Integrating Hydrogen Production and Electricity Markets: Analytical Insights from California

Omar Jose Guerra Fernandez, Joshua Eichman, David Hurlbut, Kaifeng Xu

Research output: NRELTechnical Report


This report compares the cost of different pathways for producing hydrogen in California. In addition to capturing the current cost of electrolyzers and other equipment, the pathways apply current retail electricity tariff options offered by utilities Southern California Edison (SCE), Pacific Gas & Electric Company (PG&E), and San Diego Gas & Electric Company (SDG&E). The analysis also tests the cost of combining hydrogen production with utility-scale wind or solar generation in California. Scenarios examine current costs as well as projections for 2030. The cost benchmark - a relatively low electrolytic hydrogen production cost - is based on the wholesale price of electricity used by a theoretical hydrogen production plant connected directly to the California Independent System Operator (CAISO) transmission system. California law currently prohibits this approach in CAISO, but it is permissible in other organized wholesale electricity markets. The cost for producing hydrogen under 2019 conditions in this theoretical case was approximately $3/kg. Different scenarios are used to examine current costs, e.g., 2019, as well as projections for 2030.
Original languageAmerican English
Number of pages46
StatePublished - 2022

Bibliographical note

Produced under direction of Southern California Gas by the National Renewable Energy Laboratory (NREL) under Technical Services Agreement No. TSA-19-16315

NREL Publication Number

  • NREL/TP-6A40-80902


  • electricity markets
  • electrolytic hydrogen
  • production cost
  • retail electric utility rates
  • utility-scale renewable generation


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