TIME BASED APPROACH FOR LCOE AND NPV WITH APPLICATION TO GAS POWER AND HYDROGEN.

This paper explores the effect of combining a gas turbine power plant (GTPP) with electrolyzer and storage facilities for hydrogen (H2) in the same location. We investigate how the co-location may provide new opportunities for the GTPP owner, through the ability to generate new products (in addition to the sales of electricity) that may increase the profitability for both assets: sales of H2 and, ultimately, additional flexibility services that can be generated with the co-location. We also consider the ability of GTPP to co-fire H2 together with NG. The paper relies on LCOE and NPV calculations, which are typical indicators for decision makers in the power industry. We use a time-based approach (named after considering historical operational data from gas-fired power plant) that enable implementing calculations on an hourly basis (compared with the 'conventional' approach for LCOE and NPV), in order to derive the energy quantities that serve to compute the LCOE and NPV. Results show that hydrogen appear to be non-competitive in most cases, with increased values for LCOE and negative NPV. Moreover, none of the incentives we consider (namely carbon pricing, lump-sum grant based on CAPEX, and subsidy that decreases the price of H2 when it is bought and increase the perceived price when it is sold) allow making hydrogen competitive with consistent values. Among the main obstacles is the decisions rule we assumed to determine the sizing of electrolysis and storage. The rule only considers the hydrogen the GTPP needs at peak times, which leads to overdimensioning the hydrogen facilities. This results in high LCOH and, in turn, high LCOE for the GTPP. One solution to overcome this barrier would consist in giving more weight to the objective of having low LCOH in the sizing rule. Another avenue to increase competitiveness relies on adding new products that we did not implement in this preliminary version of the paper. First of all, we want to assess the benefit that may arise from including the revenues generated by grid flexibility services. We leave this for the next version of this paper. [ABSTRACT FROM AUTHOR]