EXPLORING RENEWABLE HYDROGEN PRICING STRATEGIES: ADDRESSING COST UNCERTAINTIES
DOI:
https://doi.org/10.5281/zenodo.17443941Keywords:
Green hydrogen, renewable energy, pricing strategy, cost uncertainty, Monte Carlo simulation, dynamic pricing, offtake agreement, CAPEX and OPEX, market mechanisms, regulatory recommendations.Abstract
This paper investigates pricing strategies for green hydrogen produced from renewable sources, focusing on
mitigating cost uncertainties. First, it analyzes key cost components capital expenditure (CAPEX), operational expenditure
(OPEX), transportation, and storage and identifies their stochastic uncertainty drivers. Using a Monte Carlo simulation
framework with 10,000 iterations, the study quantifies the probability distributions of costs and market parameters. Three
pricing approaches are compared: static single-price setting, dynamic market-responsive pricing, and long-term offtake
agreement pricing. For each strategy, internal rate of return (IRR), value at risk (VaR 95 %), and net profit margins are
calculated. Results demonstrate that dynamic pricing yields the highest IRR (10.5 %) and lowest risk (VaR 10 %), while
offtake agreements provide long-term revenue stability. Policy recommendations include targeted tax incentives, subsidy
schemes, and continuous data-sharing platforms to enhance market transparency and investor confidence.
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