Clean Hydrogen & Ammonia Levelized Cost of Production Calculator

CATF’s Hydrogen Financial Model allows users to estimate the production costs for low-carbon and electrolytic hydrogen and ammonia, granting them a better understanding of the technical and economic drivers behind these costs. The model can also help inform policy decisions by letting users calculate the impact of policies levers, such as tax credits or carbon pricing, on the costs of production.

To use this tool, simply adjust the inputs for the respective model. The model will calculate the cost of production and provide a graphical breakdown as well as provide a graphical breakdown for what’s contributing to the cost stack. For more context regarding the assumptions, please hover over the information icons next to each variable name and see the notes listed below each model. As stated in our paper, the key determinant of hydrogen’s economic competitiveness as a decarbonization solution is its delivered cost, which includes the costs of compression, storage, transmission, and distribution in addition to the production cost which this tool calculates. CATF explored the limits to potential cost declines and estimated that the average production costs for clean electrolytic hydrogen are highly unlikely to fall below $3/kg (Real 2022 USD) in the foreseeable future “To obtain more information about this tool please contact Gus Wakim (gwakim@catf.us) ”

Low Carbon 'Blue' Hydrogen Financial Model

Low carbon ‘blue’ hydrogen is produced by reforming natural gas and capturing the CO2 using carbon capture and storage (CCS) equipment. This model includes three different technologies for comparison: unabated steam methane reforming (SMR) as a reference, SMR with 90% CCS, and autothermal reforming (ATR) with gas heated reforming (GHR) and CCS.
Input
Reference Case
SMR +90% CCS
ATR + GHR

  1. The heat and material balance and other operating parameters are based on IEAGHG Technical Report 2022-07: Low-Carbon Hydrogen from Natural Gas: Global Roadmap
  2. The calculations are based on a 79,000 ton per year (300MW) carbon capture-enabled hydrogen production facility in the Netherlands assuming a 90% load factor.
  3. Financial modeling is done using 2020 as the base year, 3-year construction period, 8% real weighted cost of capital (WACC), 25-year project lifetime, a 1.15 EUR/USD exchange rate and no debt financing.
  4. Calculated hydrogen production costs are calculated at the plant gate (200barg) and exclude storage, distribution, or transportation.
  5. Total Installed Costs used in this analysis are $651/kW for unabated SMR, $1178/kW for SMR+90% carbon capture and $1104/kW for the ATR+GHR hydrogen plant.
  6. Annual Fixed Operating Costs used in this analysis are $26/kW for unabated SMR, $41/kW for SMR+90% carbon capture and $47/kW for the ATR+GHR hydrogen plant. The fixed operating costs include costs for catalysts and chemicals that are normally part of the variable operating costs for a hydrogen plant.

Low Carbon 'Blue' Ammonia Financial Model

Low carbon ammonia is produced through the Haber Bosch process. The model includes a reference case and low-carbon case that includes CO2 compression and drying facilities upstream of transportation and storage facilities.
Input
Reference Case
Ammonia with Carbon Capture

  1. The heat and material balance and other operating parameters are sourced from the ‘Techno-economic assessment of blue and green ammonia as energy carriers in a low-carbon future’.
  2. The calculations are based on a 1.1 million ton per year ammonia production facility operating at a 90% load factor with a 65.4% LHV efficiency or 28.5GJ/ton NH3 specific energy consumption.
  3. Financial modeling is done using 2020 as the base year, 4-year construction period, 8% real weighted cost of capital (WACC), 25-year project lifetime with no debt financing.
  4. Total Installed Costs used in this analysis are $752/ton NH3/year for the base case and $793/ton NH3/year for the ammonia plant with carbon capture.
  5. Fixed operating costs are 2.5% (of total installed cost) for maintenance, 1% for insurance and 60 personnel at $60,000 per year salary.
  6. Catalyst and chemicals cost include $15/kg for reformer catalyst, $16,100/m3 for Water Gas Shift reactor catalyst, and $20/kg ammonia catalyst.
  7. An $85 per ton of carbon dioxide captured 45Q tax credit is applied in the financial model.

Electrolytic Hydrogen and Ammonia Financial Model

Electrolyzer Input

Electrolytic Hydrogen Production

Electrolytic hydrogen is produced through electrolysis, a process where electricity is used to split water into hydrogen and oxygen. For hydrogen to be climate beneficial, the electricity used must be low carbon. Low carbon electricity can come from a variety of sources including solar, wind, hydropower, nuclear, geothermal or a combination of these sources if procured from a low-carbon grid. Hydrogen production costs for three electrolysis technologies are examined:
  1. Proton Exchange Membrane
  2. Alkaline Membrane
  3. Solid Oxide
CATF recently published a paper on the limits of relying on falling electrolyzer costs to reduce the production cost of electrolytic hydrogen.
PEM
AEL
SOEC

  1. The heat and material balance and other operating parameters for PEM and AEL electrolyzers are sourced from the CATF Fraunhofer study. For SOEC electrolyzers, a specific system electricity demand of 40kWh/kg H2 is obtained from the ISPT report on solid oxide electrolysis.
  2. The calculations for PEM and AEL are based on a 1GW electrolysis facility built in the Netherlands and a 92MW facility for SOEC electrolysis.
  3. Financial modeling is done using 2020 as the base year, 3-year construction period, 8% real weighted cost of capital (WACC), 25-year project lifetime with no debt financing.
  4. Total Installed Costs (USD/kW) for Electrolyzers are based on the Institute of Sustainable Process Technology (ISPT) reports – See CAPEX assumptions information bar.
    2020 (High) 2030 (Low)
    PEM 2055 950
    AEL 1600 835
    SOEC 5480 1370
  5. Fixed Operating Costs are assumed to be 3% of TIC for all electrolyzers and include stack replacement.
  6. Modeling was based on ‘start of run’ electrolyzer operations. Electrolyzer performance typically degrades by 1% annually but was not included in the modeling.
  7. PEM and AEL electrolyzer efficiency figures (kWhAC/kg) are obtained from the CATF Fraunhofer study, and the SOEC electrolysis efficiency is obtained from the 2023 ISPT report.
    2020 (High) 2030 (Low)
    PEM 55.1 48.1
    AEL 53.4 49.4
    SOEC 40.0 40.0
  8. A $3 per kg H2 tax credit is applied in the financial model.

Electrolytic Ammonia Production

Electrolytic ammonia is produced through the Haber Bosch process by reacting electrolytic hydrogen with nitrogen. To be climate beneficial, the electrolytic hydrogen must be produced using low carbon energy. The ammonia plant modelled consists of an air separation unit, an ammonia synthesis loop, a refrigeration loop and ammonia storage. All of this is coupled to an electrolysis facility and runs continuously. Electrolytic ammonia production costs are calculated based on the three electrolysis technologies used for electrolytic hydrogen.
PEM
AEL
SOEC

  1. All notes for the electrolytic hydrogen model also apply to the electrolytic ammonia model.
  2. The heat and material balance and other operating parameters for the ammonia plant are sourced from the ‘Techno-economic assessment of blue and green ammonia as energy carriers in a low-carbon future’
  3. Total Installed Costs for the ammonia plant used in this analysis are $434/ton NH3/year and include the air separation unit, synthesis loop and storage.
  4. Fixed Operating Costs are assumed to be 3% of TIC for the ammonia plant.
  5. Capital and operating costs for hydrogen buffer storage to enable the ammonia plant to run continuously at low electrolyzer loads were not included. As such, ammonia production costs are more accurate at relatively high-capacity factors (>80%) and will be underestimated for lower capacity factors.