HyWeb, 2009-05-20: Building on extensive project experience in the field from Europe, Germany, Norway and the USA, strategy and technology consultants Ludwig-Bölkow-Systemtechnik (LBST) have developed a tool for the financial and spatial modelling of hydrogen infrastructure.
Challenges related to the build-up of the infrastructure for hydrogen refuelling stations
The build-up of an effective and efficient infrastructure for hydrogen refuelling stations provides a number of technological and economic challenges for the potential investors. On the one hand the use of manifold production and supply possibilities not only increases the technical complexity of the entire system but it also has a significant influence on the CO2 balances and cost allocation within the value chain for hydrogen as a transportation fuel. For example according to detailed evaluations within multiple commercial initiatives and research projects such as “NorWays” and “GermanHy” the actual hydrogen fuel costs can vary by a factor of ten between different refuelling stations, dependent on the technology and utilisation of the concerned facilities. On the other hand, the success of infrastructure for hydrogen fuel in the long-term is dependent on the CO2 emissions compliant to the political guidelines, sufficient and comprehensive distribution grid as well as consistent price to the consumer in all relevant regions.
In addition, asymmetric information and differing interests related to the distribution of investment risks among various investors and politics may lead to conflicting objectives, which, in economic terms, can be summarised as the so-called principal agent problem. This may give rise to imbalances related to the allocation of financial opportunities and risks, which, in turn, may lead to insufficient design of the entire infrastructure and, under some unfavourable circumstances, to the failure of the joint hydrogen enterprise. Therefore, in order to minimise this threat and to ensure an unproblematic infrastructure build-up, the potential actors from industry and politics, particularly in the early transition phase, will have to relay on regulations and instruments which provide sufficient transparency and trust between all involved players.
This was the starting point for a new planning and analysis tool for infrastructure of the hydrogen refuelling stations developed by the LBST. The so-called Hydrogen Infrastructure Venture Support Tool (H2INVEST) provides integrated techno-economic evaluation and consists of three consecutive modules which represent the major planning and analysis steps:
1. Modelling of the local hydrogen demand and allocation of refuelling stations in the selected regions,
2. Optimisation of the H2 supply infrastructure for the calculated demand distribution and
3. Economic evaluation of the infrastructure results for predefined business units on the basis of common financial ratios.
Modelling of the local hydrogen demand and allocation of refuelling stations
In general, the modelling of demand for hydrogen as a transportation fuel is based on demographic development data as well as expected market penetration of the fuel cell vehicles in the relevant analysis areas. The single regions can be selected either manually in order to account for politically interesting but economically less attractive regions or automatically by predefined selection criteria for the build-up of the infrastructure. These selection criteria include a number of demographic factors such as population density, specific purchasing power as well as number of neighbouring regions with existing hydrogen supply and by means of a weighted average a single score is calculated in order to allow for a ranking of the regions. In this way H2INVEST can be used to simulate the introduction of the fuel cell vehicles and consequently the development of the hydrogen demand for the entire analysis timeframe within and between all areas.
This is followed by the allocation of the corresponding refuelling stations over the simulation time period. Based on the predefined total number of refuelling stations in the analysis area the tool first calculates the minimum average driving distance to every hydrogen refuelling station in order to determine the respective number of refuelling sites in every region and time step. Then, using several assessment criteria such as available space, sales, visibility and accessibility of the site, the conventional refuelling stations are selected automatically for the upgrade with hydrogen equipment. Finally the actual demand for every hydrogen refuelling station is estimated analogically to the real consumption of the conventional fuels.
Optimisation of the H2 supply infrastructure
The data on the hydrogen demand and refuelling stations are utilised in the second planning step in order to determine an optimum supply infrastructure. The essential optimisation criterion is represented by the minimisation of the actual costs along the supply path for every hydrogen refuelling station. In this context the tool compares a number of H2 production and distribution options for every refuelling station and selects automatically the best alternative in every time step. In this way it is possible to provide detailed information on the location, capacity and utilisation of each production facility and transportation unit for the entire analysis timeframe. Similarly, refuelling station sharp costs and analysis results can be provided.
In this context within the optimisation routine the tool takes into account not only different production technologies (e.g. electrolysis, steam reforming, gasification of biomass and utilisation of existing facilities generating hydrogen as a byproduct) but also the fact that most technologies can be applied both at a centralised location or directly at the concerned refuelling station as onsite equipment. In case of the centralised supply the corresponding transportation of hydrogen can be accomplished either by specific trucks (GH2/LH2) or by a pipeline network. In addition, suitable onsite facilities can be combined with short pipelines in order to supply refuelling stations in the vicinity.
Image: cost optimum hydrogen supply with selective political support (top) and without (bottom)
Economic evaluation of the infrastructure results
The results of the demand modelling and infrastructure optimisation can be finally used within the third analysis step for a detailed economic evaluation. In this context the tool allows for a flexible definition of different business units which may represent various investors along the entire hydrogen value chain. According to predefined settings related to the technology, value chain step and region the single production facilities, transportation units and refuelling stations can be assigned to business units. Then, based on specific transfer prices between the actors, the respective revenues and costs can be calculated as well as further financial key performance indicators for single investors. Moreover, the business analysis takes into account additional economic parameters such as target capital structure, working capital requirement and inflation. In this way the tool is able to provide detailed and realistic income statement, balanced sheet, statement of cash flows and break-even analysis for every involved investor.
Image: EBITDA (Earnings before interest, taxes, depreciation and amortisation) of various actors for an infrastructure build-up scenario
Applications for H2INVEST
In general, H2INVEST stands for a comprehensive tool which can be utilised for a realistic simulation and detailed evaluation of the build-up of the hydrogen infrastructure. It provides not only relevant technological data such as location, capacity and specific CO2 emissions of single facilities but also economic ratios such as revenues, costs and cash flows for predefined business units. On the one hand, H2INVEST can be used to analyse the influence of different energy costs, technologies, CO2 taxes and specific governmental support activities on the H2 mix in selected regions and scenarios. Moreover, the tool is also suitable for the analysis of the impact of different investor configurations within a potential consortium on the financial results of the involved actors. In this way H2INVEST can be employed to provide far-reaching transparency for industry and politics during the build-up process of the hydrogen infrastructure.
The evaluations carried out with H2INVEST up to today were related to Norway, Germany and the area Berlin-Hamburg.