Optimizing the economic value of offshore wind resources: A bottom-up valuation of an offshore wind farm, coupled with hydrogen production and energy storage

Abstract

In this thesis, we analyze a hypothetical offshore wind farm placed off the southwestern coast of Norway. To maximize the economic value, we examine four different scenarios to best use the electricity generated from the wind farm. We have employed a bottom-up approach for revenue and cost inputs to analyze the economic value created from the different scenarios. We find the offshore wind farm to be a profitable investment without subsidies. Fitting a wind farm with an onshore electrolyzer for a hybrid system switching between hydrogen production and direct electricity sale generates the highest net present value. This option also allows for a higher degree of flexibility in the event of hydrogen or electricity markets experiencing significant shifts in prices. We find exclusively producing hydrogen to be economically unattractive compared to the sale of electricity at a hydrogen price of $3.50/kg. We also find that the incremental revenues gained from energy storage do not outweigh capital costs.