Levelized Cost of Hydrogen Assumptions
Levelized cost of hydrogen (LCOH) production: A summary metric that combines the primary technology cost and performance parameters: capital expenditures, operating expenditures, and capacity factor.
$$ LCOH = \frac{CRF \times CAPEX + FOM}{CF\times 365 (days/yr)} + VOM + FEEDSTOCKS $$
Capital recovery factor (CRF): Ratio of a constant annuity to the present value of receiving that annuity for a given length of time.
$$ CRF = WACC \times \left[ \frac{1}{1-\frac{1}{\left(1+WACC\right)^t}} \right] $$
Weighted average cost of capital (WACC): Average expected rate that is paid to finance assets.
Cost recovery period (t): Length of time to pay off assets.
Capital expenditures (CAPEX): Expenditures required to achieve commercial operation of the generation plant.
Fixed operation and maintenance (FOM) expenses: Annual expenditures to operate and maintain equipment that are not incurred on a per-kilogram (kg) H2 basis, including annualized replacements.
Capacity factor (CF): The ratio of actual annual output to output at rated capacity for an entire year.
Variable operation and maintenance (VOM): Operation and maintenance costs incurred on a per-kg H2 basis that are not classified as a feedstock.
Feedstock costs (FEEDSTOCKS): Annual expenditures on feedstocks, including electricity and natural gas.