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Appendix C Modeling a Hydrogen Transition Joan Ogden, Marc Melaina, and Chris Yang A goal of the scenario analysis is to estimate the invest- —Incremental vehicle costs ments needed to bring hydrogen fuel cell vehicles to life- —Infrastructure capital costs cycle cost competitiveness with a reference gasoline vehicle. —Policy costs (subsidies, carbon tax, etc.) To aid this process, researchers at the University of Califor- • Primary energy use over time nia, Davis (UC Davis,) developed a relative simple, flexible, • GHG emissions over time transparent EXCEL model called STM (Simple Transition Model) that the committee used to look at how hydrogen Figures C.1(a) and C.1(b) show the program’s logic and transition costs depend on key variables. flow, which involves the following five steps. Inputs to the model include Step 1: Estimating Infrastructure and Delivered Hydrogen • Market penetration rate of hydrogen fuel cell vehicles Costs (Figure C.2) (HFCVs) • Cost of HFCVs versus cumulative production, time • For each year from 2005 to 2050, the infrastructure (learning rate, scale factors for manufacturing HFCVs) needed to serve that H2 demand is designed using the UC • HFCV performance over time (fuel economy) Davis or H2A models. • Cost and performance of baseline reference vehicle • The initial H2 infrastructure is built up in “lighthouse” (gasoline internal combustion engine vehicle [ICEV]) over cities (similar to the Department of Energy [DOE] transition time analysis). • Oil (gasoline) price over time • The capital cost for infrastructure is estimated at each • Cost of hydrogen ($/kg) over scale, time time. —Costs and performance for H2 infrastructure compo- • The feedstock and other operating costs are estimated nents are included in H2A and UC Davis models as well. • Source of hydrogen over time and greenhouse gas • This allows determination of the delivered H2 cost (GHG) emission factors ($/kg) for each year. Outputs include Step 2: Cash Flow Analysis: Estimating the Life-cycle Cost (LCC) of Transportation • Scenario description • “Breakeven” year, when HFCVs become competitive The life-cycle cost of transportation is estimated for each with reference ICEVs on a life-cycle cost basis (cost of the year (i indicates one of these years) from 2005 to 2050 (LCC vehicle plus the discounted cost of the H2 to fuel it) [i]) for HFCVs compared to what would have been paid for • Transition costs (How much does it cost to get to break the same number of reference gasoline vehicles. even?) NOTE: Joan Ogden is a member of the Committee on Assessment of Resource Needs for Fuel Cell and Hydrogen Technologies. Marc Melaina and Chris Yang worked at the University of California, Davis. 121
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122 TRANSITIONS TO ALTERNATIVE TRANSPORTATION TECHNOLOGIES—A focus on hydrogen FIGURE C.1(a) Flow diagram of simple transition model (STM) (part 1). HFCV LCC (i) ($/yr) = number of new HFCVs (in year i) HFCVs come down via learning, under some conditions × vehicle first cost (in that year) ($/yr) + Σ [H2 fuel cost ∆LCC (i) becomes positive. (i) + O&M cost (i) + policy cost (i)] × total number of When the costs are equal, the annual cash flow ∆LCC (i) = HFCVs in the fleet (i) 0. The year that this happens is termed the “LCC breakeven” year. Presumably, at this point the net cost to the economy is Reference vehicle LCC (i) ($/yr) = # number of new the same for FCVs and gasoline reference vehicles. HFCVs (i) × reference vehicle first cost (i) ($/yr) + Σ [gasoline fuel cost (i) + O&M cost (i) + policy cost (i)] × Step 3: Estimating Transition Costs total number of FCVs in the fleet (i) Add up incremental HFCV vehicle and fuel costs to get to ∆LCC (i) = reference vehicle LCC (i) ($/yr) − LCC HFCV the LCC breakeven year (compared to the gasoline reference (i) ($/yr) = number of new HFCVs (i) × [reference vehicle vehicle). These are transition or “buydown” costs. first cost (i) − HFCV first cost (i) ($/yr)] + Σ [gasoline fuel cost (i) − H2 fuel cost (i) + ∆policy cost (i)] × total uydown cost ($) = Σ ∆LCC (i) i = 1 to the breakeven B number of HFCVs in the fleet (i) year The difference in life-cycle costs ∆LCC at each year (cash Initially, the first cost of the HFCV will be much higher flow) represents the funding that would have to be supplied than that of the reference vehicle. This cost falls over time each year to make the cost of HFCVs equivalent to that of (with increased learning and mass production of HFCVs), so the reference gasoline vehicles. Initially, HFCVs cost a lot that eventually, under some conditions ∆LCC (i) = 0, and the more than gasoline vehicles (but the number of new HFCVs negative cash flow “bottoms out.” is low) so the cash flow is negative. Eventually as costs for
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APPENDIX C 123 FIGURE C.1(b) Flow diagram of simple transition model (part 2), oil and greenhouse gas emissions saved. 0.24 8 Los Angeles, California New York, New York 0.22 Miami, Florida Denver, Colorado Levelized cost of H 2 ($/kWh, $2005) Washington, DC Dallas, Texas 7 Levelized cost of H2 ($/kg, $2005) 0.20 Albuquerque, New Mexico Atlanta, Georgia 0.18 6 0.16 5 0.14 0.12 4 0.10 3 0.08 0.06 2 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 Year FIGURE C.2 Delivered hydrogen costs in selected cities. FigureAppC-2.eps
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124 TRANSITIONS TO ALTERNATIVE TRANSPORTATION TECHNOLOGIES—A focus on hydrogen Consider incremental costs for vehicles and H 2 fuel Step 5: Estimating Savings in Oil Use and GHG emissions separately: (Figures C.3 and C.4) • Using a vehicle stock model, keep track of the number ncremental vehicle cost ($) = Σ Number of new HFCVs I of HFCVs of each model year in the fleet. (i) × [first cost HFCV (i) – first cost reference vehicle (i)], • Each year, the H2 vehicles displace a certain amount i = 1 to the breakeven year of gasoline use (the gasoline that would have been used by reference gasoline cars, if the HFCVs had not been I ncremental fuel cost ($) = number of HFCVs in the fleet introduced). (i) × [fuel cost HFCV (i) – fuel cost reference vehicle (i)], • The HFCVs have certain well-to-wheels GHG emis- i = 1 to the breakeven year sions, depending on the assumed H2 supply options (which are estimated separately and input to the scenario). These Adding up the infrastructure capital costs to the breakeven emissions are lower than those of the reference gasoline year gives an indication of cumulative costs to energy compa- vehicle, and GHG emission reductions can be estimated for nies. These are the cumulative costs that would be borne by each year. automakers or energy companies to reach breakeven. Step 4: Estimating Policy Costs • Vehicle subsidy is subtracted from vehicle first cost. 140 • Fuel subsidy is subtracted from fuel cost. 120 Billion gallons per year • Carbon tax is added to operating costs. 100 80 Cost for each vehicle becomes: 60 Case 1 (H2 Success) Case 2 (ICEV Eff) L CC ($) = (vehicle first cost ($) − vehicle subsidy ($)) 40 Case 3 (Biofuels) + Σ [(fuel costs − fuel subsidy) + O&M costs + carbon 20 emissions × carbon tax)] 0 2000 2010 2020 2030 2040 2050 The cost of policies can be estimated over time, either to Year the breakeven year or to some set “policy horizon.” The cost of a direct subsidy to energy providers (e.g., pay FIGURE C.3 Oil saved per year with different scenarios compared for 50 percent of cost of first stations) could be calculated in to the reference case. FigureAppC-3.eps an analogous fashion. 1600 Million tonnes CO2 eq/yr 1400 1200 Case 1 (H2 Success) 1000 800 Case 2 (ICEV Eff) 600 400 Case 3 (Biofuels) 200 0 2000 2010 2020 2030 2040 2050 Year FIGURE C.4 Greenhouse gas emissions avoided compared to the reference case. FigureAppC-4.eps