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Transitions to Alternative Transportation Technologies — A Focus on Hydrogen Appendix C Modeling a Hydrogen Transition Joan Ogden, Marc Melaina, and Chris Yang A goal of the scenario analysis is to estimate the investments needed to bring hydrogen fuel cell vehicles to life-cycle cost competitiveness with a reference gasoline vehicle. To aid this process, researchers at the University of California, Davis (UC Davis,) developed a relative simple, flexible, transparent EXCEL model called STM (Simple Transition Model) that the committee used to look at how hydrogen transition costs depend on key variables. Inputs to the model include Market penetration rate of hydrogen fuel cell vehicles (HFCVs) Cost of HFCVs versus cumulative production, time (learning rate, scale factors for manufacturing HFCVs) HFCV performance over time (fuel economy) Cost and performance of baseline reference vehicle (gasoline internal combustion engine vehicle [ICEV]) over time Oil (gasoline) price over time Cost of hydrogen ($/kg) over scale, time Costs and performance for H2 infrastructure components are included in H2A and UC Davis models Source of hydrogen over time and greenhouse gas (GHG) emission factors Outputs include Scenario description “Breakeven” year, when HFCVs become competitive with reference ICEVs on a life-cycle cost basis (cost of the vehicle plus the discounted cost of the H2 to fuel it) Transition costs (How much does it cost to get to break even?) Incremental vehicle costs Infrastructure capital costs Policy costs (subsidies, carbon tax, etc.) Primary energy use over time GHG emissions over time Figures C.1(a) and C.1(b) show the program’s logic and flow, which involves the following five steps. Step 1: Estimating Infrastructure and Delivered Hydrogen Costs (Figure C.2) For each year from 2005 to 2050, the infrastructure needed to serve that H2 demand is designed using the UC Davis or H2A models. The initial H2 infrastructure is built up in “lighthouse” cities (similar to the Department of Energy [DOE] transition analysis). The capital cost for infrastructure is estimated at each time. The feedstock and other operating costs are estimated as well. This allows determination of the delivered H2 cost ($/kg) for each year. Step 2: Cash Flow Analysis: Estimating the Life-cycle Cost (LCC) of Transportation The life-cycle cost of transportation is estimated for each year (i indicates one of these years) from 2005 to 2050 (LCC [i]) for HFCVs compared to what would have been paid for the same number of reference gasoline vehicles. 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.
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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) ($/yr) = number of new HFCVs (in year i) × vehicle first cost (in that year) ($/yr) + Σ [H2 fuel cost (i) + O&M cost (i) + policy cost (i)] × total number of HFCVs in the fleet (i) Reference vehicle LCC (i) ($/yr) = # number of new HFCVs (i) × reference vehicle first cost (i) ($/yr) + Σ [gasoline fuel cost (i) + O&M cost (i) + policy cost (i)] × total number of FCVs in the fleet (i) ΔLCC (i) = reference vehicle LCC (i) ($/yr) − LCC HFCV (i) ($/yr) = number of new HFCVs (i) × [reference vehicle first cost (i) − HFCV first cost (i) ($/yr)] + Σ [gasoline fuel cost (i) − 2 fuel cost (i) + Δpolicy cost (i)] × total number of HFCVs in the fleet (i) The difference in life-cycle costs ΔLCC at each year (cash flow) represents the funding that would have to be supplied each year to make the cost of HFCVs equivalent to that of the reference gasoline vehicles. Initially, HFCVs cost a lot more than gasoline vehicles (but the number of new HFCVs is low) so the cash flow is negative. Eventually as costs for HFCVs come down via learning, under some conditions ΔLCC (i) becomes positive. When the costs are equal, the annual cash flow ∆LCC (i) = 0. The year that this happens is termed the “LCC breakeven” year. Presumably, at this point the net cost to the economy is the same for FCVs and gasoline reference vehicles. Step 3: Estimating Transition Costs Add up incremental HFCV vehicle and fuel costs to get to the LCC breakeven year (compared to the gasoline reference vehicle). These are transition or “buydown” costs. Buydown cost ($) = Σ ΔLCC (i) i = 1 to the breakeven year Initially, the first cost of the HFCV will be much higher than that of the reference vehicle. This cost falls over time (with increased learning and mass production of HFCVs), so that eventually, under some conditions ΔLCC (i) = 0, and the negative cash flow “bottoms out.”
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Transitions to Alternative Transportation Technologies — A Focus on Hydrogen FIGURE C.1(b) Flow diagram of simple transition model (part 2), oil and greenhouse gas emissions saved. FIGURE C.2 Delivered hydrogen costs in selected cities.
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Transitions to Alternative Transportation Technologies — A Focus on Hydrogen Consider incremental costs for vehicles and H2 fuel separately: Incremental vehicle cost ($) = Σ Number of new HFCVs (i) × [first cost HFCV (i) − first cost reference vehicle (i)], i = 1 to the breakeven year Incremental fuel cost ($) = number of HFCVs in the fleet (i) × [fuel cost HFCV (i) − fuel cost reference vehicle (i)], i = 1 to the breakeven year Adding up the infrastructure capital costs to the breakeven year gives an indication of cumulative costs to energy companies. These are the cumulative costs that would be borne by automakers or energy companies to reach breakeven. Step 4: Estimating Policy Costs Vehicle subsidy is subtracted from vehicle first cost. Fuel subsidy is subtracted from fuel cost. Carbon tax is added to operating costs. Cost for each vehicle becomes: LCC ($) = (vehicle first cost ($) − ehicle subsidy ($)) + Σ[(fuel costs − fuel subsidy) + O&M costs + carbon emissions × carbon tax)] The cost of policies can be estimated over time, either to the breakeven year or to some set “policy horizon.” The cost of a direct subsidy to energy providers (e.g., pay for 50 percent of cost of first stations) could be calculated in an analogous fashion. Step 5: Estimating Savings in Oil Use and GHG emissions (Figures C.3 and C.4) Using a vehicle stock model, keep track of the number of HFCVs of each model year in the fleet. Each year, the H2 vehicles displace a certain amount of gasoline use (the gasoline that would have been used by reference gasoline cars, if the HFCVs had not been introduced). The HFCVs have certain well-to-wheels GHG emissions, depending on the assumed H2 supply options (which are estimated separately and input to the scenario). These emissions are lower than those of the reference gasoline vehicle, and GHG emission reductions can be estimated for each year. FIGURE C.3 Oil saved per year with different scenarios compared to the reference case. FIGURE C.4 Greenhouse gas emissions avoided compared to the reference case.