How to calculate hydrogen production cost with LCOH
Levelized cost of hydrogen (LCOH) is a modeled production cost per kilogram over a defined plant boundary and operating life. Divide included costs by usable output on a consistent time basis. Keep power-only cost and selling price separate.
Define what the cost includes
Define the product and delivery point first. A plant-gate cost covers hydrogen at the plant gate; add compression, storage, transport or conversion only when they are inside the chosen boundary. Do not compare it with a delivered price as if both covered the same service.
An LCOH-style result divides discounted included costs by discounted usable hydrogen output over one operating life. H2Prism's Gross hydrogen cost is pre-income-tax and before producer support. Published studies can use other boundaries and conventions, so read their assumptions with the figure.
LCOH = present value of included production costs ÷ present value of usable hydrogen output
Sources
NLR
H2A: Hydrogen Analysis Production Models
Overview: required capital, operating and financial inputs; discounted cash-flow method for determining hydrogen selling cost at a desired internal rate of return
Last confirmed: 2026-10-21
DOE
Clean Hydrogen Production Cost Scenarios with PEM Electrolyzer Technology, Record 24005
Pages 1-2: discounted cash-flow methodology, capacity factor, electricity price, installed CAPEX, 2022-dollar basis and plant-gate exclusions
As of: 2024-05-20
Last confirmed: 2026-10-21
Prepare a matched set of inputs
Hold product, boundary and operating life constant. The calculator takes pathway, capacity or output, capacity factor, electricity price and system use, installed CAPEX, project hurdle and life.
| Input | What to enter or check | Why it matters |
|---|---|---|
| Output scope | Plant-gate or delivered hydrogen; list included compression, storage and transport | Defines the cost and output boundary |
| Utilization and performance | Electrical input MW, capacity factor, system kWh/kg H₂, availability and dispatch | Sets annual output and energy use |
| Capital and operations | CAPEX in USD/kW, fixed and variable OPEX, water or feedstock, replacements | Include costs within the chosen boundary |
| Economic basis | Currency, price year, real or nominal basis, matching discount rate | Keeps inflation and currency effects aligned |
Check each displayed unit. USD/MWh and USD/kWh differ by a factor of 1,000.
Sources
NLR
H2A: Hydrogen Analysis Production Models
Overview: required capital, operating and financial inputs; discounted cash-flow method for determining hydrogen selling cost at a desired internal rate of return
Last confirmed: 2026-10-21
DOE
Clean Hydrogen Production Cost Scenarios with PEM Electrolyzer Technology, Record 24005
Pages 1-2: discounted cash-flow methodology, capacity factor, electricity price, installed CAPEX, 2022-dollar basis and plant-gate exclusions
As of: 2024-05-20
Last confirmed: 2026-10-21
Align currency, price year and discount basis
Values stated in USD/kg can still use different economic bases. Convert or rebase costs to a common currency and price year before comparing. A DOE PEM analysis reports production cost in 2022 dollars and excludes compression, storage, distribution and dispensing, so its figure does not directly match a differently dated or delivered-cost estimate.
Pair real prices with a real discount rate, or nominal prices and escalation with a nominal rate. The calculator's Project hurdle is shown as a real rate. Record currency, base price year and price basis with each result.
Sources
DOE
Clean Hydrogen Production Cost Scenarios with PEM Electrolyzer Technology, Record 24005
Pages 1-2: discounted cash-flow methodology, capacity factor, electricity price, installed CAPEX, 2022-dollar basis and plant-gate exclusions
As of: 2024-05-20
Last confirmed: 2026-10-21
Account for plant utilization
Capacity factor compares annual output with running at rated input all year. Lower utilization spreads CAPEX and fixed OPEX across fewer kilograms, so full cost per kilogram can rise. At a flat power price and unchanged system kWh/kg, electricity cost per kilogram stays the same.
Annual capacity factor misses hourly power availability and part-load efficiency. DOE's scenarios vary utilization, electricity price and installed capital cost.
Sources
DOE
Clean Hydrogen Production Cost Scenarios with PEM Electrolyzer Technology, Record 24005
Pages 1-2: discounted cash-flow methodology, capacity factor, electricity price, installed CAPEX, 2022-dollar basis and plant-gate exclusions
As of: 2024-05-20
Last confirmed: 2026-10-21
Read three illustrative calculations
These H2Prism calculations use one 100 MW PEM case: 55 kWh/kg system use, power at 40 USD/MWh, CAPEX of 1,000 USD/kW, fixed OPEX at 3% of CAPEX, a 20-year life and an 8% real rate. Costs are 2026 real USD. Finance is Off; no selling price is entered.
| Illustrative case | Changed input | First-year net output | Gross hydrogen cost |
|---|---|---|---|
| Reference | 50% capacity factor; 1,000 USD/kW CAPEX | 7,963,636 kg | 3.86 USD/kg H₂ |
| Lower utilization | 30% capacity factor | 4,778,182 kg | 4.97 USD/kg H₂ |
| Higher installed CAPEX | 1,500 USD/kW CAPEX | 7,963,636 kg | 4.69 USD/kg H₂ |
Illustrative H2Prism calculations, not actual project costs or market prices. Other inputs stay fixed, including 9 L/kg water at 0.001 USD/L. No degradation, replacement, escalation, grid fees, grants or downstream delivery costs. Higher CAPEX also raises OPEX at 3% of CAPEX.
Separate production cost from price and cash flow
Power-only cost counts electricity use and price but excludes capital and other operating costs. The linked electricity guide covers that conversion. LCOH includes the broader stated cost boundary.
A selling price is assumed revenue. Required selling price is the modeled price for a selected return target, not a market quote. Project NPV, Project IRR and Payback use the entered sales price to assess cash flows. Tax and Tax + Debt add after-tax or financing results such as Equity IRR and debt-service coverage. These metrics answer a return question, not the production-cost question.
Sources
NLR
H2A: Hydrogen Analysis Production Models
Overview: required capital, operating and financial inputs; discounted cash-flow method for determining hydrogen selling cost at a desired internal rate of return
Last confirmed: 2026-10-21
Common questions
Is LCOH the same as electricity cost per kilogram?
No. Electricity is one variable cost; LCOH also includes capital and other costs inside the stated boundary.
Does a lower capacity factor always increase electricity cost per kilogram?
With a flat price and unchanged kWh/kg, electricity cost per kilogram is unchanged. Lower output can raise full cost by spreading fixed costs over fewer kilograms.
Is Gross hydrogen cost a selling price?
No. Gross hydrogen cost is production cost; a selling price is assumed revenue. Required selling price is modeled for a stated return target.
Can I compare LCOH values from different studies directly?
Only after aligning product, boundary, currency, price year, real or nominal basis, operating assumptions and support.