Modeling the Feasibility of 

Using Fuel Cells and Hydrogen 

Internal Combustion Engines in 

Remote Renewable Energy 

Systems 

September 2003 • NREL/TP-500-34648 

J. Cotrell 

W. Pratt, Research Associate 

Laboratory Science Teacher Professional 

Development Program

National Renewable Energy Laboratory 

1617 Cole Boulevard 

Golden, Colorado 80401-3393 

NREL is a U.S. Department of Energy Laboratory 

Operated by Midwest Research Institute • Battelle • Bechtel 

Contract No. DE-AC36-99-GO10337 
National Renewable Energy Laboratory 

1617 Cole Boulevard 

Golden, Colorado 80401-3393 

NREL is a U.S. Department of Energy Laboratory 

Operated by Midwest Research Institute • Battelle • Bechtel 

Contract No. DE-AC36-99-GO10337 

September 2003 • NREL/TP-500-34648 

Modeling the Feasibility of 

Using Fuel Cells and Hydrogen 

Internal Combustion Engines in 

Remote Renewable Energy 

Systems 

J. Cotrell 

W. Pratt, Research Associate 

Laboratory Science Teacher Professional 

Development Program

Prepared under Task No. WER3 3250 
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Table of Contents 

ABSTRACT..................................................................................................................................1

INTRODUCTION..........................................................................................................................1

METHOD OF ANALYSIS..............................................................................................................2

RADIO REPEATER ANALYSIS ....................................................................................................2

SYSTEM DESCRIPTION...........................................................................................................2 

RADIO REPEATER RESULTS...................................................................................................5 

WALES, ALASKA ANALYSIS ......................................................................................................9

SYSTEM DESCRIPTION...........................................................................................................9 

WALES RESULTS.................................................................................................................13 

CONCLUSIONS..........................................................................................................................16

FUTURE WORK ........................................................................................................................17

ACKNOWLEDGEMENTS............................................................................................................17

REFERENCES............................................................................................................................17

Table of Figures 

FIGURE 1: SCHEMATIC OF THE RADIO REPEATER STATION. ...............................................................3 

FIGURE 2: OPTIMAL SYSTEM TYPE (WITH COE SUPERIMPOSED) AS A FUNCTION OF ELECTROLYZER AND 

FUEL CELL CAPITAL COSTS AND MEAN ANNUAL WIND SPEED. ...........................................7 

FIGURE 3: OPTIMAL SYSTEM TYPE (WITH NUMBER OF BATTERIES SUPERIMPOSED) AS A FUNCTION OF 

ELECTROLYZER AND FUEL CELL CAPITAL COSTS AND MEAN ANNUAL WIND SPEED. ............9 

FIGURE 4: SCHEMATIC OF THE LOW-HYDROGEN-PENETRATION SYSTEM IN WALES (HYDROGEN 

STORAGE NOT SHOWN). ................................................................................................10 

FIGURE 5: TOTAL CAPITAL COSTS FOR EACH SYSTEM RELATIVE TO THE DIESEL-WIND-BATTERY 

SYSTEM.......................................................................................................................14 

FIGURE 6: COST OF ENERGY FOR EACH SYSTEM RELATIVE TO THE DIESEL-WIND BATTERY SYSTEM. ..15 

FIGURE 7: TOTAL ANNUALIZED COST FOR THE WIND-DIESEL-FUEL CELL SYSTEM..............................15 

FIGURE 8: OPTIMAL SYSTEM TYPE AS A FUNCTION OF FUEL CELL CAPITAL COSTS AND DIESEL COST 

FOR WALES LOW-PENETRATION SYSTEMS. .....................................................................16 

Table of Tables 

TABLE 1: OPTIMIZATION SEARCH SPACE USED FOR THE RADIO REPEATER STUDY..............................6 

TABLE 2: LEAST-COST SOLUTION IN EACH CATEGORY FOR THE RADIO REPEATER STUDY (3.49 M/S 

MEAN WIND SPEED; ELECTROLYZER AND FUEL CELL CAPITAL COST MULTIPLIERS = 1) ........6 

TABLE 3: LEAST-COST SOLUTION IN EACH CATEGORY FOR THE RADIO REPEATER STUDY USING LEAD 

ACID BATTERIES (3.49 M/S MEAN WIND SPEED; ELECTROLYZER AND FUEL CELL CAPITAL 

COST MULTIPLIERS = 1.0).................................................................................................8 

TABLE 4: OPTIMIZATION SEARCH SPACE USED FOR THE WALES LOW-HYDROGEN PENETRATION 

ANALYSIS....................................................................................................................12 

TABLE 5: LEAST-COST SOLUTIONS IN EACH CATEGORY FOR THE WALES ANALYSIS (ASSUMING $.35/L 

DIESEL WITH ELECTROLYZER AND FUEL CELL CAPITAL MULTIPLIERS = 1) ........................14 
 1

Abstract 

Recent advances in hydrogen fuel cell and internal combustion engine technologies have enabled 

new energy options for supplying electrical power in remote, off-grid areas. The objective of this 

investigation is to determine under which conditions wind turbines and PV systems can feasibly 

power electrolyzers to generate and store hydrogen for remote power generation using fuel cells 

and internal combustion engines. In this study, the optimization software HOMER is used to 

analyze a small 356-W radio repeater station and a 148-kW village power system. This study 

concludes that fuel cell systems appear competitive today at the radio repeater station and appear 

competitive in the village system if fuel cell prices are reduced to 40% of their current capital 

cost. 

Introduction 

The use of renewable energy systems to supply electrical power in remote, off-grid areas is fairly 

well established throughout the world. Small- and medium-scale applications in the United States 

include sites such as construction sites, telecommunication stations, highway rest areas, single 

homes, science research stations, National Park facilities, and small villages. 

Depending on the resources available, such systems typically rely on photovoltaic (PV) modules 

and/or wind turbines as the primary renewable power source. These systems usually also employ 

batteries for short-term back-up power. The technology advancements in hydrogen electrolyzers, 

fuel cells, internal combustion engines, and storage in the past five years have made the storage of 

excess renewable energy as hydrogen an intriguing alternative to established back-up power 

systems. Assuming that reliable, low-maintenance systems can be designed, they are expected to 

first become competitive in remote locations in which electricity is expensive because there are 

no links to power grids serving the main urban areas. This investigation examines the conditions 

under which these systems might be economically competitive in these areas. 

For small-scale systems, such as for telecommunication stations, wind turbines or PV systems can 

often provide all the energy at an acceptable cost. For medium-scale systems, such as small 

villages, the renewable systems may only contribute a fraction of the energy, with the primary 

load being served by a diesel generator. The cost of energy is often high in these regions because 

diesel is a relatively expensive means of producing electricity. For example, there are more than 

200 rural villages in Alaska that are not linked to the power grids serving the main urban areas. 

The majority of these villages are served by diesel-driven generators. Because of the extreme 

remoteness of most of these communities and the lack of roads, the delivered cost of diesel fuel is 

high, ranging from $1.00 to $3.00 per gallon ($.26 to $.79 per liter). In addition, the high 

operations and maintenance (O&M) costs of diesel-generating stations contribute to electric 

generation costs that average nearly $0.40/kWh and can be as high as $1.00/kWh1

. 

This study examines the technical feasibility of two autonomous renewable energy systems at two 

locations. The first location is a 350-W-rated, PV/battery-powered radio repeater system located 

east of Prineville, Oregon (44° 20’ N, 120° 50’ W). The second location is Wales, Alaska. 

Wales uses two 50-kW wind turbines and a battery bank to supplement diesel generators. Both 

systems are examined to determine 1) whether hydrogen systems are competitive today, 2) at 

what cost hydrogen systems will become economically competitive, and 3) when hydrogen 

systems are likely to become competitive.
 2

Method of Analysis 

Studying the feasibility of adding hydrogen systems to the locations considered requires 

optimizing the size and number of the system components. Many different size possibilities and 

hardware configurations must be determined. For example, the size of the PV system, 

electrolyzer, hydrogen storage tank, fuel cell, and internal combustion engine (ICE) must be 

determined to ensure that the system is able to meet the required load at the lowest possible cost. 

The optimization software used for this effort is version 2.0 of the Hybrid Optimization Model for 

Electric Renewables (HOMER), which is freely available from the National Renewable Energy 

Laboratory (NREL). HOMER performs comparative economic analyses on distributed generation 

power systems. Inputs to HOMER include load data, renewable resource data, system component 

specifications and costs, and various optimization parameters (e.g., number of components, 

percentage of unmet load, etc.). HOMER will perform an hourly simulation of every possible 

combination of components entered and rank the systems according to user-specified criteria, 

such as cost of energy (COE) or capital costs. Furthermore, HOMER can perform “sensitivity 

analyses” in which the values of certain parameters (e.g., fuel cell cost) are varied to determine 

their impact on the COE. 

To obtain the input data for HOMER, hydrogen component information was collected from 

research literature and manufacturers to obtain present and future estimates of hydrogen system 

costs and efficiencies. Also collected are the load and resource time series data and information 

necessary to model the systems. 

Radio Repeater Analysis 

System Description 

The radio repeater station is a 356-W, 12-V, PV/battery-powered system located east of 

Prineville, Oregon (44° 20’ N, 120° 50’ W). HOMER was used to determine whether using a 

fuel cell or wind turbine with the system is economically competitive. FIGURE 1 depicts the 

system with a wind turbine, electrolyzer, hydrogen storage, and fuel cell added to the system. The 

assumptions and system properties are described in detail below. 

Operating Principle

The theory of operation is to use the PV system or wind turbine to directly meet the load 

whenever possible to minimize the losses in the battery and fuel cell. When excess wind or PV 

energy is available, power is supplied first to the batteries, then to an electrolyzer, which 

consumes water to generate hydrogen for storage. The batteries or the fuel cell is then used to 

meet the load when the wind or solar energy is insufficient. HOMER decides whether to use 

energy from the battery, fuel cell, or both based on the replacement cost and O&M of the devices. 

Because this analysis neglects O&M and because the fuel cell is not replaced during its lifetime, 

HOMER uses the full extent of the fuel cell capacity for this system before using the batteries. 
 3

DC Bus 

H Storage 

FIGURE 1: SCHEMATIC OF THE RADIO REPEATER STATION.

Load 

Load data were obtained from system specifications2. The station has an annual average DC load 

of 1.182 kWh/d. The summer load average (April through September) is 1.716 kWh/d, and the 

winter average (October through March) is 0.652 kWh/d. The daily load profile was not 

available, so HOMER was used to estimate load profile using the duty cycles available in the 

specifications. Daily and hourly noise values of 10% were employed in HOMER, resulting in a 

maximum load of 356W. 

HOMER allows input of the operating reserve for the system. The operating reserve is the 

surplus generation capacity used to compensate for rapid fluctuations of load, sunshine, or wind 

resource. The amount of operating reserve is specified as a percentage of hourly load and 

renewable resources. For the results reported here, the operating reserve was required to be 10% 

of the hourly load, plus 50% of the wind turbine power output and 25% of the PV power output. 

Resources 

Solar radiation and clearness data for this site were from nearby Pendleton, Oregon (45° 40’N). 

The data were derived from the NREL TMY2 (Typical Metrological Year) database. The annual 

average global radiation is 4.15 kWh/m2

/day, with an annual average clearness index of 0.573. 

Hourly wind resource data for the site were unavailable, but it is located in a Class 1 wind regime, 

so data from nearby Pendleton, Oregon (also a Class 1 regime) were again used3

. The average 

wind speed is 3.5 m/s (Weibull-k value = 1.67). 

Operations and Maintenance 

In this analysis, the operations and maintenance costs are neglected even though they are likely 

significant. Data for the fuel cell and electrolyzer maintenance costs could not be found. In 

addition, the O&M costs are difficult to divide among components in such a small system. 

Instead of attempting this task, we assumed that the system is designed to run in a maintenancefree fashion. 
 4

PV Modules 

This scenario was modeled with PV panels fixed at a slope of 44.2°. The installed cost of a 1-kW 

(peak) PV array ranges between $6.00/W and $10.00/W4

. The baseline capital cost of the PV in 

this study was $8.00/W. Lifetimes were assumed to be 20 years. 

Wind Turbines 

Although the radio repeater station does not use wind turbines, this study considers the feasibility 

of adding wind turbines to the system. Furthermore, the wind speed is varied to investigate the 

hypothetical case of a region with faster winds. 

Two wind turbines were considered in this study: a Bergey XL1 1-kW turbine and a Southwest 

Windpower AIR-X rated at 400W. The cost of the Bergey DC turbine and 9-m tower ($2,430) 

was obtained from Bergey’s Web site. The cost of the AIR-X with a 7.6-m tower ($849) was 

found on a supplier Web site. Transportation and installation costs were estimated to be $400, for 

installed total costs of $2,830 and $1,249, respectively. It was assumed that the machines would 

last 20 years. 

Electrolyzers 

Proton exchange membrane (PEM) electrolyzers from Proton Energy Inc. were used to obtain a 

cost estimate of a stand-alone (“hydrogen by wire”) electrolyzer. The system used to obtain a 

$/kW cost for electrolyzers is a HOGEN 40 6-kW electrolyzer. It includes the PEM stack, power 

electronics, and control system. The current production cost of the HOGEN 40 is approximately 

$16,000 or $2,700/kW. Projected costs are expected to be approximately $700/kW within 10 

years5

. Cost reductions are expected to stem from improvements in the PEM stack, power 

electronics, control system, and manufacturing improvements such as replacing fittings with 

welded tube assemblies. These costs assume production of 500 units per year. A profit margin of 

30% was added to these costs to estimate the purchase price of the electrolyzer. The total cost is 

then $3,500/kW. The installation cost was deemed to be negligible because the HOGEN 40 is a 

self-contained unit. The efficiency of electrolyzers using the higher heating value is estimated to 

be between 70% and 85%6

. A constant value of 83% (70% using the lower heating value) was 

used for this study. 

Feed water and cooling water are required for the electrolyzer. To avoid contaminating the 

electrolyzer, feed water should be purified and deionized. Small, remote systems (e.g., 

telecomm) may use a storage tank; larger systems (e.g., rest areas, homes) can draw from existing 

water lines. Water treatment systems need regular maintenance such as filter cartridge 

replacement. The cost of a filter cartridge system and O&M for the radio repeater station was 

neglected as the water use in the electrolyzer is small. The PV-fuel cell-battery system uses 

approximately 4 gallons per year, and the system that consumes the most water is the PV-fuel cell 

system, which uses approximately 35 gallons per year. In addition, a water recycling system 

between the fuel cell and electrolyzer could also reduce the amount of water needed if necessary. 

Conventional electrolyzers produce hydrogen at low pressure (100-200 psi). Compressors are 

used to elevate the pressure for gas storage. However, 2,500-3,000 psi production pressures have 

been demonstrated recently at Proton energy and are expected to be in production in the very near 

future; targets are upward of 6,000 psi. In addition, a relatively new U.S. company, Avalence, has 

demonstrated an electrolyzer technology that can produce hydrogen at pressures up to 10,000 psi. 

Such technologies will likely eliminate the need for compressors. Accordingly, this study 

assumed that a compressor was not required. 
 5

Hydrogen Storage 

Hydrogen can be stored several ways. Small amounts of hydrogen are most commonly stored as a 

compressed gas or as a metal hydride. Compressed gas storage is currently the most costeffective for small-scale system tanks, so it is used for this study; small-quantity prices are around 

$1,320/kg7

 with long-term targets of $165/kg8. These cost reductions of small-scale storage are 

likely to result from automotive research into compressed hydrogen storage. 

Fuel Cells 

A PEM fuel cell was assumed for this study. The cost of fuel cells varies widely depending on 

scale, power electronics requirements, and reformer requirements. A survey performed for this 

study identified three fuel cells that currently sell for between $3,000/kW and $6,000/kW 9,10,11. 

One high-temperature membrane technology currently being pursued is expected to have a 

membrane life of greater than 20,000 hours and an overall installed fuel cell system cost of less 

than $1,500/kW for initial commercialization (by 2008) and ultimately $400/kW for large 

markets (by 2010).12 Stationary fuel cells are targeted to last 30,000 to 40,000 operating hours, 

during which the membrane will likely have to be replaced one or more times. This study 

assumed the fuel cell would last 30,000 hours. 

The baseline capital cost used for this study is $5,000/kW for the radio repeater (because of its 

very small scale). The efficiencies of PEM fuel cells running on pure hydrogen are roughly 40% 

to 50%13 (lower heating value) at rated power with slightly higher values at partial load. The 

electrical efficiency used for this study was held constant at 45% to compensate for parasitic 

losses, which occur at partial load. 

Batteries 

The radio repeater station uses four GNB 3-75A21 deep-cycle batteries with two in parallel for a 

nominal voltage of 12V. Each 6V battery has a rated capacity of 930Ah. The average cost of the 

battery system is $930 per battery14, or $166/kWh. Initial studies were performed using these 

batteries. However, it was determined that these relatively large batteries were too large to permit 

sufficient resolution of the battery search space. Therefore, the simulations were repeated using 

the smaller NiCad battery cells used in the Wales system. These batteries are 1.2V Saft SPH130 

NiCad cells with 130Ah capacities. The average cost of each cell is $218, or $1,400/kWh. 

Although it is probably not technically feasible, this study assumed it was possible to use any 

number of batteries.

Radio Repeater Results 

 

In HOMER, a solution is a particular hybrid system configuration. As HOMER searches for the 

optimal hybrid system design, it typically evaluates hundreds or thousands of solutions. HOMER 

performs an hourly time series simulation of every solution and eliminates solutions that cannot 

meet the required load. For this case, HOMER examined the 229,635 solutions possible by 

combining components listed in TABLE 1. 

Careful attention was paid to ensure that the search space is adequately broad and has sufficient 

resolution to ensure optimal configurations. The gray highlighted cells indicate component sizes 

that result in selected solutions. The cells without color (which indicate these components were 

not selected) are an indication that the search space is sufficiently broad (except for the wind 

turbines), and in some cases (such as for the fuel cell), they indicate sufficient resolution. 

Sensitivity studies on the fuel cell and electrolyzer cost and on the wind speed were performed at 

60 points in the final analysis. Each point required that HOMER repeat all 229,635 simulations, 
 6

for a total of nearly 14 million simulations. On a modern 2-GHz PC, this took 76 hours to 

complete. 

TABLE 1: OPTIMIZATION SEARCH SPACE USED FOR THE RADIO REPEATER STUDY 

HOMER categorizes the viable solutions according to the types of components they contain. The 

simulation resulted in six categories, which are listed in TABLE 2 in order of increasing cost of 

energy. Each row in TABLE 2 contains the least-cost solution for that category. 

TABLE 2: LEAST-COST SOLUTION IN EACH CATEGORY FOR THE RADIO REPEATER STUDY (3.49 

M/S MEAN WIND SPEED; ELECTROLYZER AND FUEL CELL CAPITAL COST MULTIPLIERS = 1)

 Configuration Performance 

 PV Turbines Fuel Cell Batts Electrolyzer H Store Total Cap. COE FC 

Category kW kW kW Ea. kW kg $ $/kWh hrs 

PV WT FC Bat 0.20 1.0 0.2 3 0.30 1.0 $ 8,454 1.70 1,026 

PV FC Bat 0.60 - 0.1 10 0.30 0.3 $ 8,860 1.87 1,058 

WT FC Bat - 2.0 0.3 3 0.40 1.3 $ 10,864 2.18 1,101 

PV WT Bat 0.40 0.4 - 25 - - $ 9,899 2.23 - 

PV WT FC 0.30 1.0 0.4 - 0.30 0.8 $ 9,270 2.26 4,063 

PV Bat 0.60 - - 25 - - $ 10,250 2.30 - 

PV FC 0.70 - 0.4 - 0.50 0.8 $ 10,340 2.62 5,006 

WT FC - 2.0 0.4 - 0.50 1.3 $ 11,060 2.81 5,347 

Assuming a wind speed of 3.49 m/s and present fuel cell and electrolyzer costs, the PV-wind-fuel 

cell-battery configuration has the lowest COE. This result demonstrates how batteries and 

hydrogen systems are complementary. If the fuel cell is removed from this configuration (as in 

the PV-wind-battery configuration), the optimum number of batteries increases nearly eightfold 

from 3 to 25 batteries. This dramatic increase occurs because the hydrogen system can store 

energy relatively cheaply compared to the batteries. The capital cost of the batteries per unit of 

energy storage capacity is $1,400/kWh. In contrast, this figure is only $88/kWh for the hydrogen 

tank, assuming a 45% conversion efficiency in the fuel cell. In addition, the batteries are replaced 

after 15 years in service, which further increases their annualized cost. In contrast, the 

electrolyzer is assumed to last 20 years and the fuel cell 30,000 hours, or about 30 years for the 

low-penetration systems. 

If the batteries are removed from the PV-wind-fuel cell-battery configuration (as in the PV-windfuel cell configuration), the fuel cell capacity doubles from .2 kW to .4 kW. This occurs because 

the batteries are useful for providing large amounts of power for short time periods, enabling a 

smaller, less expensive fuel cell in the PV-wind-fuel cell-battery configuration. 
 7

The configuration rankings listed in TABLE 2 change significantly as a function of wind speed, 

fuel cell cost, and electrolyzer cost. The optimal system type (OST) graph in FIGURE 2 is a useful 

tool for viewing the sensitivity of the optimal system type to these parameters. Along the x-axis 

is the annual mean wind speed at the site at 10-m elevation. Along the y-axis is the capital cost 

multiplier for the fuel cell and electrolyzer. The capital cost multiplier is used to study the effect 

of changes in component cost. For example, the baseline system assumes a capital cost of 

$5,000/kW for the fuel cell and $3,500 for the electrolyzer, for a combined cost of $8,500/kW. A 

capital cost multiplier of .1 corresponds to a combined capital cost of $850/kW for the fuel cell 

and electrolyzer. Superimposed on the graph at 60 points is the levelized COE. HOMER 

performed simulations of every possible configuration at each of these points. The optimal 

system type plot is interpolated from the results at each of these points. 

Fuel cells are present in each configuration in FIGURE 2, indicating that they are economically 

competitive today at the radio repeater station given the assumptions of this study. Furthermore, 

batteries cannot compete with fuel cells in some instances when fuel cell and electrolyzer costs 

are below 30% of their present value. 

In winds between 4.25 m/s and 7.25 m/s, PV is eliminated from the system. However, the PV 

system becomes competitive above 7.25m/s at low fuel cell and electrolyzer costs. This is a 

result of the limited modularity of the wind turbines. The two PV systems in the lower right 

corner are able to use only one 400-W SW AIR turbine with a small amount of PV, rather than 

the one relatively large 1-kW Bergey turbine required by the other systems.

FIGURE 2: OPTIMAL SYSTEM TYPE (WITH COE SUPERIMPOSED) AS A FUNCTION OF 

ELECTROLYZER AND FUEL CELL CAPITAL COSTS AND MEAN ANNUAL WIND SPEED. 
 8

Effects of Using Lead Acid Batteries 

A critique of this study revealed that using NiCad batteries in the radio repeater analysis is a 

relatively poor assumption because these batteries are very expensive compared to lead acid 

batteries. This critique was obtained too late to affect the original publication of results15; 

however, the simulation has since been repeated substituting inexpensive Trojan T-105 lead acid 

batteries for the NiCad batteries. All HOMER inputs remained the same for this simulation 

except for the change in batteries and a slight reduction in the size of the search space in order to 

speed processing time. 

T-105 batteries are similar to automobile batteries. They represent the other end of possible 

battery choices in that they are inexpensive, require more maintenance (maintaining the 

electrolyte level), and have a significantly shorter life. These batteries cost roughly $60 each. At 

6V each and 225 Ah capacity, they cost only $44/kWh, which is nearly half the present cost of 

hydrogen storage. 

The results in TABLE 3 for the nominal wind speed and nominal capital cost multipliers illustrate 

that the fuel cells are much less competitive when considering lead acid batteries. The cost of 

energy for systems using fuel cells (PV WT FC and PV FC) is more than double that of the least 

cost system (PV Bat). 

TABLE 3: LEAST-COST SOLUTION IN EACH CATEGORY FOR THE RADIO REPEATER STUDY 

USING LEAD ACID BATTERIES (3.49 M/S MEAN WIND SPEED; ELECTROLYZER AND FUEL CELL 

CAPITAL COST MULTIPLIERS = 1.0) 

 Configuration Performance 

 PV TurbinesFuel CellBattsElectrolyzerH Store Total Cap. COE FC 

Category kW kW kW Ea. KW kg $ $/kWh hrs 

PV Bat 0.40 - - 7 - - $ 3,620 0.78 - 

PV WT Bat 0.20 0.4 - 13 - - $ 3,629 0.82 - 

WT Batt - 0.8 - 70 - - $ 6,698 1.83 - 

PV WT FC 0.40 0.8 0.40 - 0.30 1.0 $ 10,068 2.34 3,581 

PV FC 0.80 - 0.40 - 0.40 0.8 $ 10,790 2.70 4,956 

The OST plot in FIGURE 3 is significantly different from that derived when using NiCaD 

batteries. The fuel cell is only competitive in select instances below a capital cost 

multiplier of .3. In these instances, the hydrogen system is used to reduce the number of 

batteries by 22% to 40%. However, these configurations only have a marginal economic 

advantage, which is smaller than the uncertainty of this study. As a result, the equivalent 

systems without fuel cells would likely be used instead because they are much less 

complex. 
 9

FIGURE 3: OPTIMAL SYSTEM TYPE (WITH NUMBER OF BATTERIES SUPERIMPOSED) AS A 

FUNCTION OF ELECTROLYZER AND FUEL CELL CAPITAL COSTS AND MEAN ANNUAL WIND 

SPEED.

Wales, Alaska Analysis 

System Description 

In 1995, NREL and the Kotzebue Electric Association of Kotzebue, Alaska, began a 

collaboration to reduce the cost of electricity for Wales (a northwest Alaska village with a 

population of about 160) by implementing a wind-diesel-battery hybrid power system. Wales 

now uses two 50-kW wind turbines (plans are underway to install a third turbine) and a battery 

bank to supplement diesel generators. This study considers the option of adding hydrogen 

storage and generators to the existing hybrid system. 

Operating Principle

FIGURE 4 depicts a schematic of the Wales hybrid system with an electrolyzer, a fuel cell, and 

hydrogen storage added to the system. The theory of operation for this system is to use the wind 

turbine supplemented by the batteries or fuel cell to meet the load (with the diesel off) whenever 

possible. HOMER decides whether to use energy from the battery, fuel cell, or both based on the 

replacement cost and O&M of the devices. In this simulation, HOMER used the full extent of the 

fuel cell capacity for this system before using the batteries. When excess wind energy is 

available, power is routed first to the batteries (in a load following strategy), then to the 

electrolyzer, and finally to the thermal load, thereby saving heating fuel as well as diesel fuel for 

electric generation. 
 10

Storage 

FIGURE 4: SCHEMATIC OF THE LOW-HYDROGEN-PENETRATION SYSTEM IN WALES 

(HYDROGEN STORAGE NOT SHOWN).

Load 

Electric load data averaged every 15 minutes were available for Wales from November 1993 

through October 199416. These data were converted to hourly data for input to HOMER. The 

village has an annual average load of 1,638 kWh/d, with a peak load of 134 kW. The daily and 

hourly noise averages 8.5%. 

Loads to heat the powerhouse and the school were also included in the model using the following 

estimates for the powerhouse and school respectively: 60 kW and 50 kW in the winter; 40 kW 

and 30 kW in the spring; 20 kW and 20 kW in the summer; and 40 kW and 30 kW in the fall. 

This thermal load had to be simplified by combining the powerhouse and school into one load 

because HOMER only allows one thermal load. This differs from the actual system because the 

boiler and wind turbine serve only the school thermal load, and the diesel serves only the 

powerhouse. 

Resources

Wales has a poor solar resource. For this reason, PV was not considered as a reasonable 

alternative for this scenario. Solar radiation and clearness data were obtained from nearby Nome; 

the annual average global radiation is 2.45 kWh/m2

/day, with an annual average clearness index 

of 0.337. 

Wind data were derived from a 15-minute time series17. The village is in a Class 7 wind regime, 

with an average wind speed of 8.7 m/s and Weibull-k value of 2.25. 

Hydrogen Components

The cost and assumptions for the hydrogen system (electrolyzer, water, and fuel cell) are the 
 11

same as in the radio repeater analysis with a few exceptions. The fuel cell capital cost was 

reduced from $5,000/kW to $3,000/kW to account for the larger scale (roughly 2 orders of 

magnitude) of the Wales system. Likewise, the electrolyzer cost was reduced from $3,500 to 

$2,000. 

Also considered in this study was the use of a hydrogen ICE to supplement or replace the fuel 

cell. Ballard Power Systems and Ford Power Products are developing a 114-kVA hydrogen 

genset based on a standard 6.8L Ford production engine. A preliminary specification sheet for 

the Ecostar product indicates electrical efficiency near rated power of nearly 30%. This study 

assumes the O&M cost of the hydrogen ICE to be the same as the diesel system ($5/hr) and 

assumes the capital cost of the genset is $500/kW. 

O&M was also considered for the fuel cell and electrolyzer in this analysis. For the fuel cell, the 

O&M was assumed to cost 1/10 that of a diesel, or $.0033/hour/kW. The O&M for the 

electrolyzer system is estimated to be 7% of the annual capital cost per year, or $245/yr. The cost 

of the water treatment is included in this figure. 

Wind Turbines

The wind turbines used in Wales are made by Atlantic Orient Corporation and are rated by the 

manufacturer at 50 kW in 12m/s winds. Although the turbine output has been higher than 

projected by the power curve in the extremely cold temperatures and increased air density of 

Kotzebue winters, this effect was not modeled in this study. The installed turbine cost is 

estimated at $110,000 (includes $45,000 for shipping and installation) with O&M costs estimated 

at $2,682/yr (approximately $.015/kWh)18. Lifetimes are assumed to be 20 years. 

Rotary Converter

For the remote village scenario, a rotary converter, rather than an inverter, is used at the site 

because of the maintenance capabilities of local crews. The rotary converter is used to convert 

the battery power to alternating current, provide reactive power to the system, and allow all 

diesels to be shut down. A 100-kW rotary converter is estimated to cost an additional $30,000 

beyond a system that uses a synchronous condenser to perform the latter two functions above. 

The maintenance of the converter is estimated at $500/yr. 

Batteries 

The batteries in the Wales system consist of 200 Saft SPH130 NiCad batteries, resulting in a 

130Ah, 240V NiCad bank, for a nominal capacity of 31.2 kWh. The cost of this bank is 

estimated at $43,500 ($1,400/kWh). The battery charging is limited to a 2C (260A) charge rate 

limit19. The O&M is estimated to cost $200/year. 

Diesel Generator Sets 

The costs for new diesel generators are well established and range from $250-$500 per kW of 

rated capacity20. A lower value of $200/kW was used based on a survey of modern diesel units. 

Diesel generator sets require a significant amount of labor and materials to maintain proper 

operation. Costs for regular maintenance can be high depending on maintenance schedules; for 

the small village scenario, a cost of $5 per hour of operation was used ($.033/hr/kW), with an 

operating lifetime of 10,000 hours21.

Some of the waste heat from the diesel is used to heat the school and the plant. A water jacket in 

the diesel captures this heat. However, the energy in the stack gasses is lost. A common 

approximation for the dissipation of the energy in the fuel is one-third to electricity, one-third to 
 12

the water jacket, one-third to the exhaust gasses. In line with this approximation, this study 

assumed that the energy in the water jacket energy (50% of the total waste energy) could be used 

to meet the thermal load. 

Diesel Fuel 

Diesel fuel prices vary widely. Villages such as Wales buy large quantities (waterways are iced 

over much of the year) and can get reasonable prices such as $1.28/gal ($.33/L) delivered 22. 

Costs for storage, tank replacement, and spill clean-up were not considered. 

Balance of System (BOS) 

BOS costs include miscellaneous costs that can’t be ascribed to one particular component but are 

associated with the system as a whole. Examples include road construction, site preparation, 

system controllers, equipment housing, etc. Available data were used. This study used a BOS 

cost of $38,000 with a fixed system capital cost of $138,000. 

Optimization 

The focus of the Wales analysis is on low-hydrogen-penetration wind diesel systems, or systems 

in which a relatively small hydrogen component is used to supplement the wind turbine and 

diesel system. Another possible system configuration is to use a high-hydrogen-penetration 

system similar to the radio repeater or a system that relies primarily on the wind turbines and fuel 

cell to provide the village power with diesel as a possible back-up power source. To limit the 

simulation time to a reasonable figure, separate simulations were performed to examine the 

feasibility of low- and high-hydrogen-penetration systems. 

For the final low-hydrogen-penetration simulation, HOMER examined 313,362 possible solutions 

by the combining components listed in TABLE 4. In addition, roughly eight sensitivity studies 

were performed in the final analysis, each of which requires HOMER to repeat the simulation. 

This took more than 14 hours using a 2-GHz personal computer. 

The components of the high-penetration system are identical to the low-hydrogen-penetration 

system except that 50% of the fuel cell waste heat is routed to the thermal load, which increases 

the overall efficiency of the fuel cell to about 63%. This change was made because the optimum 

fuel cells are significantly larger in high-penetration systems, making heat recovery more 

worthwhile. The search space considered for the high-penetration simulations is similar in size as 

for the low-hydrogen-penetration system except that the diesel size was varied and larger 

electrolyzers, fuel cells, and hydrogen storage capacities were considered. 

TABLE 4: OPTIMIZATION SEARCH SPACE USED FOR THE WALES LOW-HYDROGENPENETRATION ANALYSIS 
 13

Wales Results

TABLE 5 lists results from the low-hydrogen-penetration and the high-hydrogen-penetration 

simulations. The low-hydrogen-penetration simulation resulted in 16 categories, seven of which 

are listed in TABLE 5 (between the configurations in the first and last rows). Nine of these 

categories are not shown because they are categories in which HOMER identified a feasible 

combination of components containing a fuel cell or ICE but one of the components was not run 

because it was more cost effective to not use it. 

The results in TABLE 5 assume present-day prices for the components except for the first and 

last rows. The first row assumes a fuel cell price one-tenth ($300/kW) of the present cost. This 

row is intended to demonstrate the potential of fuel cell systems if fuel cell costs are drastically 

reduced. 

The high-hydrogen-penetration system resulted in two additional categories that are not present in 

the low-hydrogen-penetration results—the wind-fuel cell and the wind-fuel cell-battery 

configurations. These categories are unique in that they do not use a diesel generator. The most 

competitive of these two systems (wind-fuel cell) is included in TABLE 5 in the last row. This 

result was obtained using a fuel cell price of $300/kW and an electrolyzer price one-tenth ($200) 

of the cost today. This result is intended to demonstrate the infeasibility of high-hydrogenpenetration systems even at extremely favorable fuel cell and electrolyzer costs. 

FIGURE 5 and FIGURE 6 plot the capital cost and COE for each system normalized by the leastcost, present-day system (wind-diesel-battery). From these plots, it is immediately apparent that 

the wind turbine-fuel cell system (high-hydrogen-penetration) is not cost competitive, even when 

both the electrolyzer and fuel cell are assumed to cost one-tenth of their current capital cost. 

Although the capital costs of each system are significantly higher than a diesel-only system, the 

low-penetration systems have COEs below that of the diesel-only system. This is a result of the 

significant maintenance and fuel cost for the diesels and the relatively good wind resource. 

For low-hydrogen-penetration systems, the competitiveness of a wind-diesel-fuel cell system 

depends primarily on the cost of the fuel cell and is relatively insensitive to the electrolyzer cost 

or hydrogen storage cost. This is due in part to the fact that the optimal wind-diesel-fuel cell 

system uses a small electrolyzer and small amount of hydrogen storage. In addition, the 

electrolyzers cost 33% less per kW than fuel cells (see FIGURE 7 for the relative life cycle costs 

of the system components). 

TABLE 5 indicates that the least-cost system today is a diesel-wind-battery system. The next two 

most competitive systems add a fuel cell or ICE and an electrolyzer to this system. The addition 

of a small hydrogen system to these components reduces the battery bank size by 20%. However, 

the relatively small size of these components and the relatively small number of hours these 

components are used indicate that the primary benefit for the system is from the batteries. 

In the next two systems (D WT FC and D WT ICE), the batteries are replaced with a fuel cell or 

ICE. In the fuel cell system, a very small electrolyzer (3kW) and hydrogen storage tank (3kg, 

which can provide about 50kWh of electricity) are used with a moderately sized fuel cell (30kW). 

The hydrogen system in this case is useful for meeting the operating reserve requirement for the 

wind turbines to shut down the diesels, thereby realizing a significant fuel savings. However, the 

increased capital cost and higher COE indicate that these systems are not currently competitive 

with the diesel-wind-battery system under the given assumptions. Furthermore, this study does 
 14

not address whether these configurations will work without a small number of batteries or a super 

capacitor because of the ramp-up time required for fuel cells. 

It is often perceived that the lower capital cost of an ICE engine compared to a fuel cell will make 

the ICE engine preferable. However, the results of this study indicate that for this system, a fuel 

cell is currently the most competitive option. This is due to the high O&M costs for the ICE and 

the poor efficiency at partial loads. 

The next system is the wind-diesel system. This system has a significantly higher COE than the 

wind-diesel-battery system primarily because the diesel runs one-third more hours and an 

additional wind turbine is used. These characteristics are due in part to the 50% operating reserve 

requirement placed on the wind turbines, which the batteries help meet. In addition, the batteries 

allow the capture of some of the wind energy when the turbine output exceeds the load. 

TABLE 5: LEAST-COST SOLUTIONS IN EACH CATEGORY FOR THE WALES ANALYSIS (ASSUMING 

$.35/L DIESEL WITH ELECTROLYZER AND FUEL CELL CAPITAL MULTIPLIERS = 1) 

 Configuration Details Performance 

 WT FC Diesel ICE Bat Electro.H StoreTotal Cap. COE Dsl FC Dsl ICE 

Category ea kW kW kW ea kW kg $ $/kWh L hrs hrs hrs 

D WT FC 

(FC * .1) 3 50 148 - - 10 10 526,600 0.238 63,437 3,553 3,630 - 

D WT Bat 3 - 148 - 500 - - 635,400 0.247 59,543 - 3,217 - 

D WT FC Bat 3 6 148 - 400 3 3 641,560 0.248 60,384 484 3,283 - 

D WT FC ICE Bat 3 6 148 25 400 3 6 658,020 0.249 59,167 451 3,197 137 

D WT FC 4 30 148 - - 3 3 706,360 0.256 61,815 1,804 3,512 - 

D WT ICE 4 - 148 25 - 10 10 652,100 0.263 70,658 - 4,263 1,218 

D WT 4 - 148 - - - - 606,400 0.270 85,356 - 5,316 - 

D - - 148 - - - - 166,400 0.294 194,843 - 8,760 - 

WT FC 

(FC & Elctr * .1) 7 125 - - - 200 800 2,041,500 0.437 - 3,483 - - 

-

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

D WT FC

(FC*.1)

D WT Bat D WT FC

Bat

D WT FC

ICE Bat

D WT FC D WT ICE D WT D WT FC 

(FC &

Elctr*.1)

FIGURE 5: TOTAL CAPITAL COSTS FOR EACH SYSTEM RELATIVE TO THE DIESEL-WINDBATTERY SYSTEM. 
 15

0.9

1.0

1.1

1.2

1.3

1.4

1.5

1.6

1.7

1.8

1.9

D WT FC

(FC*.1)

D WT Bat D WT FC

Bat

D WT FC

ICE Bat

D WT FC D WT ICE D WT D WT FC 

(FC &

Elctr*.1)

FIGURE 6: COST OF ENERGY FOR EACH SYSTEM RELATIVE TO THE DIESEL-WIND-BATTERY 

SYSTEM. 

$49,089

$7,779

$47,386

$7,129

$943

$309

$42,031

Wind Turbine

Fuel Cell

Diesel

Boiler

Electrolyzer

H storeage

Other

FIGURE 7: TOTAL ANNUALIZED COST FOR THE WIND-DIESEL-FUEL CELL SYSTEM. 

It was initially anticipated that the competitiveness of the fuel cell would depend greatly on the 

cost of diesel. However, FIGURE 8 indicates that the optimal system has only a small 

dependence on the cost of diesel. This is because the real competitor of a fuel cell system is a 

wind-diesel-battery system, which is already the least-cost solution at current diesel prices in 

Wales. However, the cost of diesel does significantly affect the system design. For example, the 

number of wind turbines, number of batteries, fuel cell capacity (and therefore the electrolyzer 

capacity and hydrogen storage capacity) are very dependent on the cost of diesel. 
 16

FIGURE 8: OPTIMAL SYSTEM TYPE AS A FUNCTION OF FUEL CELL CAPITAL COSTS AND DIESEL 

COST FOR WALES LOW-PENETRATION SYSTEMS. 

Conclusions 

Depending on the choice of batteries, fuel cells may or may not be economically competitive for 

systems like the radio repeater. This study considered two extremes of battery technology: 

inexpensive lead acid batteries and costly NiCad batteries. When using NiCad batteries, the 

economically optimum configuration for the radio repeater is a PV-wind-fuel cell-battery system. 

Some of the advantages of adding a fuel cell to the system are long life (relative to batteries) and 

relatively inexpensive long-term storage. On an economic basis, if fuel cells and electrolyzer 

costs drop to approximately 30% of their current values, hydrogen systems could theoretically 

entirely replace NiCad batteries under many conditions, despite their lower round-trip efficiency 

and relatively high cost. However, at present prices for fuel cells and electrolyzers, most 

optimum systems have batteries because their fast discharge rates facilitate smaller fuel cells. 

When using inexpensive lead acid batteries, fuel cells and electrolyzer costs need to drop to at 

least 25% of their current values to become economically competitive. Even then, the increased 

complexity of including a hydrogen system will likely favor the choice of systems without 

hydrogen systems. 

For medium-scale remote systems such as Wales, high-hydrogen-penetration systems do not 

appear feasible. However, low-hydrogen-penetration systems could certainly become 

competitive in the near future, depending primarily on the fuel cell cost. 

Wind-diesel-battery systems result in the least COE for the Wales system. Replacing the fuel 

cell with batteries will become economically competitive when fuel cell prices drop 40% (to 
 17

$1,200/kW). PEM fuel cells will likely reach this price point, considering installed stationary 

fuel cell targets are $400/kW by 2010. Thus, fuel cells could be economically competitive in 

systems like the Wales system by 2010. 

The assumptions of component size, cost, and type (such as battery type) can have a dramatic 

effect on the optimal system type. The results in this report probably cannot be extrapolated to 

other renewable energy systems. Other systems should be analyzed on a case-by-case basis. 

Future Work 

Detailed modeling and hardware testing are required to determine whether the economically 

optimum systems identified by HOMER are technically viable. In addition, O&M should be 

considered for the radio repeater system. At this time, no plans have been made by the authors to 

perform these efforts. 

Acknowledgements 

This study would not have been possible without timely support from Tom Lambert at Mistaya 

Engineering Inc. and Peter Lilienthal at NREL. In addition, Tony Jimenez provided valuable 

guidance and data. Steve Drouilhet at Sustainable Automation, LLC and Mari Shirazi at NREL 

provided invaluable data and expertise on the current Wales system and on this report.

References 

 

1

 Drouilhet, S.; Shirazi, M. Wales, Alaska High-Penetration Wind-Diesel Hybrid Power System: 

Theory of Operation. NREL/TP-500-31755. Golden, CO: National Renewable Energy 

Laboratory, May 2002. 

2 Stand-Alone Photovoltaic Systems: A Handbook of Recommended Design Practices, SAND87-

7023. Albuquerque, NM: Photovoltaic Design Assistance Center, Sandia National Laboratories, 

March, 1995; pp. 161-173. 

3

 Green, J. Internal communication of the 1992 Pendleton, OR wind data file, National 

Renewable Energy Laboratory, Golden, CO, June 2002. 

4

 “A Quick Guide to Solar Electricity.” National Renewable Energy Laboratory, BR-520-27951, 

http://www.nrel.gov/ncpv/pdfs/27951.pdf , June 2000, Last accessed April 27, 2003. 

5

 Friedland, R.J.; Speranza, J. Hydrogen Production through Electrolysis: Proceedings of the 

2001 DOE Hydrogen Program Review. NREL/CP-570-30535. Work performed by Proton 

Energy Systems, Wallingford, CT. Golden, CO: National Renewable Energy Laboratory, May 

2001. 

6

 Ogden, J. M. “Prospects for Building a Hydrogen Energy Infrastructure,” Annual Review of 

Energy and the Environment; v24, 1999; pp. 227-279. 

7

 Amos, W.A. Costs of Storing and Transporting Hydrogen. NREL/TP-570-25106, Golden, CO: 

National Renewable Energy Laboratory, November 1998. 

8

 Sirosh, R., e-mail communication. Quantum Technologies, July 11, 2002. 

9

 UTC Fuel Cells. “Frequently Asked Questions.” 

http://www.utcfuelcells.com/commercial/faq.shtml. Last accessed April 27, 2003. 
 18

 10 Coleman PowerMate, “Airgen Fuel Cell Generator.” http://www.airgen.com/airgen.shtml. Last 

accessed April 27, 2003. 

11 Fuel Cells 2000, “How Much Do Fuel Cells Cost?” http://www.fuelcells.org/fcfaqs.htm#cost , 

Last accessed April 27, 2003. 

12 Fuel Cell Report to Congress. ESECS EE-1973. February 2003; pp. 24, 41. 

13 Fuel Cells 2000, “If all those fuel cell cars are emitting water, won't that create other 

problems?” http://www.fuelcells.org/fcfaqs.htm#cost, Last accessed April 27, 2003. 

14 Stand-Alone Photovoltaic Systems: A Handbook of Recommended Design Practices, 

Albuquerque, NM: Photovoltaic Design Assistance Center, Sandia National Laboratories, 

SAND87-7023, March 1995, pp. 161-173. 

15 Cotrell, J.; Pratt, J. “Modeling the Feasibility of Using Fuel Cells and Hydrogen Internal 

Combustion Engines In Remote Renewable Energy Systems.” WINDPOWER 2003 Conference 

and Exposition. May 18-May 21, 2003, Austin, TX. NREL/CP-500-34043. Golden, CO: 

National Renewable Energy Laboratory, 2003.

16 Shirazi, M. Internal communication of 15-minute electrical load and wind data for Wales, 

Alaska. National Renewable Energy Laboratory, Golden, CO, July 5, 2002. 

17 Ibid. 

18 Drouilhet, S.; Shirazi, M. Performance and Economic Analysis of the Addition of Wind Power 

to the Diesel Electric Generating Plant at Wales, Alaska. National Renewable Energy 

Laboratory, September 1997 (was not published). 

19 Ibid. 

20 Elliot, G.; Hunter, R. Wind-Diesel Systems, Cambridge: Cambridge University Press, 1994; p. 

223. 

21 Drouilhet, S.; Shirazi, M. Performance and Economic Analysis of the Addition of Wind Power 

to the Diesel Electric Generating Plant at Wales, Alaska. National Renewable Energy Laboratory, 

September 1997 (was not published). 

22 Thompson, C. E-mail communication. Thompson Engineering Company, Anchorage, AK. 

September 12, 2002. 
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Modeling the Feasibility of Using Fuel Cells and Hydrogen Internal Combustion Engines 

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13. ABSTRACT (Maximum 200 words)

Recent advances in hydrogen fuel cell and internal combustion engine technologies have enabled new energy options for 

supplying electrical power in remote, off-grid areas. The objective of this investigation is to determine under which conditions 

wind turbines and PV systems can feasibly power electrolyzers to generate and store hydrogen for remote power generation 

using fuel cells and internal combustion engines. In this study, the optimization software HOMER is used to analyze a small 

356-W radio repeater station and a 148-kW village power system. This study concludes that fuel cell systems appear 

competitive today at the radio repeater station and appear competitive in the village system if fuel cell prices are reduced to

40% of their current capital cost. 

15. NUMBER OF PAGES 14. SUBJECT TERMS 

wind energy; wind turbines; fuel cells; hydrogen; hydrogen internal combustion 

engines; remote renewable energy systems; HOMER 16. PRICE CODE

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