute significantly. For
PEM technology the contribution of electrolysis equipment is significantly larger due to the higher stack
costs. Figure 10 represents the breakdown in total installed costs in case services and contingency are
proportionally distributed over these parts.
Our analysis also demonstrates the relevance of incorporating indirect costs and owner cost, as these
add up to approximately a quarter of the total costs. Also contingency is included to avoid unrealistic
expectations in the development phase and reduce probability of overruns of project costs at execution
phase.
15
Capex cost breakdown Alkaline technology (Million Euro)
Total Installed Costs 1400 Euro/kW
Direct costs 800 Euro/kW
120
323
78
194
779
88
205
210 182
Figure 8: Breakdown of the total installed costs for 1 GW green hydrogen plant based on Alkaline technology (in Million Euro)
189
415
131
1014
102
60
486
148
269
Balance of plants
Indirect costs Civil, Structural & Architectural
Owners costs Utilities and Process Automation
Contingency Power supply and electronics
Direct Costs Stacks
Figure 9: Breakdown of the total installed costs for 1 GW green hydrogen plant based on PEM technology (in Million Euro)
16
Total Installed Costs, including services and contingency
Alkaline: TIC=1400 Euro/kW PEM: TIC=1800 Eur/kW
234
216
349 105 337
140
262
368 328
862
Stacks
Balance of plants
The accuracy of the total estimates is within a - 25% / + 40% range (complying with class IV level
of the Association for the Advancement of Cost Engineering). This is primarily determined by the
quality of deliverables and the level of project scope definition. The expert teams were able to calculate
more than half of their equipment estimates on available figures (e.g. provided by suppliers and other
sources). Where no hard data could be obtained, they took every effort to weigh and value the available
information. For piping, installation, mounting and erection assumptions based on experiences have been
made as is practice for this level of uncertainty.
In addition to this public report a more detailed report will be published in the course of this project
providing more information and conclusions on this state-of-the-art design but also regarding advanced
design of a future GW green hydrogen plant.
17
Other capex definitions and numbers
Besides total installed costs often other scope definitions are used for capital expenditures. This remains
challenging since in many publications it is not entirely clear what is included and excluded. We are
however able to put our results in perspective if we peel down our scope as follows:
• System supply: these costs comprise the supply part of direct costs and includes 33kV transformers and
power electronics, electrolyser stacks and balance of plant modules. Our cost estimate is about 400-500
€/kW for Alkaline. This in the range of for example 300-600 €/kW as reported by others.9
• System supply and installation, these are direct costs but can still vary depending on size and scope.
In our cost estimate, the numbers are about 600 €/kW for Alkaline technology and 900 €/kW for PEM
technology in case civil and high voltage substations are excluded. Similar values have been reported. 10/11
• EPC costs, these are direct and indirect costs but excluding owners costs and contingency, and which still
can vary depending on size and scope. Our numbers for direct and indirect costs are 1000 resp. 1300 €/
kW for Alkaline and PEM. No relevant references for EPC costs have been found.
Regarding system supply (and installation), the capex estimates of this study are in the ballpark with above
reference numbers based on similar scope of supply. Concerning EPC, also civil, utilities and indirect costs
need to be included. To these costs, owners costs and contingency should be added for total installed costs
to cover all costs for the end-user or investor.
9
https://www.hydrogeneurope.eu/sites/default/files/Hydrogen%20Europe_2x40%20GW%20Green%20H2%20Initative%20Paper.pdf
10
RM01 - Electrolysis , Hydrogen Europe, June 2020.
11
https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2018/Sep/IRENA_Hydrogen_from_renewable_power_2018.pdf
18
Conclusions
This study describes the total installed costs of a gigawatt green hydrogen plant. It provides a
complete and realistic picture of the capital expenditures required for building such a plant, powered by
wind energy, and ready to provide green hydrogen to industrial end-users.
For 2020, we estimate a total installed cost of 1400 €/kW for Alkaline electrolyser technology and 1800
€/kW for PEM technology. The study shows that the power supply and electronics, balance of plants,
and civil and utilities contribute to the total installed costs in a comparable way as Alkaline electrolyser
stacks. For PEM however, the electrolyser stack costs are higher than for Alkaline and equal the sum of
mentioned other areas. Furthermore, we have demonstrated the importance of incorporating indirect
costs, owner cost and contingency for end-users. These costs are often not reported but need to be taken
into account from investment point of view. In case other (scope) definitions are used, like only direct
costs for system supply and installation, our cost estimates are in line with reported values.
This baseline design and costs estimate provides the reference level for the next phase of this project to
reduce capex and levelised costs of hydrogen.
19
Follow-up
A preliminary outlook on potential cost reduction was already made during engineering and
compilation of cost estimates. This suggests that many incremental cost savings, see for example below,
can add up potentially to a cost reduction with a factor 2. Further validation of this number is still needed.
Yet even this factor 2 is unlikely to be sufficient to make green hydrogen competitive.
We also started investigating opex to improve levelised costs as the electricity costs are clearly an
important cost driver too. Improvements can be achieved for example through optimising electricity costs
through developing operating models but also co-siting opportunities and creating revenues (e.g. oxygen)
and efficiency improvements.
Therefore, there is a need for breakthrough innovations, business models and technologies to further
reduce levelized costs of hydrogen.
These and other ideas are being followed-up in the project with experts from industry, engineering and
academia, but also require stakeholder involvement and especially input and feedback from suppliers.
The results will be shared with you in a next public report in 2021.
20
The GigaWatt Scale Electrolyser project is part of the
Hydrohub Innovation Program
The Institute for Sustainable Process Technology (www.ISPT.eu) is an open innovation network for the
process technology community to support the development of sustainable processes. The GW electrolysis
project is part of the Hydrohub Innovation Program aiming at supporting the development of green
hydrogen at scale for industrial use.
The Hydrohub GigaWatt Scale Electrolyser project consists of 3 parts, see infographic below.
This project focuses on the upscaling and upnumbering of electrolysers to a GW facility, and optimizing
system design including electrical installations and balance of plant.
This study of the baseline economics is supporting the engineering part 3. Together with the results from
the scientific part 1 and business part 2, its results will be used as input for further design development to
an economically viable GW green hydrogen facilities in five industry regions.
Industrial and research partners Regional partners in 5 industrial clusters Industrial, regional and research partners
Iterative process
21
Colophon
Title
Baseline design and total installed costs of a GW green hydrogen plant
Subtitle
State-of-the-art design and total installed capital costs
Publication date
October 26th, 2020
Author
Hans van ’t Noordende (E4U Projects), Peter Ripson (Ekinetix), on behalf
of the Hydrohub GigaWatt Scale Electrolyser project
Copyright
© Institute for Sustainable Process Technology (ISPT)
Published by
Institute for Sustainable Process Technology (ISPT)
Address
Groen van Prinstererlaan 37, 3818 JN Amersfoort, The Netherlands
Telephone number
+31 (0)33 700 97 97
E-mail
info@ispt.eu
Website
www.ispt.eu
22
About this report
This report was prepared by ISPT in close cooperation with partners. The study was performed by ISPT
and partners. The Hydrohub GigaWatt Scale Electrolyser project is managed and coordinated by E4U
Projects and Ekinetix on behalf of ISPT.
This report can be found online at https://ispt.eu/projects/hydrohub-gigawatt/
• DOW and
• Gasunie
• Nouryon • Imperial College London
• OCI Nitrogen • TNO
• Ørsted • Eindhoven University of Technology
• Yara • Utrecht University
PUBLIC FUNDING
This project is co-funded by TKI Energy and Industry with the supplementary grant ‘TKI-Toeslag’ for
Topconsortia for Knowledge and Innovation (TKI’s) of the Ministry of Economic Affairs and Climate Policy.
Consortium partners
23
Groen van Prinstererlaan 37
3818 JN Amersfoort
The Netherlands
t. +31 (0)33 700 97 97
info@ispt.eu