Glossary
Plain-language definitions for the cost, engineering, and policy terms used across H2Prism calculators, data pages, and briefs, with units and direct links.
These are the terms that actually appear across H2Prism's calculators, data pages, and briefs — pulled from the tool inputs and dataset fields themselves, not a generic industry list. Each entry states the plain meaning, the precise definition with its unit, why it changes a real decision, and a common mix-up worth checking before you trust a number.
Cost & project finance
LCOH $/kg H₂
In one line: the average price a project needs per kilogram of hydrogen to break even over its life.
Definition: Levelized cost of hydrogen — total discounted lifetime cost (CAPEX, OPEX, and financing) divided by total discounted lifetime hydrogen output, in $/kg.
Why it matters: It is the one number that lets you compare production pathways or set an offtake price — but only when both sides use the same CAPEX boundary, capacity factor, and discount rate.
Common mix-up: LCOH is a screening estimate, not a quote or a certified figure. A few points of WACC or a lower capacity factor can move it substantially.
Related: Quick LCOH estimate · Full investment analysis · Reverse LCOH
CAPEX USD/kW
In one line: the upfront build cost of the plant, stated per kilowatt of capacity.
Definition: Capital expenditure. H2Prism separates three boundaries so figures from different sources can be compared on the same basis: ① stack-only (the electrolyzer stack alone), ② equipment-package (stack plus balance-of-stack components), and ③ fully installed (EPC + BoP — the whole plant, ready to run). The benchmark and CAPEX-check tools use ③.
Why it matters: A stack-only number and a fully installed number for the "same" technology can differ by several times. Comparing them without checking the boundary produces a false conclusion before any real analysis starts.
Common mix-up: A CAPEX figure that looks like a bargain is often a narrower boundary, not a better price. Normalize to the same boundary before comparing or plugging it into LCOH.
Related: Installed-cost benchmark · CAPEX sanity check
OPEX % CAPEX / yr
In one line: the yearly cost of running the plant, usually stated as a share of CAPEX.
Definition: Operating expenditure — maintenance, stack replacement reserves, labor, and consumables, expressed as a percentage of CAPEX per year (H2Prism's LCOH tools default to 3%/yr).
Why it matters: Over a 20-year plant life, OPEX assumptions compound — a 1-point change in the annual percentage moves lifetime cost more than most people expect.
Related: Full investment analysis
EPC
In one line: the contractor and contract type that delivers a project from design through a working plant.
Definition: Engineering, Procurement, and Construction — a single contract (and often a single contractor) covering design, equipment sourcing, and building the plant. "Fully installed EPC + BoP" is H2Prism's tier ③ CAPEX boundary.
Why it matters: Whether a CAPEX figure includes EPC decides whether it is a component price or a price you can actually break ground with.
Related: Installed-cost benchmark · CAPEX sanity check
BoP
In one line: everything the plant needs besides the core equipment itself.
Definition: Balance of Plant — gas handling, cooling, water treatment, electrical and control systems, piping, and site works that sit around the electrolyzer or reformer stack. Included in H2Prism's tier ③ (fully installed) CAPEX.
Why it matters: BoP is frequently the majority of installed cost, not a rounding error on top of the stack — leaving it out is the single most common reason a CAPEX comparison goes wrong.
Related: Installed-cost benchmark
WACC % discount rate
In one line: the return your money needs to earn elsewhere, used to discount future cash flows back to today.
Definition: Weighted Average Cost of Capital, used as the discount rate (default 8% in H2Prism's investment tools) — it blends the cost of debt and the required return on equity, weighted by how the project is financed.
Why it matters: A higher WACC penalizes projects with heavy upfront CAPEX and distant payback — which describes most hydrogen plants. Small WACC changes move LCOH, NPV, and payback more than most single technical assumption.
Related: Full investment analysis
NPV
In one line: today's value of every future dollar the project makes or spends, added up.
Definition: Net Present Value — the sum of all discounted cash flows (using WACC) over the project life. Positive NPV means the project clears its discount-rate hurdle; negative means it does not.
Why it matters: NPV answers "is this worth doing at all," in dollars — where IRR and payback answer related but different questions (see below).
Related: Full investment analysis
IRR
In one line: the effective annual return rate the project earns over its life.
Definition: Internal Rate of Return — the discount rate at which NPV equals exactly zero. Compared against WACC or a hurdle rate to judge whether a project clears the bar.
Why it matters: IRR lets you rank projects of different sizes on a percentage basis, which NPV (a dollar amount) cannot do directly.
Related: Full investment analysis
Payback period
In one line: how many years until the project's cash flows repay the initial investment.
Definition: The number of years of cumulative net cash flow needed to recover the initial CAPEX outlay, shown alongside NPV and IRR in H2Prism's investment analysis.
Why it matters: Payback is intuitive and easy to communicate, but it ignores what happens after the money is recovered — a project with a fast payback and a low IRR can still be a worse investment than one with a slower payback and a higher IRR.
Related: Full investment analysis
PPA
In one line: a contract to buy electricity at an agreed price for a set period.
Definition: Power Purchase Agreement — a bilateral electricity supply contract, often used by hydrogen projects to lock in a renewable power price for LCOH and RFNBO-compliance planning.
Why it matters: H2Prism's reverse-LCOH tool solves for the exact power price a PPA needs to hit a target hydrogen cost — useful going into a PPA negotiation, not after signing one.
Related: Reverse LCOH
CfD
In one line: a subsidy that guarantees the total price you get paid, not a bonus on top of the market price.
Definition: Contract for Difference — the scheme pays (or claws back) the gap between a guaranteed "strike price" and the market reference price, so the seller always receives the strike price. Different from a production premium or tax credit, which add on top of whatever the market pays.
Why it matters: Confusing a CfD strike price with a per-kg premium overstates or understates the real subsidy value — they are not the same kind of number and should not be added together.
Related: Policy database
Engineering & units
HHV 39.39 kWh/kg
In one line: the higher of the two ways to count hydrogen's energy content — includes the heat you get back from condensing water vapor.
Definition: Higher Heating Value — 39.39 kWh per kg of hydrogen, the energy released when combustion products are cooled back to liquid water.
Why it matters: Electrolyzer efficiency, fuel-cell efficiency, and unit conversions all change depending on whether HHV or LHV is the basis — the two differ by about 18%, enough to make two "efficient" claims incomparable.
Common mix-up: A vendor quoting "efficiency" without stating HHV or LHV has not actually told you a comparable number yet.
Related: Unit converter · Efficiency converter
LHV 33.32 kWh/kg
In one line: the lower of the two energy-content bases — assumes the water vapor from combustion leaves as vapor, not liquid.
Definition: Lower Heating Value — 33.32 kWh per kg of hydrogen, commonly used in engineering practice because it matches how most equipment actually operates (vapor is exhausted, not condensed).
Why it matters: Mixing HHV- and LHV-basis figures in the same comparison is one of the fastest ways to make an efficient system look mediocre, or a mediocre one look efficient.
Related: Unit converter · Efficiency converter
Nm³ ≈ 11.13 Nm³/kg
In one line: a way to measure hydrogen by standardized volume instead of weight.
Definition: Normal cubic meter — gas volume measured at 0°C, a fixed reference condition. One kilogram of hydrogen is about 11.13 Nm³. Distinct from Sm³ (standard cubic meter, usually referenced at 15–25°C) and scf (standard cubic feet) — the three are not interchangeable without conversion.
Why it matters: Gas transmission network capacity, storage sizing, and some subsidy schemes are quoted by volume, not mass — misreading Nm³ as Sm³ introduces a real, if modest, error.
Related: Unit converter
SEC kWh/kg
In one line: how much electricity it takes to make one kilogram of hydrogen.
Definition: Specific Energy Consumption, in kWh per kg of hydrogen output. H2Prism's specification tables flag whether a vendor's SEC is stack-DC (electrolyzer stack only, on a DC basis) or system-AC (the whole system, drawing grid AC power) — these can differ meaningfully for the same underlying stack.
Why it matters: A stack-DC SEC number is always more flattering than a system-AC number for the same hardware — comparing across that boundary makes one vendor look better for no real reason.
Related: Electrolyzer specifications · Efficiency converter
Capacity factor (CF) %
In one line: what share of the year the plant is actually running at full output.
Definition: Capacity factor — actual annual output divided by the output the plant would make if it ran at full rated capacity every hour of the year. A grid-connected electrolyzer might run near 90%; one paired only with solar can fall to 25–45%.
Why it matters: LCOH is highly sensitive to capacity factor because CAPEX gets spread over fewer kilograms when the plant runs less — a project quoting an unusually low CAPEX-per-kg number may simply be assuming an unusually high capacity factor.
Related: Electrolyzer sizing · Quick LCOH estimate
tpd
In one line: tonnes of hydrogen produced per day — the usual scale unit for reforming plants.
Definition: Tonnes per day. Electrolyzer CAPEX is typically quoted in $/kW; reforming-route (SMR/ATR) CAPEX is typically quoted in $/tpd — the two production routes use different sizing units by convention.
Why it matters: Comparing a $/kW electrolyzer figure directly against a $/tpd reforming figure without converting through actual output is not a comparison — it is two different units read as if they were one.
Related: Electrolyzer sizing · Installed-cost benchmark
Electrolyzer technology
ALK Alkaline
In one line: the oldest, most industrially proven way to split water into hydrogen with electricity.
Definition: Alkaline electrolysis — uses a liquid alkaline electrolyte (typically potassium hydroxide) between electrodes. Lower capital cost and long operating track record; typically slower to ramp and less tolerant of intermittent power than PEM.
Why it matters: Technology choice changes CAPEX, SEC, ramp behavior with variable renewable power, and stack lifetime all at once — it is usually the first fork in any project comparison.
Related: Electrolyzer specifications · Equipment fit
PEM
In one line: a faster-responding, more compact electrolysis technology built for variable renewable power.
Definition: Proton Exchange Membrane electrolysis — uses a solid polymer membrane. Higher current density and faster load-following than alkaline, at typically higher CAPEX per kW and shorter stack lifetime, in part due to reliance on platinum-group catalysts.
Why it matters: If a project pairs the electrolyzer directly with solar or wind, PEM's faster ramp can matter more than its higher upfront cost.
Related: Electrolyzer specifications · Equipment fit
AEM
In one line: a newer technology aiming to combine PEM's responsiveness with alkaline's lower material cost.
Definition: Anion Exchange Membrane electrolysis — a solid polymer membrane like PEM, but designed to avoid platinum-group catalysts and work with non-precious-metal components. Less commercially mature than ALK or PEM, with fewer long-term deployment records.
Why it matters: AEM specs on a datasheet are more likely to be pilot-scale or projected figures rather than field-proven numbers — worth checking the source and deployment stage before treating them the same as ALK/PEM figures.
Related: Electrolyzer specifications
SOEC
In one line: a high-temperature electrolysis technology that trades heat for electricity to hit the best efficiency on paper.
Definition: Solid Oxide Electrolysis Cell — operates at roughly 700–850°C using a ceramic electrolyte. Can reach the highest electrical efficiency of the four types when waste heat is available, but is early-stage commercially, with limited large-scale deployment and stricter requirements on thermal cycling.
Why it matters: SOEC's headline efficiency numbers usually assume free or cheap waste heat is available — without it, the real-world electricity bill looks very different.
Related: Electrolyzer specifications
Policy & compliance
45V up to $3.00/kg
In one line: the main US federal tax credit for clean hydrogen production, sized by how clean the hydrogen actually is.
Definition: The Section 45V Clean Hydrogen Production Tax Credit — a tiered, per-kilogram credit (up to $3.00/kg in H2Prism's carbon-intensity tool) that scales down as lifecycle carbon intensity rises above the lowest tier. It stacks with capex grants like H2Hubs but is generally exclusive, per facility, with other operating incentives such as 45Q or an EU-style production premium.
Why it matters: 45V is not a flat subsidy — the credit a project may receive depends on measured or modeled carbon intensity, using the official 45VH2-GREET lifecycle model, not a rough operational estimate.
Common mix-up: H2Prism's carbon-intensity calculator gives a rough operational-only estimate to gauge which tier you might be near — it is explicitly not a certified eligibility determination.
Related: Policy database
RFNBO ≤ 3.38 kgCO₂/kg H₂
In one line: the EU's rulebook for calling hydrogen "renewable," with a hard carbon-intensity ceiling.
Definition: Renewable Fuel of Non-Biological Origin — the EU classification for hydrogen produced from renewable electricity that qualifies under the Renewable Energy Directive (RED III). H2Prism's screening threshold is ≤ 3.38 kgCO₂/kg H₂, but qualifying takes more than hitting that number — see the three pillars below.
Why it matters: RFNBO status is the gateway to a large share of EU hydrogen demand and support schemes — projects that miss it face a materially smaller buyer pool.
Related: Policy database
RFNBO's three pillars
In one line: the three extra conditions renewable power must meet before the hydrogen it makes can count as RFNBO.
Definition: Additionality — the renewable power must be genuinely new capacity, not power that would have existed anyway. Temporal (hourly) matching — from 1 January 2030, hydrogen production must be matched to renewable generation hour by hour, not averaged over a month; solar-only projects see their effective capacity factor fall sharply under this rule. Deliverability — the renewable power must be grid-connected or co-located within the same bidding zone as the electrolyzer, not sourced from anywhere on paper.
Why it matters: A project can pass the carbon-intensity number and still fail RFNBO status if it fails any one of these three — they are pass/fail conditions, not something a good carbon number can offset.
Related: Policy database
FID
In one line: the point where a project stops being a plan and starts being funded construction.
Definition: Final Investment Decision — the formal commitment by a project's sponsors to fund and build it. H2Prism's project map groups "FID/Construction" as one status tier, distinct from earlier stages like concept or feasibility study.
Why it matters: Most announced hydrogen capacity never reaches FID — treating a pre-FID announcement the same as a post-FID one significantly overstates how much real capacity is actually coming.
Related: Project map & evidence · Project evidence radar
Deals & evidence
Offtake
In one line: an agreement that someone will actually buy the hydrogen a project makes.
Definition: H2Prism groups announced offtake agreements into five status tiers, from weakest to strongest commercial commitment: negotiating, MoU/LOI, heads of terms, signed/binding, and cancelled.
Why it matters: Without a real offtake, a project has no confirmed buyer at any price — offtake status is often a better predictor of whether a project actually gets built than its technology or even its FID status.
Related: Offtake deals
Heads of terms
In one line: the middle ground between "we're talking" and "it's signed."
Definition: A document outlining the key commercial terms both parties expect a future contract to contain — more concrete than early negotiation, but not itself a binding sale agreement. H2Prism labels this stage Heads of terms.
Why it matters: Headlines often describe heads of terms with the same confident language as a signed deal — checking the actual status field, not just the press release tone, avoids overcounting real demand.
Related: Offtake deals
MoU / LOI
In one line: a statement of intent to keep talking, not a purchase commitment.
Definition: Memorandum of Understanding / Letter of Intent — a non-binding statement that two parties intend to explore or pursue a deal. It is the earliest and weakest tier on H2Prism's offtake status scale, one step above open negotiation.
Why it matters: A signed contract, heads of terms, and an MoU are not the same commercial reality, even though news coverage often uses "deal" for all three.
Related: Offtake deals