Economic and Environmental Assessment of Hydrogen Production from Brazilian Energy Grid

The Brazilian energy grid is considered as one of the cleanest in the world, because it is composed of more than 80% of renewable energy sources. This work aimed to apply the levelized costs (LCOH) and environmental cost accounting techniques to demonstrate the feasibility of producing hydrogen (H-2) by alkaline electrolysis powered by the Brazilian energy grid. A project of hydrogen production, with a lifetime of 20 years, had been evaluated by economical and sensitivity analysis. The production capacity (8.89 to 46.67 kg H-2/h), production volume (25 to 100%), hydrogen sale price (1 to 5 USD/kg H-2) and the MAR rate were varied. Results showed that at 2 USD/kg H-2, all H-2 production plant sizes are economically viable. On this condition, a payback of fewer than 4 years, an IRR greater than 31, a break-even point between 56 and 68% of the production volume and a ROI above 400% were found. The sensitivity analysis showed that the best economic condition was found at 35.56 kg H-2/h of the plant size, which generated a net present value of USD 10.4 million. The cost of hydrogen varied between 1.26 and 1.64 USD/kg and a LCOH of 37.76 to 48.71 USD/MWh. LCA analysis showed that the hydrogen production project mitigated from 26 to 131 thousand tons of CO2, under the conditions studied.

Automated summary

The Brazilian energy grid, composed of over 80% renewable energy sources, is seen as one of the cleanest in the world. This study applied levelized costs and environmental cost accounting techniques to demonstrate the feasibility of producing hydrogen through alkaline electrolysis powered by the Brazilian energy grid. The evaluation showed that at a hydrogen sale price of 2 USD/kg, all plant sizes were economically viable with a payback period of less than 4 years, an internal rate of return greater than 31%, and a return on investment above 400%. The project also successfully mitigated CO2 emissions by 26 to 131 thousand tons.