Offshore or onshore hydrogen production? A critical analysis on costs and operational considerations for the Dutch North Sea

Abstract

Ambitious offshore wind energy targets in the North Sea necessitate innovative solutions for efficiently delivering energy to onshore demand locations. Wind-to-hydrogen systems offer a promising pathway, with three archetypes of system configurations: centralized onshore electrolysis (C-ON), centralized offshore electrolysis (C-OFF), and decentralized offshore electrolysis at each wind turbine (D-OFF). This study introduces a high-resolution, time-dependent simulation framework capable of analyzing offshore wind-to-hydrogen systems with a focus on operational dynamics and comprehensive cost estimation. The framework enables detailed analysis of D-OFF, capturing its unique dynamics driven by direct connections to individual wind turbines, including the impacts of dynamic operation. A comprehensive system analysis, spanning from the wind farm to the hydrogen offtaker, reveals a wide cost range, with Levelized Cost of Hydrogen (LCOHs) ranging from 3.0 to 10.5€/kgH₂ post 2030. Among the different scenarios analyzed, C-OFF with proton exchange membrane electrolysis achieves the lowest LCOHs due to a reduced need for offshore electrical infrastructure, economies of scale, and efficient dynamic operating characteristics. D-OFF with alkaline electrolysis incurs the highest costs and faces operational challenges, such as electrolyzers shutting down when they occasionally fail to reach the minimum load thresholds, lowering hydrogen production. We illustrate the trade-offs between system configurations’ cost, production rate, and electrolyzer stack lifetime across configurations. Insights from this study can be utilized as a starting point for informed decision-making for large-scale wind-to-hydrogen deployment in the Dutch North Sea region.