Q0043
The cost of green hydrogen is driven mainly by the price of electricity, the electrolyser's installed cost and efficiency, and how intensively the equipment is used. Financing, engineering, water treatment, compression, maintenance, stack replacement and delivery costs also matter. The cheapest electrolyser or renewable tariff does not necessarily produce the lowest delivered hydrogen cost.
Cost claims are difficult to compare when they use different system boundaries, financing assumptions and operating profiles. A transparent cost stack helps buyers and investors distinguish a credible project from a headline price that excludes essential infrastructure or assumes unrealistic utilisation.
A useful levelised cost calculation is:
Annualised capital cost + electricity + fixed and variable operations + water + stack replacement + compression and logistics - co-product revenue, divided by saleable kilograms of hydrogen.
Electrolysers commonly require roughly 50–55 kWh of electricity per kilogram of hydrogen before some downstream loads. Every RM0.01 per kWh therefore changes the electricity component by roughly RM0.50–RM0.55 per kilogram.
Power electronics, transformers, buildings, water treatment, compression, controls, engineering, construction and contingency all add to capital cost. The IEA reported that engineering, procurement, construction and contingency accounted for more than half of installed electrolyser-project cost outside China in 2024.
High operating hours spread capital and fixed operating costs across more hydrogen. However, buying expensive electricity simply to maximise utilisation can raise total cost. The lowest-cost design balances renewable price, supply profile, electrolyser size and storage.
Higher electricity consumption raises cost directly. Stack degradation can reduce efficiency and output, while replacements create periodic capital expenditure and downtime.
Interest during construction, weighted average cost of capital, construction delay and contracted revenue can materially affect levelised cost. Cost at the electrolyser outlet is not comparable with hydrogen delivered at pressure to a customer or converted into an export derivative.
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