energies

Article
Design and Optimization of an Alkaline Electrolysis System for
Small-Scale Hydropower Integration
Hojun Song 1,† , Yunji Kim 2,† and Heena Yang 2, *

1 Green and Sustainable Materials R&D Department, Research Institute of Sustainable Manufacturing System,
Korea Institute of Industrial Technology, Cheonan-si 31056, Republic of Korea
2 Water Energy Research Center, Korea Water Resources Corporation, Daejeon 34045, Republic of Korea
* Correspondence: [email protected]; Tel.: +82-042-870-7676
† These authors contributed equally to this work and shared first authorship.

Abstract: Alkaline electrolysis systems are currently considered to be suitable for large-scale hydrogen
production. Previous research has primarily focused on integrating renewable energy sources such
as solar and wind into water electrolysis systems. However, intermittent issues stemming from
the sporadic nature of renewable energy sources have led to the introduction of energy storage
systems (ESSs) to address these intermittent challenges. Extensive research has been conducted on
the efficiency and operational aspects of these systems. In contrast to other renewable energy sources,
hydropower offers the advantages of stable output and high utilization, making it a promising
solution for overcoming intermittent issues. In this study, we propose the design of an optimized
alkaline electrolysis system tailored for small-scale hydropower generation. This approach allowed
us to confirm the efficiency of a small-scale hydropower-based hydrogen production facility and the
analysis of hydrogen production costs under diverse scenarios. Notably, the optimal selling price per
kilogram of hydrogen was determined to be USD 15.6 when the operational time exceeded 20 h, albeit
indicating a challenging market supply. Under the consideration of various scenarios and government
subsidies, this study revealed that a USD 10/kgH2 subsidy or 24 h of continuous operation achieved
break-even points in the sixth and eighth years, respectively. Ultimately, the findings underscore the
necessity for essential measures, including government backing and technological advancements in
Citation: Song, H.; Kim, Y.; Yang, H. small-scale hydropower facilities, to enhance the economic viability of the green hydrogen market in
Design and Optimization of an South Korea.
Alkaline Electrolysis System for
Small-Scale Hydropower Integration. Keywords: renewable energy; hydropower; electrolysis; hydrogen; energy economy
Energies 2024, 17, 20. https://
doi.org/10.3390/en17010020

Academic Editors: Kittisak

Jermsittiparsert and 1. Introduction
Thanaporn Sriyakul As the global climate crisis escalates due to rising carbon emissions, numerous coun-
tries are actively endorsing carbon-neutral and net-zero policies. In technologically ad-
Received: 8 November 2023
Revised: 12 December 2023
vanced nations, there is a growing quest for clean energy sources to replace fossil fuels.
Accepted: 18 December 2023
Among these, hydrogen has emerged as the most prominent global candidate for future
Published: 20 December 2023
clean energy, prompting substantial research in related technologies [1,2].
Hydrogen production can be broadly categorized into three main methods, with
grey hydrogen being the most cost-effective, derived from natural gas reforming or coal
gasification. Grey hydrogen production releases carbon, and when carbon capture and
Copyright: © 2023 by the authors. storage techniques are employed, it is termed blue hydrogen [3–5]. In contrast, green
Licensee MDPI, Basel, Switzerland. hydrogen is produced through electrolysis using electricity generated from renewable
This article is an open access article sources, gaining global attention as an environmentally friendly energy source. The key
distributed under the terms and
appeal lies in its complete absence of greenhouse gas emissions throughout the production
conditions of the Creative Commons
process [6,7]. In the production process of green hydrogen, water is electrolyzed into
Attribution (CC BY) license (https://
oxygen and hydrogen using electricity generated from renewable sources. Ion exchange
creativecommons.org/licenses/by/
occurs across a liquid or solid membrane electrolyte. Membranes or diaphragms positioned
4.0/).

Energies 2024, 17, 20. https://doi.org/10.3390/en17010020 https://www.mdpi.com/journal/energies

Energies 2024, 17, 20 2 of 13

between the two electrodes separate the generated gases and prevent mixing to avoid
accidents [8,9]. The core of the process for producing hydrogen from water lies in the
electrolysis process, where ions are transferred through the membrane to generate hydrogen
and oxygen. The two most widely used electrolysis technologies are alkaline electrolysis
and polymer electrolyte membrane (PEM) electrolysis. Solid oxide electrolysis is used in
specific scenarios but has limited adoption due to cost considerations [10–16].
Alkaline electrolysis devices are extensively utilized in commercial plants due to their
cost efficiency and relatively extended lifespan. They are stable, do not require precious
metal catalysts, and are relatively inexpensive for initial installations, making them suitable
for large-scale facilities [17–20]. Nevertheless, challenges such as low hydrogen productiv-
ity, reduced durability, and difficulty in coping with power fluctuations persist [21]. On
the contrary, polymer electrolyte membrane electrolysis systems use expensive materials,
including precious metal catalysts, leading to higher costs. However, they offer higher
operational current density compared to alkaline systems, enabling the production of
high-purity hydrogen, and exhibit excellent adaptability to power fluctuations from renew-
able energy sources [22–25]. A more recent technology, solid oxide electrolysis (SOEC),
operates in high-temperature environments (700–850 ◦ C) and utilizes high-temperature
steam electrolysis to produce hydrogen, offering the potential for higher system efficiency
when integrated with nuclear energy and obtaining high-quality waste heat. While SOEC
is currently under research at the kilowatt scale, overcoming challenges such as rapid
performance degradation and short lifespan remains crucial [26].
Currently, research is underway globally to produce green hydrogen by integrating
various renewable energy sources such as wind power, solar power, hybrid generation
(wind + solar), hydropower, and geothermal power. Among these sources, solar and
wind power are the most commonly commercialized, albeit with the need for additional
energy storage systems (ESSs) due to power fluctuations and substantial initial investment
costs [27–29]. To address the limitations in the pre-production phase of green hydro-
gen production, substantial research and development (R&D) efforts are being invested
worldwide [30–32]. These studies explore diverse aspects of hydropower, considering
economic factors, climate change impacts, and optimization methodologies. The first study
based its components on actual costs from green hydrogen facilities constructed since 2022,
emphasizing the need to promote small hydropower development for expanding renew-
able energy usage. This study simulated the potential of small hydropower plants [33].
The second study predicted hydropower generation under climate change, employing
innovative algorithms and advocating for adaptive strategies and increased reliance on
hydropower [34]. The third study assessed climate change impacts on run-of-river small
hydropower, demonstrating a marginal decrease in generated energy [35]. The fourth study
proposed a methodology for optimizing small run-of-river hydropower plants, suggesting
the potential for user-friendly design tools [36]. Lastly, the fifth study focused on Greece’s
small hydropower potential, emphasizing capacity factors and flow duration curves for de-
signing projects in intermittent-flow rivers [37]. Together, these studies offer comprehensive
insights into the complexities and opportunities within the hydropower sector.
These efforts primarily focused on the development of new materials for electrolysis
stacks and strategies to enhance efficiency, thereby reducing the production cost of hy-
drogen [38–40]. Governments are also investing in the establishment of hydrogen trade
networks to alleviate supply–demand disparities. They are formulating national strategies
and regional plans to bolster the foundation for green hydrogen initiatives [41,42]. Con-
sequently, it is anticipated that as electrolysis technology advances, leading to increased
electrolysis capacity and a larger green hydrogen market, the production cost of green
hydrogen will decrease, aided by the utilization of carbon pricing mechanisms [43–45].
However, it is essential to recognize that these efforts may take time to have an im-
mediate impact on reducing the current production cost of green hydrogen [46,47]. Many
research outcomes from pilot projects and R&D initiatives remain undisclosed. Therefore,
what is needed at present is the exploration of multiple scenarios for green hydrogen
Energies 2024, 17, 20 3 of 13

production systems, ranging from small- to large-scale, by harnessing various renewable

energy sources [48–51]. Importantly, there is a shortage of research on green hydrogen pilot
facilities directly integrated with small-scale hydropower generation without the need for
energy storage. To address this gap, this study constructed a green hydrogen production
facility directly linked to 700 kW small-scale hydropower generation. The research uti-
lized actual data from the Seongnam pilot facility and small-scale hydropower, including
generation capacity and equipment costs. The evaluation encompassed efficiency, energy
utilization, and economic feasibility. The objective of this study was to provide blueprints
and reference materials for scenarios and support projects for hydropower-integrated hy-
drogen production facilities for researchers, industry partners, and government officials
considering similar facilities in countries with power markets similar to South Korea. Ad-
ditionally, in a situation where only a few companies dominate the electrolysis market,
this study aimed to reveal the impact of electrolysis equipment prices on hydrogen selling
prices through an economic analysis of the green hydrogen production facility.

2. Materials and Methods

The small-scale hydropower plant in Seongnam (Water Purification Plant) utilizes the
residual headwater of the inflowing water from the Paldang Water Intake to the Seongnam
Water Purification Plant. It is equipped with two Francis-type turbine generators (with
capacities of 340 and 360 kW) and operates for over 350 days annually, making it suitable for
the installation of a hydrogen production facility. The small-scale hydropower-based green
hydrogen production research facility was constructed to explore the technical feasibility of
a small-scale hydropower-integrated green hydrogen production system. The maximum
output of the small-scale hydropower plant is 700 kWh, and the capacity of the alkaline
electrolysis applied here is 600 kWh, producing 10.9 kgH2 /h. This pilot facility is located
at the Korea Water Resources Corporation’s Seongnam Water Purification Plant, and its
goal includes producing and supplying hydrogen using small-scale hydropower. The
calculation of the operational efficiency of this small-scale hydropower is as follows:

Annual power generation (kWh)

Operational Efficiency(%) = × 100 (1)
Facility Capacity (kWh) × 24h × 365 days

while the theoretical voltage for electrolysis is 1.23 V, it involves an endothermic reaction.
This change in enthalpy, known as the higher heating value (HHV), and the power con-
sumption are 1.48 V and 39.4 kWh/kgH2 , respectively [52]. Through this, the efficiency of
the electrolysis system can be determined as follows:

39.4 kWh × Hydrogen production(kg/h)

Efficiency of electolysis(%) = × 100 (2)
Capacity of Electrolysis

The economic viability of hydrogen production can be analyzed from various per-
spectives. For instance, the levelized cost of hydrogen (LCOH) can be assessed from the
cost standpoint of hydrogen production. Additionally, the economic feasibility can be
analyzed based on the net present value (NPV), which considers the cumulative revenue
expected from green hydrogen sales during a specific project period, along with investment
and operating costs for business model evaluation and selection. This study analyzed the
economic viability of hydrogen production in this system based on LCOH. The cost of a hy-
drogen production system in a water-electrolysis-based green hydrogen production system
can be broadly categorized into operational expenditure (OPEX) and capital expenditure
(CAPEX). OPEX includes utility costs, which encompass electricity and water consumed by
the electrolysis system, periodic stack replacement costs, and labor costs. CAPEX includes
the purchase and installation costs of the electrolysis system and hydrogen storage tanks,
as well as site construction expenses. The specific formulas for calculating CAPEX and
OPEX are as follows:
Energies 2024, 17, 20 4 of 13

CAPEX = CE (Electrolysis purchasing cost) + CI (Installation cost) + CC (Construction cost) (3)

OPEX = Labor cost + Stack replacement cost + Electricity cost + Water cost (4)
In essence, the expected revenue from hydrogen sales is the primary source of income that
can be anticipated from a water-electrolysis-based green hydrogen production system. The
key economic analysis metric, the LCOH, can be calculated as follows [53]:

CR + OPEX
LCOH = (5)
Revenue from hydrogen sales

CR = CAPEX * Capital recovery factor + Discount rate * Salvage value (6)

The CR (capital recovery) cost encompasses the depreciation costs associated with the
operation of the electrolysis facility and includes CAPEX based on the CRF (capital recovery
factor). The equation for CR is as follows:

r (1 + r ) N
Capital Recovery Factor = (7)
(1 + r ) N − 1

(r: Discount rate; N: project period (year))

All components applied in this study were based on the actual costs incurred in the
construction of the green hydrogen demonstration facility conducted since 2022. Among
the analytical components applied in this study, the most significant weight from a pricing
perspective was the stack of alkaline electrolysis. It was benchmarked at an average price
of USD 3477/kW, obtained from a domestic electrolysis company of the actual Seongnam
demonstration facility. This provided amount includes the costs of system equipment, such
as electrolysis stacks and balance of plant (BOP), as well as miscellaneous procurement
costs like piping and safety equipment (the exchange rate: 1330 KRW/USD). The cost of
electricity was calculated using the electricity rates in South Korea in 2022. Hydrogen prices
were determined based on the average market prices at hydrogen refueling stations. The
cost of stack replacement was computed using the maintenance cost data provided by the
electrolysis company. Labor costs were allocated on an hourly basis. For 4-h shifts, the
labor costs encompassed the wages of one skilled technician. In the case of shifts lasting
up to 8 h, the labor cost accounted for two technicians. When shifts were extended to 16
and 24 h, the labor costs included the wages of three and four technicians, respectively. It
was assumed that the expected lifespan of the alkaline electrolysis stack is 10 years [54],
with an annual inflation rate of 4.7%, while the stack replacement cost was set at 4% of
the cost of building the electrolysis system. Other expenses necessary for operating the
demonstration facility, such as management fees and insurance premiums, were estimated
at 10% of OPEX and included in the investment cost of the Seongnam Demonstration
Facility. These calculation factors were employed to derive the LCOH, and the LCOH
represents the hydrogen production cost, including the factors indicated in Table 1. It does
not encompass the costs associated with hydrogen transportation and storage.

Table 1. The economic analysis factors for electrolysis system.

Parameter Value Unit

Stack price 3477 USD per kWh
Stack capacity 600 kWh
Installation cost 353,233 USD
Building construction 730,827 USD
Energies 2024, 17, 20 5 of 13

Table 1. Cont.

Parameter Value Unit

42,890
USD per year
(Operating Time: 4 h/day)
85,780
USD per year
(Operating Time: 5–8 h/day)
Labor cost 128,670
USD per year
(Operating Time: 9–16 h/day)
171,560
USD per year
(Operating Time: 17–24 h/day)
Stack replacement 45,951 USD per year
Electricity cost 0.15 USD per kWh
Hydrogen price 7.33 USD per kilogram of hydrogen
Basis year 2022 Year
Inflation rate 4.7 %
Depreciation period 10 Year
Exchange rate 1330 KRW per USD

3. Results and Discussion

3.1. Small-Scale Hydropower Analysis
The small-scale hydropower generation consistently supplied an annual average
of 3691 MWh (from 2018 to 2022) of electricity, exhibiting an efficiency rate of 60.2%
compared to the total generation capacity (6132 MWh). The small-scale hydropower
exhibited varying levels of generation depending on the season, with the summer (from
June to August) showing the lowest generation at 279 MWh and the spring (from March to
May) at 327 MWh, which was the highest. The efficiencies for summer and spring were
54.6% and 64.0%, respectively. Since the low generation of small-scale hydropower is related
to the difficulty of operating the electrolysis system, we examined the hourly generation
data in July during the low-generation summer period. The variation in generation between
the highest and lowest generation levels was 19% based on the total generation capacity.
This indicates that the small-scale hydropower maintained a relatively stable utilization
rate, making it a reliable source of green hydrogen production [55–57]. This trend is shown
in Figure 1. With an average power load fluctuation rate of less than 20% per day, it is
anticipated that stable system operation could be achieved without power storage devices
(ESSs). As a result, this demonstration was designed without ESSs.

3.2. Experimental Facility Configuration and Evaluation

First, the electrolysis system was configured to convert the alternating current (AC)
power from a 0.7 MW small-scale hydropower generation facility, integrated into the power
grid, into direct current (DC) power for supply to the electrolysis device, as depicted in
the diagram. According to the data obtained from operations at the actual pilot facility,
the efficiency of the AC to DC conversion ranged from 89.3% to 92.5%, with an average
conversion rate of 90.9%. The hydrogen produced by the electrolysis device is initially
stored in a low-pressure buffer tank. The stored low-pressure hydrogen is then compressed
to high pressure (250 bar) using a compressor and supplied to a tube trailer. This entire
process is controlled and operated by an integrated control system. The integrated control
system must continuously monitor the operation status of renewable energy and the
electrolysis system in real-time and notify users immediately in the case of equipment
abnormalities. This configuration can be seen in Figure 2. Technical analysis indicated
that the consumption power of hydrogen production can be expressed as production
efficiency. The design of stack efficiency and the system efficiency (stack with BOP) were
55 and 63 kWh/kg, respectively. With the designed efficiency of this electrolysis system, it
could produce 10.9 kg/h of hydrogen, and the actual amount of produced hydrogen was
10.7 kg/h. A hydrogen production rate of 98.1% was achieved at the rated power input.
Energies 2024, 17, 20 6 of 13

Energies 2024, 16, x FOR PEER REVIEW 6 of 14

The hydrogen production exhibited a standard deviation of 0.2, confirming stable operation
without significant efficiency variations.

Energies 2024, 16, x FOR PEER REVIEW 7 of 14

Figure 1. Trends in small-scale hydropower generation from 2018 to 2022.

Figure 1. Trends in small-scale hydropower generation from 2018 to 2022.

3.2. Experimental Facility Configuration and Evaluation

First, the electrolysis system was configured to convert the alternating current (AC)
power from a 0.7 MW small-scale hydropower generation facility, integrated into the
power grid, into direct current (DC) power for supply to the electrolysis device, as de-
picted in the diagram. According to the data obtained from operations at the actual pilot
facility, the efficiency of the AC to DC conversion ranged from 89.3% to 92.5%, with an
average conversion rate of 90.9%. The hydrogen produced by the electrolysis device is
initially stored in a low-pressure buffer tank. The stored low-pressure hydrogen is then
compressed to high pressure (250 bar) using a compressor and supplied to a tube trailer.
This entire process is controlled and operated by an integrated control system. The inte-
grated control system must continuously monitor the operation status of renewable en-
ergy and the electrolysis system in real-time and notify users immediately in the case of
equipment abnormalities. This configuration can be seen in Figure 2. Technical analysis
indicated that the consumption power of hydrogen production can be expressed as pro-
duction efficiency. The design of stack efficiency and the system efficiency (stack with BOP)
were 55 and 63 kWh/kg, respectively. With the designed efficiency of this electrolysis sys-
tem, it could produce 10.9 kg/h of hydrogen, and the actual amount of produced hydrogen
was 10.7 kg/h. A hydrogen production rate of 98.1% was achieved at the rated power in-
put. The hydrogen production exhibited a standard deviation of 0.2, confirming stable
operation without significant efficiency variations.

Figure 2. Configuration of the experimental facility.

Figure 2. Configuration of the experimental facility.

However, thetheoretical
However, the theoretical power
power consumption
consumption of hydrogen
of hydrogen production
production was 39.4was 39.4
kWh/kg,
kWh/kg, and the conversion
and the conversion factor of factor of the
the stack stack
in this in this electrolysis
electrolysis system wassystem
70%. was 70%. Ac-
According to
cording to the data presented in Table 2, the actual input power of the balance
the data presented in Table 2, the actual input power of the balance of plant (BOP) was of plant
(BOP) was
12 kWh, 12 kWh,
which did which did not
not include include
other othersuch
systems, systems,
as thesuch as the compressor.
compressor. Usually,
Usually, the power
the power consumption of the compressor system is 15% of the total system, in which case
the conversion factor of this electrolysis system would be 60%.

Table 2. Calculation of the energy utilization factor.

Electricity (Stack) Electricity (BOP) Hydrogen (kg/h) H2 (HHV) Conversion Factor

Energies 2024, 17, 20 7 of 13

consumption of the compressor system is 15% of the total system, in which case the
conversion factor of this electrolysis system would be 60%.

Table 2. Calculation of the energy utilization factor.

Electricity (Stack) Electricity (BOP) Hydrogen (kg/h) H2 (HHV) Conversion Factor

600 12 10.7 56 kWh/kg 70.3%

3.3. Economic Evaluation and Analysis

The economic evaluation of the green hydrogen production system revealed several
critical insights. The CAPEX includes the costs associated with the electrolysis equipment,
construction expenses, and installation costs, with the majority of this budget allocated
to the electrolysis equipment being 65.8%. On the contrary, the OPEX encompasses labor
costs, component replacement expenses, electricity costs, and maintenance costs [58–62].
Among the factors included in the OPEX, labor costs depend on the number of permanent
employees according to the operating hours of the hydrogen production facility, ranging
from a minimum of USD 42,890 to a maximum of USD 171,560. Labor costs account for
approximately 15.5–17.7% of the OPEX. Figure 3 represents each factor in the CAPEX and
OPEX. The most significant factor within the OPEX is the cost of electricity [63]. In this study,
we took into consideration the electricity expenses associated with the electrolysis system,
excluding the costs related to selling renewable energy. While small-scale hydropower
generation is considered relatively cost-effective compared to other forms of renewable
Energies 2024, 16, x FOR PEER REVIEW
energy, it is apparent that the electricity cost, ranging from 54.2% to 71.2%, presents8the of 14
most prominent challenge in achieving cost-effective green hydrogen production [64–66].
This underscores the critical importance of securing a reliable and cost-efficient source of
electricity for green hydrogen production.

Figure 3. The ratios of each factor in (a) the capital expenditure (CAPEX) and (b) the operational
(a)
expenditures (OPEX) for the Seongnam Green Hydrogen Demonstration (b) Facility.
Figure 3. The ratios of each factor in (a) the capital expenditure (CAPEX) and (b) the operational
A comprehensive analysis of the calculated annual hydrogen production quantities
expenditures (OPEX) for the Seongnam Green Hydrogen Demonstration Facility.
in response to variations in small-scale hydropower output was conducted (Figure 4).
Notably, there was an increase in hydrogen production during the years 2018 and 2022,
A comprehensive analysis of the calculated annual hydrogen production quantities
coinciding with higher levels of electricity generation. Figure 4 also shows an analysis of
in response to variations in small-scale hydropower output was conducted (Figure 4). No-
the LCOH based on the CAPEX and OPEX depending on operating hours for the Seongnam
tably, there was an increase in hydrogen production during the years 2018 and 2022, co-
Green Hydrogen Demonstration Facility. This analysis provided a significant difference
inciding with higher levels of electricity generation. Figure 4 also shows an analysis of the
when applying the actual CAPEX and OPEX of the green hydrogen production facility
LCOH based on the CAPEX and OPEX depending on operating hours for the Seongnam
in Seongnam, South Korea. In recent times, various policies have been proposed, aiming
Green Hydrogen Demonstration Facility. This analysis provided a significant difference
to set the target cost of hydrogen below USD 1/kgH2 . However, when actual values are
when applying the actual CAPEX and OPEX of the green hydrogen production facility in
Seongnam, South Korea. In recent times, various policies have been proposed, aiming to
set the target cost of hydrogen below USD 1/kgH2. However, when actual values are con-
sidered, it becomes apparent that there are many challenges to overcome in order to
achieve this goal [67]. The resulting LCOH values were relatively high in the Seongnam
Energies 2024, 17, 20 8 of 13

considered, it becomes apparent that there are many challenges to overcome in order to
achieve this goal [67]. The resulting LCOH values were relatively high in the Seongnam
case, which can be attributed to several factors. These factors include the limited number of
green hydrogen demonstration projects in South Korea and disparities between theoretical
values in reports and real-world operational data. The growth of the electrolysis market
is experiencing a rapid expansion, leading to a decrease in the stack of electrolysis costs.
Comparing the LCOH based on the stack of electrolysis costs (USD 250/kW) reported by
Energies 2024, 16, x FOR PEER REVIEW 9 of 14
the IRENA report [68], the results indicate an LCOH of around USD 12.8/kgH2 for 20 h
of operation (Figure 4). This amount is lower than the calculated production cost of USD
15.6/kg of hydrogen from the actual data, but it does not show a significant difference. This
confirms that cost reduction is essential not only in stack prices but also in other aspects,
such as construction costs.

Figure 4. Amount of hydrogen production and LCOH based on the operating hours for Seongnam
Figure 4. Amount of hydrogen production and LCOH based on the operating hours for Seongnam
vs. IRENA report [68].
vs. IRENA report [68].

The optimized hydrogen production and constructed scenarios were determined

The optimized hydrogen production and constructed scenarios were determined for
forfuture
futureoutlooks
outlooks in alignment
in alignment with
with the the subsidy
subsidy support framework
support framework currently
currently being imple- being
implemented
mented by the government, as depicted in Figure 5. Utilizing the actual values andvalues
by the government, as depicted in Figure 5. Utilizing the actual con- and
considering the
sidering the reference
reference hydrogen
hydrogen cost
cost of USDof 15.6/kg
USD 15.6/kg of hydrogen
of hydrogen and an time
and an operation operation
time
of of
20 20 h, ititbecomes
hours, becomes evident thataaminimum
evident that minimum subsidy
subsidy of USD
of USD 10/kg10/kg of hydrogen
of hydrogen is is
required.
required.While
Whilereaching break-evenpoint
reaching a break-even pointin in
thethe sixth
sixth yearyear is feasible,
is feasible, obtaining
obtaining this this
amount
amount ofof subsidyininthe
subsidy the present
present circumstances
circumstances is is
a considerable
a considerablechallenge.
challenge.
In response to this challenge, we investigated a scenario where the most significant
segment of operational expenses, the electricity costs, receives support. Within this sce-
nario, the hydrogen price was USD 8.2 for 24 hours of continuous operation, representing
only a marginal 6% deviation from the actual hydrogen price at refueling stations. Im-
portantly, this scenario allowed us to surpass the break-even point by the eighth year.
Hence, it is our contention that, at this juncture, securing electricity subsidies for the hy-
drogen economy stands as the most promising solution to drive the advancement of green
hydrogen initiatives in South Korea.
Energies 2024, 16, x FOR PEER REVIEW 10 of 14
Energies 2024, 17, 20 9 of 13

Figure
Figure5.5.The
Thebreak-even
break-evenpoint
pointfor
forhydrogen
hydrogenprices
pricesaccording
accordingto
tothe
thescenarios.
scenarios.

In response to this challenge, we investigated a scenario where the most significant

4. Conclusions
segment of operational expenses, the electricity costs, receives support. Within this scenario,
In conclusion, this study made a significant contribution by establishing a green hy-
the hydrogen price was USD 8.2 for 24 h of continuous operation, representing only a
drogen production facility directly integrated with small-scale hydropower generation.
marginal 6% deviation from the actual hydrogen price at refueling stations. Importantly,
The evaluation conducted here covered efficiency, energy utilization, and economic feasi-
this scenario allowed us to surpass the break-even point by the eighth year. Hence, it is
bility, offering a blueprint for similar facilities in regions with power markets akin to South
our contention that, at this juncture, securing electricity subsidies for the hydrogen econ-
Korea’s.
omy stands as the most promising solution to drive the advancement of green hydrogen
The Seongnam Green Hydrogen Production Facility faces a formidable challenge de-
initiatives in South Korea.
spite sustaining an operational rate exceeding 60%. This challenge arises primarily from
the recent upsurge in energy costs. Even with a meticulous optimization of operational
4. Conclusions
hoursIn toconclusion,
a span of 20thishours,
studythemade
LCOH remained fixed
a significant at approximately
contribution USD 15.6/kgH
by establishing 2.
a green hy-
The integration of small-scale hydropower-connected green hydrogen
drogen production facility directly integrated with small-scale hydropower generation. The pilot facilities
holds substantial
evaluation potential
conducted herein advancing
covered green energy
efficiency, hydrogen initiatives.
utilization, and This pricingfeasibility,
economic scenario
places
offering a blueprint for similar facilities in regions with power markets akin toenergy
constraints on the facility’s competitiveness within the dynamic hydrogen South
market.
Korea’s.It is worth noting that South Korea’s electrolysis facilities have yet to establish
official Theperformance
Seongnamand Greensafety credentials
Hydrogen for extended
Production operations
Facility beyond the challenge
faces a formidable one-year
mark. Consequently, the Seongnam facility, in synergy with its small-scale
despite sustaining an operational rate exceeding 60%. This challenge arises primarily from hydropower
counterpart, envisions
the recent upsurge securing
in energy a robust
costs. Evenfoothold in continuous
with a meticulous operational
optimization of technology
operational
through
hours toprolonged
a span of 20 experimental
h, the LCOH research.
remained This indicates
fixed future possibilities
at approximately for develop-
USD 15.6/kgH 2.
ment.The integration of small-scale hydropower-connected green hydrogen pilot facilities
holdsInsubstantial
terms of thepotential
specific innumerical
advancing scenarios for green initiatives.
green hydrogen hydrogen pricing:
This pricing scenario
places constraints on the facility’s competitiveness within thecost,
Scenario 1: Based on the optimized hydrogen production the minimum
dynamic hydrogen subsidy
energy
required
market. It was USD 10/kgH
is worth . In this
noting 2that scenario,
South Korea’sthe break-even
electrolysis point was
facilities havereached in the sixth
yet to establish offi-
year.
cial performance and safety credentials for extended operations beyond the one-year mark.
Scenario 2:the
Consequently, In the scenariofacility,
Seongnam where in electricity
synergy costs
with receive support,
its small-scale the hydrogen
hydropower sell-
counter-
ing price
part, for 24 hours
envisions securingof continuous operation
a robust foothold was USD 8.2/kgH
in continuous 2. In this
operational case, thethrough
technology break-
even point was
prolonged achieved by
experimental the eighth
research. Thisyear.
indicates future possibilities for development.
In terms of the specific numerical scenarios for green hydrogen pricing:
Energies 2024, 17, 20 10 of 13

Scenario 1: Based on the optimized hydrogen production cost, the minimum subsidy
required was USD 10/kgH2 . In this scenario, the break-even point was reached in the
sixth year.
Scenario 2: In the scenario where electricity costs receive support, the hydrogen selling
price for 24 h of continuous operation was USD 8.2/kgH2 . In this case, the break-even
point was achieved by the eighth year.
These break-even points indicate the number of years it would take for the hydro-
gen production facility to recover its costs and start generating positive returns under
each scenario. This highlights the financial challenges and considerations associated with
green hydrogen production in the given context. However, it is important to note that
South Korea’s electrolysis facilities have not yet established official performance and safety
credentials for extended operations beyond one year; therefore, the Seongnam facility is
conducting experimental research to secure a strong position in continuous operational
technology. Additionally, for the economic production and sale of green hydrogen in the
current situation of electrolysis and green hydrogen markets in South Korea, the following
strategies are necessary based on the analyses conducted in this paper: (1) reducing output
limitations through ensuring the stability of the domestic power grid; (2) increasing the
efficiency of small-scale hydropower generation and electrolysis systems through tech-
nological development; (3) alleviating technological monopolies among small businesses
through government support for technology transfer to private companies involved in
electrolysis system manufacturing; (4) reviewing the appropriate capacities of electroly-
sis systems considering actual renewable energy generation; and (5) establishing carbon
emission rights and support systems for renewable energy-integrated green hydrogen
production facilities.
In order to implement a strategy toward a carbon-neutral society, the demand and
supply goals for green hydrogen in Korea are expected to grow steadily. Based on the
research conducted in this paper, it will be possible to consider strategies not only for
small-scale but also for large-scale green hydrogen production facilities to ensure their
economic viability.

Author Contributions: H.Y. performed the conceptualization, methodology, and writing and editing
of the original draft. Y.K. performed the formal analysis and methodology. H.S. contributed to the
conceptualization, review, and editing of the draft. All authors have read and agreed to the published
version of the manuscript.
Funding: This research was funded by the Korea Water Resources Corporation, Grant Number G220691.
Data Availability Statement: Data are contained within the article.
Conflicts of Interest: The authors declare that this study received funding from Korea Water Re-
sources Corporation. The funder was not involved in the study design, collection, analysis, interpre-
tation of data, the writing of this article or the decision to submit it for publication.

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