Operational and policy levers for low-cost green hydrogen : Levelized cost of hydrogen optimization of a grid-connected proton exchange membrane electrolyzer

Abstract

This thesis examines the cost competitiveness of green hydrogen in Austria by quantifying and minimizing the levelized cost of hydrogen (LCOH) for a grid-connected proton exchange membrane electrolyzer operating under wholesale electricity prices. The central question is what LCOH can be achieved under Austrian market and regulatory conditions, and which levers in the market operation and policy support are required for competitiveness against fossil benchmarks in priority end-use sectors. The working hypothesis is that an optimized wholesale procurement strategy combined with targeted subsidies and network-tariff relief can substantially reduce LCOH and approach sectoral break-even levels. Hourly price series for 2025-2044 were constructed using two methods: statistical interpolation (Scenario A) and statistical plus structural interpolation that blends anchor-year patterns (Scenario B), drawing on empirical data and the SECURES market model. Electrolyzer dispatch was optimized with a threshold rule under a perfect-foresight global benchmark and an implementable sequential variant using only past information. Policy levers were assessed through variants with and without capital expenditures (CAPEX) subsidies and relief on network fees and levies. Sensitivity analyses varied electricity prices, CAPEX, efficiency, lifetime and full-load hours. Results were benchmarked against a power purchase agreement (PPA)-type baseline and against willingness-to-pay signals and sectoral break-even prices. Global optimization yields LCOH of 7.14 €/kg without support, 5.18 €/kg with network-tariff relief, and 3.44 €/kg with the addition of a CAPEX subsidy. Sequential results are moderately higher, while Scenario B delivers slightly higher LCOH but higher average utilization due to a tighter price distribution. Compared to a fixed-price PPA baseline, threshold-based wholesale procurement lowers the active electricity price and endogenously adjusts utilization, reducing LCOH from about 11.45 €/kg to 6.02-6.38€/kg. Sensitivities show that across the +/-20% tests, efficiency exerts the largest effect on LCOH, followed by exogenous changes in Full-loas hours, with the electricity price ranking next. Without support, LCOH is not competitive with current break-evens in refining, primary steel and heavy-duty transport. With combined CAPEX grants and network-tariff relief, LCOH falls to 3.44-3.75 €/kg and can align with some sectoral benchmarks in favorable years. Overall, grid-connected, price-responsive electrolyzers, when supported by targeted CAPEX grants, network-tariff relief, and time-limited operating premiums, can materially narrow the competitiveness gap. Remaining gaps are most effectively addressed by demand-side instruments such as mandates, contracts for difference, and public procurement, that stabilize revenues. Together, operational optimization reduces costs while policy creates bankable demand, enabling scalable and system-efficient deployment.