Cluster of Excellence Integrated Energy Systems
Strategic analysis and optimisation of hydrogen procurement costs
LCODH: For greater security in hydrogen investment
Cost certainty is often lacking when it comes to reliably planning investments in green hydrogen. We calculate and optimise the costs of supply, including transport and storage (Levelised Cost of Delivered Hydrogen – LCODH), specifically tailored to your location and usage profile.
Whether in industry or the energy sector, corporate investment in green hydrogen is currently characterised by considerable caution. A key reason for this is uncertainty regarding the expected procurement costs.
Conventional analyses focus on generation costs alone, but neglect the significant impact of transport, storage and usage patterns. Fraunhofer CINES bridges this gap and offers bespoke, data-driven calculations of the actual delivery costs.
Whether you are a hydrogen consumer or supplier, our LCODH analyses provide you with planning certainty, tailored specifically to your location and your application.
An overview of our services
Click on the tabs below to find out more about the specific services we offer for various sectors.
Tabbed contents
Industrial companies
Hydrogen, as an industrial energy carrier and chemical feedstock, will become increasingly important, particularly in the iron and steel industry, the basic chemicals sector and refineries. In order to initiate concrete planning and investment in these areas, companies in these sectors need certainty regarding their future hydrogen supply. What will the costs be? Is connecting to the core hydrogen network worthwhile? Or is an on-site solution with on-site electrolysis more cost-effective?
Our services:
Detailed cost analysis: We calculate your individual hydrogen procurement costs (LCODH) based on your specific load profile. It makes a significant difference whether you procure hydrogen as a continuous load (e.g. DRI steel, ammonia) or in flexible campaigns.
Techno-economic path comparison: We compare the costs of a grid-connected hydrogen supply (including ramp-up charges for the core grid) for your site with self-sufficient on-site solutions that rely on local electrolysis.
Risk assessment & hedging: Rather than providing simple point forecasts, we deliver ranges and strategic options for action to hedge against price fluctuations.
For hydrogen producers and project developers
Identifying lucrative customer segments is crucial for planning green hydrogen production capacity. At what total cost (including transport and storage) can which customers be supplied at which locations? How competitive are you compared to the competition?
Our services:
Customer- and location-specific delivery costs (LCODH): We determine the extent to which transport and storage costs drive up the final price for different customer groups. For example, infrastructure costs have a significantly lower impact on industrial base-load customers than on peak-load power stations.
Optimisation of generation costs: Using our hourly-resolution optimisation models for H₂ production, combined with our SCOPE EM electricity market model, we show you how you can reduce your generation costs through smart procurement strategies (e.g. a combination of PPAs, portfolio effects and spot market purchases).
Competitive analysis: We assess your competitive position in comparison with import options (e.g. non-European maritime transport of ammonia, including cracking) to optimise your pricing strategy.
Infrastructure design: We determine what proportion of the hydrogen you produce needs to be temporarily stored in order to serve specific customer profiles, and what costs (e.g. cavern storage cycles) this entails.
For H₂ power stations
Hydrogen power stations will provide reliable power in the electricity system of the future. Whether as new builds or through the retrofitting of existing facilities, the planning process faces considerable uncertainties: what impact will the transport and storage of hydrogen have on the cost structure of electricity generation? Which regulatory framework (capacity market, storage market) enables economically viable operation? Is connection to the core hydrogen network preferable, or is a self-sufficient ‘storage power station’ (electrolyser + on-site cavern) the more economical option?
Our services:
Detailed full-cost analysis: We calculate your actual hydrogen procurement costs (LCODH), including transport and storage – not just the production costs. This is because, particularly for power stations with few annual full-load hours, infrastructure costs account for a large proportion of the total costs.
Supply path comparison (grid vs. storage power station): We quantify, for your site and load profile, whether a connection to the core hydrogen grid (with grid charges) or a self-sufficient storage power station concept (without grid costs, but site-dependent) is more economical.
Assessment of alternative fuels: We compare your specific hydrogen procurement costs with the costs of alternative options (e.g. renewable methanol, hybrid driving modes) so that you can make a technology-neutral investment decision.
Regulatory scenario analysis & basis for argumentation: We demonstrate, in quantitative terms, the framework conditions (capacity market design, grid tariff discounts, storage CfDs) under which the commercial operation of H₂ power stations becomes feasible – thereby providing you with a robust basis for dialogue with policymakers, regulators and investors