Optimal sizing of a hybrid renewable energy system for low cost green hydrogen production

Abstract

The Netherlands is transitioning towards a fully renewable energy system, aiming to achieve an almost entirely renewable energy supply by 2050. Green hydrogen, produced via water electrolysis powered by renewable energy, offers a key solution for decarbonising energy-intensive sectors. However, high production costs remain a major barrier to widespread adoption. This study investigates the cost-optimal design of a hybrid renewable energy system combining solar PV, onshore wind, and battery storage to supply a 200 MW electrolyser in De Koog, the Netherlands.
A simulation model was developed in Python, incorporating hourly wind and solar generation data, electrolyser operation with on/off stack control, battery charging and discharging, and system degradation over a 20-year lifetime. Multiple system scenarios were evaluated by varying installed capacities, battery sizes, and minimum stack operation rules. Economic performance was assessed using key indicators, including hydrogen sales price, levelised cost of hydrogen (LCOH), net present value (NPV), internal rate of return (IRR), and payback time. Additionally, stack and battery replacement costs were considered. Results show that the cost-optimal system for the chosen location, De Koog, is dominated by wind-only systems, with the electrolyser operating at a capacity factor of 0.659. Inclusion of a small battery provides
minor operational flexibility, increasing annual hydrogen production slightly from 22.98 to 22.99 million kg, but has a negligible effect on hydrogen sales price (7.442–7.444 €/kg), NPV, LCOH, IRR, or payback time. From year 8 onwards, stack replacement costs remain constant, as stacks are replaced annually and battery replacement is scheduled after 13.5 years, leading to only a limited and predictable increase in total system costs. Electrolyser stack granularity affects operational efficiency: smaller stacks reduce curtailment without storage but slightly limit battery utilisation when included.
The findings indicate that the economic performance of green hydrogen production is primarily driven by the balance between renewable generation and electrolyser operation. In particular, the renewable to-electrolyser capacity ratio plays a key role, while battery storage has only a minor influence in the cost-optimal configuration. For the analysed Dutch coastal site, the lowest hydrogen production costs are achieved with a moderately oversized wind capacity, an electrolyser operating at an intermediate capacity factor, and minimal battery integration. However, the optimal capacity ratio and the economic value of battery storage are strongly location-specific and depend on local resource conditions and system design assumptions. This study provides a comprehensive techno-economic assessment of hybrid renewable energy system design, offering practical guidelines for optimising component sizing to achieve cost-efficient green hydrogen production in the Netherlands and supporting the transition to a low-carbon energy system.