Levelized Cost of Green Hydrogen Production in the Philippines

Abstract

As climate change is slowly materialising, the importance of alternative fuels has been magnified to aid in reducing carbon emissions. One of the most promising clean alternative fuels is green hydrogen which is produced via water electrolysis powered by renewable energy sources. The solar and wind power potential of the Philippines has been explored in published studies; however, the economic viability of green hydrogen production has not yet been evaluated. In this work, an assessment of the levelized cost of hydrogen (LCOH) produced from solar and wind power in the Philippines was performed. Representative locations within a province were selected based on the annual average resource availability for solar global horizontal irradiance (GHI) and wind speed. LCOH calculations identified the favourable locations for green H₂ production by calculating the net present cost (NPC) of solar- and wind-powered electrolysis plants with deionised water as feedstock. Uncertainty analysis was performed via Monte Carlo simulations by perturbing component costs, feedstock water price, and discount rate. Additionally, LCOH calculations and Monte Carlo simulations showed the disparity of resource availability between solar and wind in the Philippines – supported by the calculated capacity factors. It was also shown that favourable conditions such as high solar GHI and high wind speed tend to have a narrower distribution and lower LCOH values – implying less economic risks in developing over these locations. Calculations identified that policy instruments such as subsidies and tax exemptions are still vital in commissioning green hydrogen plants, as LCOH values are generally higher than the cost of grey hydrogen.