Opportunity and Cost of Green Hydrogen Production in Kuwait: A Preliminary Assessment

26 Pages Posted: 21 Jan 2022

See all articles by Manal Shehabi

Manal Shehabi

St. Antony's College, University of Oxford; Economic Research Forum (ERF)

Bassam Dally

King Abdullah University of Science and Technology (KAUST)

Date Written: December 27, 2021

Abstract

The promise of hydrogen as a potential decarbonization and energy solution has seen Gulf hydrocarbon economies join the hydrogen race. This paper undertakes a techno-economic analysis of opportunities in Kuwait and estimates the levelized costs of producing it using the Polymer electrolyte membrane (PEM) and solid oxide electrolyzer cell (SOEC) technologies in 2032, assuming completion of its Shagaya Renewable Energy Park by 2030. The paper argues that green hydrogen is part of a potential solution for energy, environmental, and economic sustainability challenges. Yet production is not possible until the completion of Kuwait’s Shagaya Renewable Energy Park Project, planned for 2030. Production costs are driven by renewable energy, electrolyzers costs, and energy efficiency; Kuwait has a potential comparative advantage in renewable energy but not in electrolyser technology. Model results show that, in 2032, Kuwait can produce green hydrogen at $3.22/Kg using PEM and $4.41/kg using SOEC technology, excluding storage, transmission, and other products costs. Scenarios varying renewable and electrolyzer costs yield levelized costs of hydrogen (LCOH) of ~$2.09-3.80/kg from PEM and ~$3.82-5.50/kg from SOEC electrolyzers. These costs suggest that green hydrogen in Kuwait in 2032 is more competitive than in other regions, but currently not competitive with fossil fuels (cost >$1.5/kg) in current price dynamics and absent of carbon taxes. Kuwait realizing the full opportunity of hydrogen is challenged by various factors. For hydrogen to help Kuwait in meeting its decarbonization and economic diversification needs, Kuwait must expand its renewables projects, undertake policy reform, and implement a carefully-designed market strategy.

Keywords: Hydrogen, green hydrogen, electrolysis, renewable energy, techno-economic, Kuwait, Shagaya, levelized costs of hydrogen

JEL Classification: N55, N75, Q41, Q42, Q47

Suggested Citation

Shehabi, Manal and Dally, Bassam, Opportunity and Cost of Green Hydrogen Production in Kuwait: A Preliminary Assessment (December 27, 2021). USAEE Working Paper No. 21-536, Available at SSRN: https://ssrn.com/abstract=3995610 or http://dx.doi.org/10.2139/ssrn.3995610

Manal Shehabi (Contact Author)

St. Antony's College, University of Oxford ( email )

62 Woodstock Rd
Oxford, OX2 6JF
United Kingdom

Economic Research Forum (ERF) ( email )

21 Al-Sad Al-Aaly St.
(P.O. Box: 12311)
Dokki, Cairo
Egypt

HOME PAGE: http://www.manalshehabi.com

Bassam Dally

King Abdullah University of Science and Technology (KAUST) ( email )

Thuwal 23955- 6900
Thuwal, 4700
Saudi Arabia

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