Abstract
Hydrogen is expected to play a significant role in the process of decarbonizing the global energy sector where Underground Hydrogen Storage (UHS) may be the only option for large-scale seasonal energy storage. Studies conducted so far to investigate the economic feasibility of UHS in porous reservoirs focus on the levelized cost of energy (LCOE) while the other economic indicators are left unattended. To better assess the techno-economic feasibility of UHS, we built a knowledge-based net cash flow model to estimate the net present value (NPV) and internal rate of return (IRR) of UHS projects under different hydrogen price assumptions. Specifically, we incorporate expected green and blue hydrogen prices by 2030 in Australia into our model to evaluate the resulting project economic performance. Our model calculated net cash flows illustrate the inherent technical and economic disadvantages of UHS in Australia compared to alternative technologies such as underground gas storage (UGS). Under current expectations, both the storage of hydrogen-methane mixtures and pure hydrogen cannot make considerable economic profits without policy support in the near future. The commercialization of UHS is in need of support measures such as an Australian carbon credit unit (ACCS) of at least $18.17 AUD.
