The OffgridH₂ from the LUT University project explored how different system configurations perform under varying technical, economic and geographical conditions to identify the most cost-effective solutions for system designs and operating strategies. In these systems, flexibility can be just as important as efficiency, as renewable electricity generation varies over time.
“Using techno-economic modelling and optimization, we evaluated how different system designs and operating strategies affect hydrogen production costs across different scenarios says Nasir Aziz, a junior researcher on the OffgridH₂ project. “This allows us to identify economically viable whole-system solutions rather than optimizing individual components in isolation.”
There is no one-size-fits-all hydrogen plant
The optimal system depends for example on renewable energy availability, hydrogen demand, storage requirements, component costs and financing assumptions. In one case study for an off-grid H₂ plant, researchers found that a system designed for continuous hydrogen supply required additional renewable generation and storage capacity, resulting in hydrogen costs approximately 16–31% higher than a system optimized purely for lowest-cost production. While the exact figures depend on project-specific assumptions, the result highlights the importance of optimizing the whole system rather than individual components in isolation.
Because project conditions vary, the economically optimal system configuration can also change. The results show that declining electrolyser costs can favour larger electrolyser capacities and lower utilisation, as capturing more renewable generation during periods of high output can become more valuable than maintaining a high electrolyser capacity factor. The optimal trade-off between renewable generation, electrolyser capacity and storage also changes with renewable availability, hydrogen demand, storage costs and financing assumptions.
The results also indicate that hydrogen production based solely on local renewable electricity is technically feasible, although the economic performance depends strongly on how renewable generation, electrolyser capacity and storage are balanced.
That is the point of system-level optimisation. Instead of assessing technologies one by one, it looks at how different combinations of technologies, capacities and operating strategies perform together, and points to the most economically attractive solution for a given project and its conditions.
From research insights to a practical tool for hydrogen project optimization
Building on this research, Dr. Alejandro Ibáñez-Rioja and his colleagues at LUT University are translating these insights into practice through XOptimal, a techno-economic optimization tool for hydrogen projects.
“The strength of XOptimal lies in optimizing the entire system rather than individual components,” says Ibáñez-Rioja. “Instead of asking which electrolyser is best, we ask what combination of technologies, capacities, and operating strategies can deliver the most competitive hydrogen for a specific project.”
For large industrial plants, hydrogen valleys, and first-of-a-kind (FOAK) projects, the implications can be significant. Small changes in system design or operating strategy can translate into substantial lifetime costs, while identifying the optimal configuration early can reduce investment risk and improve project bankability. In a specific case study conducted with XOptimal, different technically feasible configurations of a hydrogen production system were found to result in variations of up to 8% in annual hydrogen production costs and 14% in annual electricity demand. At industrial production scales, these differences can translate into millions of euros over a 30-year plant lifetime, highlighting the value of identifying the optimal system configuration early in the project development process.
For the projects being planned now, getting the system design right early is where the money is won or lost.
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