H2POWER: Development of a methodology to calculate life cycle cost of small and medium-scale hydrogen systems
Abstract At this time, hydrogen-based power plants and large hydrogen production facilities are capital intensive and unable to compete financially against hydrocarbon-based energy production facilities. An option to overcome this problem and foster the introduction of hydrogen technology is to introduce small and medium-scale applications such as residential and community hydrogen refueling units. Such units could potentially be used to generate both electricity and heat for the home, as well as hydrogen fuel for the automobile. Cost modeling for the integration of these three forms of energy presents several methodological challenges. This is particularly true since the technology is still in the development phase and both the financial and the environmental cost must be calculated using mainly secondary sources. In order to address these issues and aid in the design of small and medium-scale hydrogen systems, this study presents a computer model to calculate financial and environmental costs of this technology using different hydrogen pathways. The model can design and compare hydrogen refueling units against hydrocarbon-based technologies, including the “gap” between financial and economic costs. Using the methodology, various penalties and incentives that can foster the introduction of hydrogen-based technologies can be added to the analysis to study their impact on financial cost.
Environmental Externalities, Market Distortions and the Economics of Renewable Energy Technologies
This paper reviews life cycle analyses of alternative energy technologies in terms of both their private and societal costs (that is, inclusive of externalities and net of taxes and subsidies). The economic viability of renewable energy technologies is shown to be heavily dependent upon the removal of market distortions. In other words, the removal of subsidies to fossil fuel-based technologies and the appropriate pricing of these fuels to reflect the environmental damage (local, regional, and global) created by their combustion are essential policy strategies for stimulating the development of renewable energy technologies in the stationary power sector. Policy options designed to internalize these externalities are briefly addressed.
Valuing the environmental impacts of electricity generation : a critical survey
This article provides a critical survey of a large number of studies carried out during the 1980s and 1990s that have focused on valuing the external, primarily environmental, costs associated with electricity generation. It discusses a number of conceptual, policy-related and, in some cases, unresolved questions in economic valuation of these types of impacts. These include: (a) the definition of externalities; (b) the choices of scope, relevant parameter input assumptions, and methodology; (c) the role of 'green' consumer demand in replacing environmental cost assessments; and (d) the behavioral assumptions underlying environmental impact valuation. By analyzing these issues we gain an increased understanding of the reasons for the wide disparity in external cost estimates reported in previous studies. The article also concludes that in cases where the results of electricity externality studies are utilized as a basis for policy purposes, a conflict between the economic efficiency criterion, its theoretical foundations and other - not necessarily less legitimate - goals of policy may exist.