Fallacies and limitations of the levelised cost of hydrogen (LCOH): Exploring the concept from the perspective of an end-user
The Levelised Cost of Hydrogen (LCOH) concept is widely used by researchers, policymakers, and investors to assess the competitiveness of clean hydrogen compared to other energy carriers like fossil fuels and battery storage. However, this concept has fundamental flaws that can distort stakeholders’ understanding, particularly for off-takers. LCOH primarily focuses on production costs, neglecting the entire hydrogen value chain and the complexity of hydrogen infrastructure. Consequently, some types of clean hydrogen might seem economically viable for certain technological processes but lack practical economic sense for end-users, even if their production costs are minimal. This research aims to highlight the key shortcomings of the LCOH concept and demonstrate, from the end-users’ perspective, the areas and sectors where clean hydrogen is unlikely to become a competitive option.
