Capital Investment and Levelized Price Estimates

Capital cost estimates for the H2 system are presented in Table 2. The PV power plant is the largest capital component. With 10% efficient PV modules, the PV power plant accounts for 59% of total capital investments. With cost reductions achieved by PV module efficiency gains, the proportion of capital for 14% efficient PV modules is reduced to 51%. The second largest capital investment component is the electrolysis plant. The electrolysis plant accounts for 18 22% of total capital for 

Fortune. Fortune stated that Arizona is willing to work closely with companies and developers who build rain runoff water collection and storage systems, and he stated that he believes an on site rain runoff water collection and storage system for elec trotysis plants is feasible. 

Hydrogen production and PV electricity prices are presented in terms of levelized prices. Levelized price is the constant revenue stream that recovers all capital investments (equity and debt) at the required rates of return and covers annual O M expenses, insurance, property tax, and income taxes over the assigned capital recov- 

The discount rate is a weighted average cost of capital (WACC) and takes into account the capital structure of firms, cost of equity and debt, and income taxes. The capital structure of firms is assumed to be 30% equity and 70% debt. The cost of equity capital is 10%, the cost of debt is 7%, and the effective income tax rate is 39%. The debt instrument is assumed to be a 20 year, 7% coupon bond. The calculation of the discount rate is 

The levelized prices of PV electricity and H2 are derived by net present value cash flow analysis. The net present value cash flow method is described in Appendix A.l. A straight tine, ten-year depreciation schedule is applied with an annual depreciation rate of 9% of capital. The levelized PV electricity and H2 prices are derived by choosing PV electricity and H2 prices to generate a revenue level that results in a cumulative, net cash flow stream with a 0 net present value over the thirty-year capital recovery period. The annual net cash flow streams are discounted at the present value of the 6%-discount rate. Investment funds are allocated in year 1 construction occurs in year 2 and H2 cash flow begins in year 3. The modular design of PV electrolysis plants and H2 distribution systems enables the rapid initiation of H2 marketing and cash flow. 

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