A novel model for measuring the economics of hydrogen generation via electrolytic water projects was constructed. The model overcomes the current problem of incomplete and inaccurate assessments of the price of producing hydrogen via water, which are caused by ignoring the indirect carbon costs of different power generation sources in the process of determining the cost of producing hydrogen via water. The model was used to analyze the price of producing hydrogen via water electrolysis and its sensitivity to the electricity costs of hydrogen production and carbon prices in various provinces of China. With the continuing increase in the penetration of novel energy in China’s power system and the gradual decline in electricity prices, the price of producing hydrogen via electrolytic water is expected to be close to or even lower than that of producing hydrogen via coal in the future. Geographical differences also have a significant impact on the price of producing hydrogen, which is typically higher in the southeastern coastal region than in the western region, because of the local price of electricity and the composition of the energy sources. Provinces that have been effective in developing novel energy sources, such as Qinghai, Sichuan, and others, have been effective in the hydrogen energy industry. Sichuan and other provinces with significant new energy development have a clear advantage in the hydrogen industry. Because provinces with low hydrogen production costs can transport hydrogen to provinces with high hydrogen production costs through pipelines, hydrogen pipelines are planned from Shaanxi to Henan and from Xinjiang to Nei Mongol. These study results reveal the relative economic advantages of producing hydrogen via water electrolysis under various energy and electricity price policies and provide new perspectives on China’s energy strategy and the growth of the hydrogen energy sector.

Keywords: Hydrogen energy; Hydrogen production cost; Levelized cost; Carbon emissions