Economic analysis of hydrogen production from electrolyzed water technology by provinces in China

0 Introduction

Severe environmental and climate issues have prompted accelerated exploration of clean energy sources.Based on the IPCC (Intergovernmental Panel on Climate Change) report,global warming is approaching the limit of 1.5 degrees Celsius,with frequent occurrences of natural disasters such as droughts,wildfires,and floods posing evident threats [1].To achieve the global climate change goal of restricting the temperature rise to within 1.5 degrees Celsius by the middle of this century,it is necessary to vigorously promote carbon emission reductions in fossil energy and traditional industries and accelerate the global energy transition toward cleanliness,which is an urgent task.Hydrogen energy,a resource-rich,clean,efficient,and renewable energy carrier,has become an important carrier in the new round of energy transition worldwide.Hydrogen is essential for developing a clean,secure,efficient,lowcarbon,energy system,accelerating the revolution in the generation and use of energy,and meeting carbon peaking and carbon neutrality goals [2].Major countries around the world,such as the United States and Japan,as well as the European Union,have made hydrogen energy a top priority;have developed specialized action plans,strategies,and growth roadmaps;and have elevated the industry’s growth to a strategic level to meet their energy,environmental,economic,technology,and security needs [3].The Chinese government delivered its“Medium-and Long-Term Development Plan for the Hydrogen Energy Industry (2021–2035)”in March 2022,clarifying the strategic importance and goals for growth of hydrogen energy,as well as injecting new momentum into accelerating the growth of the hydrogen energy industry [4].

With the ongoing advancement and deepening of China’s carbon peaking and carbon neutrality policies,the falling cost of electricity via new energy sources (especially photovoltaic and wind power),and the gradual maturity of the hydrogen energy application market,the market demand for hydrogen gas is expected to experience explosive growth.Although traditional fossil-based“gray hydrogen”will still dominate the market in the short to medium term,the use of“green”electricity to electrolyze water for hydrogen production will become the mainstream direction for development of a low-carbon economy in the future,with carbon reduction being beneficial for the realization of strategic carbon neutrality goals [5].The use of renewable energy in the electrolysis of water for hydrogen production is a truly zero-carbon hydrogen production method.However,a major obstacle to the growth of the hydrogen energy sector is the high cost of this technology [6].Researchers and analysts have examined the economic feasibility of electrolyzing hydrogen both domestically and internationally.The price of renewable-energy electrolytic hydrogen generation was analyzed systematically in a study in which the levelized cost of hydrogen (LCOH) was determined for alkaline (AWE) and proton exchange membrane (PEM) water electrolysis hydrogen generation [7].Another study analyzed the cost of green hydrogen production based on the main factors affecting electrolytic water hydrogen generation,including the electricity price,system scale,equipment investment,electrolysis efficiency,operating hours,and management quality improvement [8].The LCOH model was used in an analysis of the economic viability of electrolyzing hydrogen and a life cycle analysis of electrolytic water hydrogen generation projects conducted by comparing the costs of electrolytic water hydrogen generation by different technical routes [9].Potential technical routes have been proposed for electrolytic water hydrogen generation in China,based on analysis of current levelized low-carbon clean hydrogen costs [10].Another study summarized the technological progress in distributed methanol hydrogen production,natural gas hydrogen production,alkaline electrolytic water hydrogen generation,proton exchange membrane (PEM) electrolytic water hydrogen generation,and ammonia decomposition hydrogen generation and compared the prices of these five technical routes [11].Although these studies analyzed the costs of electrolytic water hydrogen generation in China in detail,they did not consider the indirect carbon emission prices of electrolytic water hydrogen generation associated with the different energy sources used to generate power.Furthermore,individual scenarios were considered in previous studies;their findings are not necessarily applicable to hydrogen production projects in all provinces of the country.

1 Hydrogen production from water electrolysis

A vital component of the hydrogen energy industry chain is hydrogen generation,which can be divided into three primary categories:hydrogen produced from water electrolysis,hydrogen produced from industrial by-product gas,and hydrogen produced from the reforming of fossil fuels [11].Hydrogen generation via fossil energy reforming,which is accomplished mainly using coal and natural gas as raw materials,has low costs and is suitable for large-scale industrial production.Hydrogen generation via industrial by-product gas mainly uses coke oven gas and propane.Although the hydrogen generation price is low,the product purity achieved is not high,and further refinement and purification are required.Hydrogen generation via water electrolysis has the benefits of using simple raw materials,no greenhouse gas emissions,high hydrogen production efficiency,and high product purity [12].In the short term,industrial byproduct hydrogen is a transitional solution to meeting hydrogen demand,whereas in the medium and long terms,renewable energy electrolytic hydrogen generation is the ultimate solution for hydrogen sources [13].

With the advent of renewable energy sources,such as solar,wind,and tidal energy,additional electrical energy may be used to electrolyze water and transform it into hydrogen [14].The development of renewable energy makes the entire process of hydrogen generation with electrolytic water environmentally friendly.The advantages of hydrogen generation with electrolytic water make it the most promising approach to solving the current energy crisis [15].

1.1 Prospects for growth of hydrogen generation by water electrolysis

Currently,China is diligently encouraging gradual carbon reduction and zero-emissions goals and accelerating the construction of modern power systems.It is anticipated that,by 2060,the grid will require four times as many flexible resources as it currently has,with battery energy storage,hydropower,pumped storage,and hydrogen replacing fossil fuels as the main sources of flexibility.Large-scale energy storage is made possible by the integration of hydrogen with power systems,which encourages the commercialization of hydrogen generation,transportation,and use [16].Electrolytic water hydrogen production,as a highly adjustable load,may become an important flexibility regulation resource for modern power systems,promoting the absorption and use of renewable energy sources and enhancing the flexibility of power systems [17].

In 2023,China accelerated the deployment of green energy demonstration projects based on hydrogen,building public service platforms for technical standards,equipment testing,and so on.The level of domestication of the main technologies and production processes within the hydrogen industry chain,including“generation,conservation,transportation,use,and services,”has steadily improved,with achievements in all links.Representative renewable energy hydrogen production demonstration projects have been completed and put into operation,and integrated,large-scale hydrogen production projects have entered the implementation phase.The number of construction projects for renewable energy electrolytic water hydrogen manufacturing facilities by province in China is shown in Figure 1,and the proportions are shown in Fig.2.Since 2023,China has begun construction on 67 major renewable energy hydrogen production projects,a year-on-year rise of 34%,with the main construction projects located in northern China and some other areas rich in renewable energy.The planned total scale of hydrogen production for these projects is 5,752 megawatts.

1.2 Technologies for producing hydrogen from water electrolysis

The three main methods for producing hydrogen by water electrolysis—solid oxide electrolyzer cell (SOEC) electrolysis,proton exchange membrane (PEM) electrolysis,and alkaline (ALK) water electrolysis [18]— are compared in Fig.1.Because of the poor stability of the electrode materials,hydrogen generation by solid oxide water electrolysis is still in the experimental stage,despite having the lowest energy use and highest energy conversion rate.PEM water electrolysis technology is characterized by low energy consumption,compact size,fast start-up and shutdown,and high purity.However,it is still in the early stages of commercialization,with higher costs.ALK water electrolysis hydrogen generation is the most mature and cost-effective approach and is currently the mainstream technology.Fig.3 illustrates the operational concepts of the three water electrolysis hydrogen generation systems.

Fig.1 Number of major renewable energy-to-hydrogen projects begun since 2023 by province in China

Fig.2 Proportion of major hydrogen projects under construction in various regions of China since 2023

Fig.3 Diagrams of three types of electrolytic cell operation

The costs of ALK and PEM water electrolysis for hydrogen generation differ for multiple reasons.First,they are in different phases of business development.ALK water electrolyzers in China have achieved localization and are highly competitive in the international market,with prices ranging from 2,000 to 3,000 CNY/kW.Because of the need to import key materials and technologies for PEM water electrolyzers,their prices range from 7,000 to 12,000 CNY/kW.Second,their scales of hydrogen production differ.The hydrogen scale for manufacturing domestic PEM water electrolyzers is up to 200 Nm3/h,yet there are no large-scale hydrogen generation applications within China.The singletank ability of ALK water electrolyzers has crossed 1,000 Nm3/h,and megawatt-level hydrogen generation has been achieved nationally,causing equipment depreciation,civil construction depreciation,and operation and maintenance costs lower than those of PEM water electrolysis hydrogen technology for manufacturing [19].Thus,the primary focus of this study is to examine the costs associated with hydrogen production projects in different Chinese regions,using ALK water electrolysis hydrogen production as an example.

Table 1 Comparison of hydrogen generation methods

2 Economic model for hydrogen production projects considering carbon emission costs and oxygen sale offsetting costs

The price of grid-connected electrolytic hydrogen generation projects can be calculated using the LCOH model.This study proposes an LCOH model consisting of four components:electricity cost for hydrogen production,electrolysis plant operation cost,carbon emission cost,and oxygen sale offsetting cost.The LCOH model is expressed as follows:

where N is the amount of electricity used per kilogram of hydrogen generated from the electrolysis plant;E is the electricity cost for hydrogen production; F is the cost of the electrolysis plant;and P is the carbon emissions cost per kilogram of CO2,with a mean transaction cost of 55.3 CNY/ton for the 2022 Chinese carbon market as the benchmark;C is the carbon emission intensity;Y is the oxygen sale offsetting cost;Cele is the capital expenditure of the electrolysis plant;Rele is the residual value of the electrolysis plant’s capital expenditure;r is the discount rate;n is the project lifespan;Oele is the operating expenditure of the electrolysis plant;Fele is the interest payable by the electrolysis plant;Tele is the taxes payable by the electrolysis plant;and Ht is the annual hydrogen generation of the electrolysis plant.

2.1 Electricity cost for hydrogen production

Considering the current technological challenges and economic disadvantages faced by off-grid hydrogen production technology,as well as the lack of extensive policy support,most off-grid hydrogen production projects are for demonstration purposes.Although off-grid hydrogen production technology can effectively reduce carbon emissions,it cannot be widely promoted in the short term [20,21].Therefore,the current cost of hydrogen production electricity primarily refers to the electricity price in each province.In China,owing to the different resource endowments of each province,there are different electricity prices;therefore,the cost of hydrogen production varies from province to province.The costs of hydrogen production and electricity purchases in each province are shown in Table 2.All data are from the websites of the provincial growth and reform commissions.

Table 2 Provincial data on the cost of purchasing electricity for hydrogen production through water electrolysis

Table 3 Proportion of electricity cost in total price of gridconnected electrolytic hydrogen production

2.2 Electrolysis plant operation cost

The operation cost of an electrolysis plant can be expressed as follows:

where OPEX is the operation cost of the electrolysis plant;CF is the equipment maintenance cost;CS is the wages of employees,which vary by the level of regional economic growth and are based on data for wages in each province from the“China Statistical Yearbook 2022”;CM is the material cost;CB is insurance costs;CW is water fees;and CQ is other management costs.

2.3 Cost of carbon emissions

The cost of carbon emissions can be expressed as follows:

where C is the carbon emission intensity;HD is the electricity cost per kilogram of hydrogen produced;Si are the percentages of various energy types,including coal,gas,wind,hydroelectric,solar,and nuclear power,in each province’s power generation,based on data from the“China Electric Power Statistical Yearbook 2022”;and Ri is the unit carbon emissions of each energy type.

2.4 Oxygen sale offsetting cost

High-purity green oxygen is a byproduct of electrolytic water hydrogen synthesis that has economic value and may be used in many sectors and disciplines,such as medicine and chemistry.With the average market price of high-purity oxygen being approximately 35 CNY/m3,the economic viability is significant.This study assumed that 50% of the oxygen produced by an electrolytic water hydrogen project is purified and sold externally at a price of 5.6 CNY/kg.

3 Analysis of factors affecting the price of hydrogen generation via water electrolysis

Alkaline water electrolysis hydrogen generation technology is currently the most mature technology,with advantages such as a simple tank structure,safety,reliability,long operational life,ease of operation,and low price.This is the most widely used method of electrolytic hydrogen generation[21].This study analyzed typical alkaline water grid-connected electrolytic hydrogen production projects and found that five variables—the electricity cost for hydrogen production,carbon price,electrolysis efficiency,operating hours,and management quality improvement—were the most critical factors influencing the cost of electrolytic water hydrogen generation projects.By analyzing the effects of these variables on the price of electrolytic water hydrogen generation projects,this study identified key directions for reducing costs in electrolytic water hydrogen production,with the goal of determining where efforts should be focused to enhance the competitiveness of electrolytic water hydrogen projects in China.

3.1 Analysis of the impact of the electricity cost for hydrogen production upon hydrogen generation via water electrolysis

As Fig.4 shows,the electricity cost as a percentage of the total hydrogen production cost decreases with the cost of purchasing electricity for hydrogen production.To characterize the decrease in hydrogen production and the electricity cost for hydrogen production caused by large-scale new energy generation and grid connection in the future,purchase costs are proportionally decreased in increments of 10% every 5 years in the graph.For a benchmark electricity rate was 0.477 CNY/kWh,the electricity purchase cost accounts for approximately 77% of the total hydrogen generation cost.As electricity prices decrease,the electricity purchase cost as a proportion of the total hydrogen generation cost decreases rapidly.In addition to the price of electricity falling by 50% relative to the benchmark,the hydrogen production cost decreases by 44.9%.The cost of an electrolysis plant is equal to the cost of purchasing electricity when the price decreases by 70%.The average cost of purchasing electricity for hydrogen production is 0.14318 CNY/kWh,which is close to the projected average electricity price of 0.14 CNY/kWh for China’s new energy grid connection in 2060[22].The cost of producing hydrogen is 12.84 CNY/kg H2,which is less than the cost of producing hydrogen using coal,which is 15 CNY/kg H2 when the price of coal is 1,000 CNY/ton.The analysis shows that reducing the electricity purchase cost of hydrogen production projects is an important way to reduce hydrogen production costs.

Fig.4 Effect of purchasing electricity costs on the total price of grid-connected electrolytic hydrogen production

3.2 Analysis of the effect of carbon price on hydrogen generation via water electrolysis

As Fig.5 shows,the overall cost of producing electrolytic water hydrogen increases in tandem with the rate of carbon.When the benchmark carbon rate is 55.56 CNY/ton,the hydrogen generation cost is 34.578 CNY/kg H2,with the carbon emission cost accounting for 3% of the total hydrogen production cost,which is relatively low.However,as carbon prices increase in the coming years,the proportion of carbon emission costs to the total hydrogen production cost will increase rapidly.When the carbon price reaches 1,000 CNY/ton,the hydrogen production cost increases to 52.321 CNY/kg H2,with the carbon emission cost accounting for 35.9% of the total hydrogen generation cost.When the carbon price reaches 2,000 CNY/ton,the total hydrogen production cost reaches 71.109 CNY/kg H2,with the carbon emission cost accounting for 52.8% of the total hydrogen production cost.According to this analysis,lowering the carbon emission costs of projects involving hydrogen generation is a key strategy for lowering the cost of hydrogen production.

Fig.5 The impact of carbon prices on the total cost of hydrogen generation via electrolysis

3.3 Analysis of the impact of electrolysis efficiency on hydrogen generation via water electrolysis

As Fig.6 shows,technological advancements can result in considerable reductions in the energy required for hydrogen generation,further lowering the cost of hydrogen production.A 10% improvement in hydrogen generation efficiency from 50% to 60% lowers the overall cost of hydrogen production by 13.78%,all other conditions being equal.The overall cost of hydrogen production decreases by 44.19% as the efficiency of hydrogen generation increases from 50% to 100%.At this point,the cost of producing hydrogen is less than that of producing hydrogen using coal at a cost of 15 CNY/kg H2 when the price of coal is 1,000 CNY/ton.

Fig.6 The impact of electrolysis efficiency upon the total cost of hydrogen generation

Fig.7 Effect of equipment running time on unit cost of producing hydrogen

3.4 Analysis of the impact of equipment utilization on hydrogen generation via water electrolysis

Figure 7 illustrates how the operating hours of the equipment at a water electrolysis hydrogen production project affect the overall cost per unit mass of hydrogen production.The project was based on a benchmark electricity price of 0.477 CNY/kWh and a hydrogen production efficiency of 50%.The analysis shows that,all other conditions being equal,as the running time of the equipment increases,the unit hydrogen generation cost first decreases and then remains relatively constant.

3.5 Analysis of the impact of management quality improvement on hydrogen generation via water electrolysis

As the number of construction projects increases over time,the management quality of hydrogen production projects is enhanced,and the corresponding labor costs,maintenance,and management expenses decrease.This may result in a decrease in the overall cost of hydrogen production from electrolytic water.When maintaining the operating,material,and water costs of the electrolysis plant,a 10% reduction in management costs (equipment maintenance costs,other management costs,wages,etc.) due to improved management quality leads to a 1.29% decrease in the total cost of hydrogen generation.The impact of management quality improvement on hydrogen production costs is shown in Fig.8.

Fig.8 The impact of management quality improvement on hydrogen production costs

In summary,this analysis highlights the critical factors that influence the cost of hydrogen generation via water electrolysis and suggests strategies for reducing costs and enhancing competitiveness in the industry.By focusing on these factors,policymakers and industry stakeholders can identify areas for targeted improvements and investments,thereby accelerating the development of a sustainable and cost-effective hydrogen economy.

4 Economic study of hydrogen generation via water electrolysis in china’s provinces

4.1 Total cost study of hydrogen generation via water electrolysis in china’s provinces

Table 4 shows the overall cost of hydrogen generation via water electrolysis in China’s 31 provincial-level administrative regions calculated for an electrolyzer capacity of 10 MW.The darker the color is in the figure,the higher the total cost of hydrogen generation is and vice versa.As shown in the figure,owing to the influence of electricity costs on hydrogen production and local economic levels,the overall cost of hydrogen generation in central and southern China is usually higher than that in western and northern China.Provinces with higher total hydrogen production costs are typically more economically developed and have higher expenses for purchasing power and emitting carbon,resulting in higher total hydrogen production costs.Provinces with lower total hydrogen production costs are typically those with significant achievements in new energy development,such as Qinghai Province,which has a relatively low total hydrogen production cost of 24.344 CNY/kg,compared to Guangdong Province,which has a higher total cost of 40.265 CNY/kg.Compared to the coastal regions in the southeast,the western regions of China,which have abundant water and wind resources,have a growing share of renewable energy power generation.This means that these regions can implement more flexible electricity pricing mechanisms,which,in turn,leads to comparatively lower total costs for hydrogen production.For example,Qinghai Province,with only 15% of its electricity generated from coal and nearly 85% from renewable energy,has a lower total hydrogen production cost than Guangdong Province,which has over 70% of its electricity generated from coal and only 7% from renewable energy.Despite having an installed renewable energy power generation capacity that accounts for 90.9% of China’s total in 2022,owing to its low power generation and high electricity prices,the cost of hydrogen production and electricity purchase is relatively high,ultimately leading to a higher total cost of electrolytic hydrogen production.

Table 4 Total cost of hydrogen generation via electrolysis in various provinces of China

When the transportation distance of hydrogen is between 150 and 550 km,the hydrogen pipeline transportation cost is between 2.76 CNY/kg and 10.12 CNY/kg[23],making inter-provincial hydrogen transportation through pipelines feasible.This allows low-cost hydrogen production areas to transport low-cost hydrogen to high-cost production areas,as shown in Table 5.For example,the hydrogen cost from Shaanxi Province to Henan Province ranges from 37.779 to 45.139 CNY/kg,which is much lower than the hydrogen production cost of 46.697 CNY/kg in Henan Province,indicating a significant inter-provincial cost advantage for hydrogen transportation in China.

Table 5 Inter-provincial cost of hydrogen pipeline transportation in China

The proportions of electricity purchase cost,electrolysis plant cost,and carbon emissions cost in the total hydrogen generation cost of China’s provinces are shown in Fig.9.According to the data,there were no appreciable differences across the provinces in the proportions of the three expenses in the overall cost of hydrogen production.In the provinces,the electricity purchase cost accounts for approximately 76% of the total cost on average,with Xinjiang having the smallest proportion at approximately 63%.However,in the future,with the large-scale integration of new energy into the grid,the electricity cost for hydrogen production will continue to decrease.This shows that the cost of purchasing energy makes up the overwhelming majority of the total cost and has the greatest influence on the cost of producing hydrogen.Carbon emission costs account for approximately 2.64% of the total cost,with Tibet having the lowest at approximately 0.09%.However,as carbon prices increase gradually in the future,carbon emissions costs as a proportion if total hydrogen production costs will also increase.

Fig.9 Composition of the total cost of hydrogen generation via electrolysis in various provinces of China

4.2 Comparative analysis of costs of producing hydrogen in china’s provinces using water electrolysis and coal-based hydrogen generation

As shown in Fig.10 and Table 6,the cost of producing hydrogen based on coal is 15 CNY/kg when the price of coal is 1,000 CNY/t.The cost of producing hydrogen using coal is 16.10 CNY/kg at the current carbon price of 50 CNY/t.The cost of producing hydrogen using coal is projected to be 19.4 CNY/kg by 2030 (assuming 200 CNY/t of CCS),and 18.3 CNY/kg by 2050 (assuming 150 CNY/t of CCS).

Table 6 Cost Study of Coal-to-Hydrogen Generation

Fig.10 Cost study of coal-to-hydrogen generation

Fig.11 Comparison of total cost of hydrogen production via electrolysis and coal-to-hydrogen production

Figure 11 compares the overall cost of hydrogen production by water electrolysis and that of hydrogen production using coal.At the current mean price of 0.4773 CNY/kWh for energy,the total cost of hydrogen production from water electrolysis in various provinces ranges from 20.60 to 43.45 CNY/kg,which is still higher than the cost of coal-based hydrogen generation.When the average electricity price decreases by 20% to 0.3818 CNY/kWh,the total cost of hydrogen generation via water electrolysis in various provinces ranges from 16.40 to 35.52 CNY/kg,with some provinces having a lower cost than coal-based hydrogen production,considering CCS (200 CNY/t).When the average electricity price decreases by 30% to 0.3341 CNY/kWh,the total cost of hydrogen generation via water electrolysis in various provinces ranges from 15.63 to 31.55 CNY/kg,with some provinces having a lower cost than coalbased hydrogen production,considering the carbon price (50 CNY/t).When the average electricity price decreases by 40% to 0.2863 CNY/kWh,the total cost of hydrogen generation via water electrolysis in various provinces ranges from 13.97 to 27.58 CNY/kg,with some provinces having a lower cost than coal-based hydrogen production.This indicates that as the penetration rate of novel energy in China’s power system gradually increases,leading to further decreases in electricity prices,the production cost of hydrogen generation via water electrolysis within various provinces is expected to approach or even be less than the production cost of coal-based hydrogen generation.When the electricity price in Xinjiang,the region with the lowest electricity purchase cost,decreases by 34%,its hydrogen production cost is comparable to that of coalbased hydrogen production.When the electricity price in Hainan,the region with the highest electricity purchase cost,decreases by 72%,its hydrogen production cost is comparable to that of coal-based hydrogen production.

4.3 Sensitivity study of hydrogen generation costs via water electrolysis in china’s provinces to the electricity cost for hydrogen production

A sensitivity analysis of power purchase costs was conducted to assess the effect of these costs on the overall cost of hydrogen production,with one parameter varied at a time.The provinces with the highest and lowest powerpurchasing expenses were considered in the sensitivity.Fig.12 shows the results,with changes in electricity prices plotted on the horizontal axis and 0.4773 CNY/kWh in the middle as the benchmark.The total hydrogen production cost was calculated for seven scenarios:baseline,10% lower than baseline,20% lower,30% lower,10% higher than baseline,20% higher,and 30% higher.Of the ten provinces considered,Hainan,Jiangxi,Tibet,Henan,and Hunan have higher electricity purchase costs,whereas Xinjiang,Ningxia,Qinghai,Zhejiang,and Yunnan have lower electricity purchase costs.According to the results of the sensitivity analysis,Hainan experienced the greatest shift,with the cost of producing hydrogen rising by 3.968 CNY/kg for every 10% increase in the price of purchasing power.The least amount of change occurred in Xinjiang,where a 10% increase in the cost of purchasing power resulted in a 1.659 CNY/kg increase in the cost of hydrogen production.The overall cost of hydrogen production increases by 2.941 CNY/kg on average for every 10% increase in the cost of purchasing energy.

Fig.12 Sensitivity test of purchasing electricity cost

4.4 Sensitivity study of hydrogen generation costs via water electrolysis in china’s provinces to carbon prices

A sensitivity analysis of carbon emission costs was conducted to assess the effect of these prices on the overall cost of hydrogen production.The five provinces with the highest and lowest carbon emission intensities were the subjects of sensitivity analysis.The results are shown in Fig.13.Changes in carbon prices are plotted on the horizontal axis,with 55.56 CNY/ton in the middle as the benchmark carbon price.The sensitivity analysis considered seven scenarios:the baseline,10% lower than baseline,20% lower,30% lower,10% higher,20% higher,and 30% higher.Among the ten provinces,Shanghai,Tianjin,Anhui,Shandong,and Shaanxi had higher carbon emission levels,while Tibet,Yunnan,Sichuan,Qinghai,and Beijing had lower carbon emission levels.

Fig.13 Carbon emission price sensitivity analysis results

The results indicate that the province most sensitive to changes in carbon prices is Shanghai,where the hydrogen production cost increases by 0.1559 CNY/kg for every 10% increase in the carbon price.Tibet is the least vulnerable province,with a 10% rise in carbon prices resulting in a 0.0041 CNY/kg increase in the cost of hydrogen production.On average,a 10% increase in carbon price led to a 0.087 CNY/kg increase in the total hydrogen production cost.Provinces with greater carbon emission intensities are more susceptible to changes in carbon prices than those with lower carbon emission intensities,such as Tibet,Sichuan,Yunnan,and Qinghai,which have made more significant achievements in new energy applications.

4.5 Relationship analysis between hydrogen production costs and carbon emission intensity in china’s provinces

A scatter plot illustrating the relation between the intensity of carbon emissions and the overall cost of hydrogen production for each province,excluding carbon emission expenses,is shown in Fig.14.The provinces with higher hydrogen production costs and carbon emission intensities are represented by points in the upper righthand corner of the scatter plot,whereas those with lower hydrogen production costs and carbon emission intensities are represented by points in the lower left-hand corner.The results for most provinces are in the middle of the scatter plot.Provinces such as Yunnan and Qinghai,with points in the lower left-hand corner,are characterized by low carbon emission intensities and low hydrogen production costs,indicating great potential for hydrogen and new energy industry development.Tibet,located in the lower left corner,despite having a higher hydrogen production cost owing to its high electricity price,has a low carbon emission intensity,indicating a reasonable energy structure and good future prospects for hydrogen and new energy development.Provinces such as Xinjiang,located in the upper-right corner,have high carbon emission intensities and low hydrogen production costs because of their low electricity prices.Provinces such as Shanghai and Tianjin,located in the upper-right corner,have high carbon emission intensities and high hydrogen production costs,indicating a relatively low development potential for hydrogen and a more urgent need for energy structure transformation.

Fig.14 Scatter plot of carbon emission intensity and total hydrogen production costs by province

The cost of carbon emissions is predicted to rise in the future owing to China’s limits on carbon emissions and rising carbon tax,which might help provinces in the hydrogen sector with low carbon emissions intensity.China can further reduce hydrogen production costs by promoting the rational transformation of its energy structure to reduce carbon emissions.

5 Conclusion

Given that an increasing number of regions worldwide are linking carbon market emission reduction targets to macro-level emission reduction goals,carbon emissions intensity will be a significant factor for various industries in the future.This study incorporated carbon emission costs into the cost calculation of electrolytic water hydrogen generation,establishing a levelized cost calculation model for electrolytic water hydrogen generation projects to estimate the cost of provincial grid-connected electrolytic water hydrogen generation projects more accurately.First,electricity purchase costs for each province were calculated.Second,information on the energy structure of each province’s power supply was gathered,and each province’s expenses associated with carbon emissions were computed.Finally,the total cost of each province’s grid-connected hydrogen generation plants was calculated while accounting for carbon emission costs.

The results indicate that hydrogen production costs are significantly influenced by geographical location,with hydrogen production costs generally higher in the southeastern coastal provinces compared to the western provinces.The bulk of the entire cost of producing hydrogen is related to the purchase of energy,and provinces should provide subsidies for hydrogen production electricity prices to reduce hydrogen production costs.Provinces with low hydrogen production costs should play a radiating role to neighboring provinces,and can transport low-cost hydrogen through pipelines to provinces with high hydrogen production costs.The effect of carbon prices on the cost of electrolytic water hydrogen production in provinces with high utilization of new energy is relatively small.Provinces with lower carbon emission intensities and greater new energy application are frequently those with substantial potential for the development of grid-connected hydrogen production plants.The growth potential of the hydrogen sector in Qinghai,Sichuan,and Yunnan is positive when taking into account the expenses of producing hydrogen as well as the intensity of carbon emissions.

As a result of the provinces’ heavy reliance on coal-fired power production,carbon emissions are now quite high.As a result,the provinces must modify their energy structures to enhance the share of new energy sources.

Acknowledgments

This work was supported by the National Key R&D Program of China (2021YFE0102400) and the Long-term Research Projects of EPRI (JS83-22-001).

Declaration of Competing Interest

We declare that we have no conflict of interest.