Life cycle cost analysis of hydrogen value chains in Finland

Abstract

H₂ emerges as a transformative force in future energy system serving as a base chemical, carrier and storage solution. This study utilizes life cycle cost (LCC) methodology to calculate the levelized cost of hydrogen (LCOH) in Finland for three well-to-gate production pathways: steam methane reforming (SMR), proton exchange membrane electrolysis (PEMEL) and thermal decomposition of methane (TDM). PEMEL systems were assessed under two scenarios: powered by a project-owned wind farm, connected to the national grid. The findings revealed that grid-powered PEMEL is the most expensive green H₂ option, with an LCOH of 6.56 €/kgH₂, while wind-powered PEMEL offers a reduced LCOH of 5.82 €/kgH₂ due to lower electricity costs (56.39 €/MWh). TDM was identified as a mid-cost solution, producing turquoise H₂ at 4.75 €/kgH₂, whereas conventional grey H₂ via SMR remained the most cost-effective option at 3.69 €/kgH₂. The inclusion of CCS technology increased SMR's LCOH to 4.02 €/kgH₂. Storage costs for H₂ were standardized at 1.52 €/kgH₂ across all pathways. Wind farm ownership make green H₂ costs highly sensitive to discount rates and the breakeven points indicated that wind-powered PEMEL could outperform TDM and SMR+CCS under favorable electricity prices and low discount rates. While fossil-based routes currently seem cheaper, incorporating monetized environmental impacts suggests PEM electrolysis could become more cost-effective in the future. As a secondary objective, mapping Finland’s H₂ projects, the study identified 13 initiatives in the planning stage, with a combined proposed capacity of 2.78 GW, concentrated in the Bothnian Bay, South-West, and South-Eastern hydrogen valleys. These projects are primarily focused on electrolyser plants, methanol/methane/ammonia synthesis, and pyrolysis technologies.