Renewable: Green hydrogen solution
KyH2 – A new model for green hydrogen
KyH2 is the latest addition to our suite of stochastic optimization and valuation models. It helps owners and developers of (green) hydrogen projects in assessing the income stream of their plant or project. This is key information for internal valuation purposes, to identify the best hydrogen opportunities in the market, for structuring and sizing projects, to evaluate the risks, and to report to investors and other stakeholders.
We actively use KyH2 in our advisory practice, and will soon be able to provide access to our customers. Get in touch with us to know more details.
Methodology
The KyH2 software builds on our many years of experience in optimizing and valuing power plants, PPAs and energy storage. We combine a real options-based approach with actual asset behavior and realistic simulations. The model is continuously adapted to fit the demands of our customers.
Our approach incorporates the uncertainty in power and hydrogen prices, as well as the fluctuations in renewable electricity generation. We combine a thorough fundamental model of power markets (KyPF) with realistic Monte Carlo simulations of prices and volumes (KySim). Advanced option valuation methodologies, including least-squares Monte Carlo (LSMC), determine the optimal dispatch of the electrolyser and other assets in the portfolio. The methodology takes into account technical parameters, grid connection constraints, contractual parameters – for example related to H2 offtake – and policy conditions.
The detailed simulation approach means that KyH2 not only gives the user an estimate of the intrinsic value of the electrolyser – the observable margin between (green) hydrogen and power prices, with subsidies included, but also of the extrinsic or flexibility value: what extra margin can be generated by flexibly dispatching the plant on a day-to-day or even hour-by-hour basis. This is a key element in every business case.
Different configurations KyH2
KyH2 can be used to value and optimize an electrolyser connected to the grid, typically under one or more PPAs. Often however, we see electrolysers being added to an existing wind or solar farm of the same owner, or being part of a combined project with energy storage, other electricity generation and consumption.
For those “portfolio” cases KyH2 and other KYOS models allow you to find the value of various configurations, such as electrolyser capacity, where our models take into account the interdependency between the assets and the grid.
Get in touch!
Ask us for support if you work on hydrogen business cases. We can help you with our hydrogen financial modelling expertise. Send us a quick e-mail: info@kyos.com
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