Designing the Hydrogen Supply Chain for Maritime transportation in Norway

Abstract

We study the problem of locating hydrogen facilities for the maritime transportation sector in Norway. We present a multi-period model with capacity expansion to obtain optimal investment and expansion decisions and to choose optimal production quantities and distribution solutions. The objective is to minimize the sum of investment, expansion, production, and distribution costs while satisfying the demand in each period. Hydrogen production costs are subject to economies of scale which causes non-linearity in the objective function. We model long-term investment and expansion costs separately from short-term production costs. The short-term production costs depend on the installed capacity and production quantities. We analyze two models that differ in investment decision flexibility and two demand scenarios: demand only from the maritime sector and demand from the whole transportation sector in Norway. The results show that the scenario with higher demand does not lead to a higher number of built facilities due to the economies of scale. The model with higher flexibility leads to higher capacity utilization in the first periods and thus significantly lower production costs. The results further indicate that the initial demand is too low to build a steam methane reforming facility, instead only electrolysis facilities are built in both scenarios and both models.