The least-cost hydrogen for Southern California

Optimization is applied to identify the least-cost sequence of hydrogen infrastructure build-up in Southern California during 2010-2060. Given an exogenous demand, the model generates temporal and spatial decisions for building a hydrogen infrastructure, in terms of when, where, at what sizes and by what technologies, that minimize the net present value of technology, environment, and fuel accessibility costs. The least-cost sequence is then analyzed with respect to technology deployment, delivered hydrogen cost, capital requirements, subsidy need, subsidy capacity, and CO2 mitigation. It is found that industrial hydrogen could play a critical role in initiating hydrogen transition, temporally bridged by onsite SMR to central production dominated at first by biomass gasification and later by coal gasification with carbon dioxide capture and storage (CCS). While a non-discounted capital investment of $24.43 billion is needed for the 50-year build-up, a hydrogen price below 3$/kg could pay back the costs in 20 years earning a 10% IRR. If hydrogen is purchased at the current equivalent gasoline price (2.517 $/gallon), the hydrogen industry could potentially provide $4715 as subsidy for each new FCV purchase. With CCS, 50% of 50-year CO2 emissions could be avoided. (c) 2008 International Association for Hydrogen Energy. Published by Elsevier Ltd. All rights reserved.