# An Overview of Hydrogen's Application for Energy Purposes in Lithuania
## 5 Hydrogen Costs  
Green hydrogen is considered to be one of the most promising solutions to the problem of decarbonising industry, transport, energy management and the residential sector; it holds significant promise in meeting the world's future energy demands. Its ability to compete with fossil fuels and alternatively sourced (blue and grey) hydrogen and the establishment of the whole green hydrogen economy in the next decade will only be achieved if green hydrogen production costs become cheaper. The green hydrogen economy is understood as a variety of hydrogen production through end-use application technologies employed to decarbonize specific economic sectors and activities which may be technically, cost-effectively and energy-efficiently difficult to decarbonize in other ways [44]. However, because of the underlying costs, conversion efficiency and geographical scarcity and variation in the renewable energy sources, the economics of green hydrogen have been challenging so far [45]. It is widely believed that green hydrogen costs will decrease over the years, mainly due to the gradual decline in renewable energy production costs, advances in technology, projects already finished, ongoing research and economies of scale [45]. The cost of produced green hydrogen depends mainly on two factors: the cost of electricity supplied and the cost of technology used. The hydrogen cost for the end user will be a function of production and distribution costs. According to [46], technology cost depends on the following factors:  
* Capital expenditure (CAPEX);
* Variable and fixed operating expenditure (OPEX);
* Hydrogen compression costs;
* Efficiency;
* Build and lifetime. All those factors differ depending on hydrogen production technology used. For example, CAPEX and OPEX are calculated for CCUS-enabled methane reformation, electrolysis and gasification. Meanwhile, hydrogen compression costs are excluded due to uncertain timings of transmission, distribution and storage networks emerging. Efficiency is based on turning electricity MWh input into MWh (HHV) hydrogen output. Build times and technologies vary depending on project. The cost of electricity from renewable energy sources varies across the globe; therefore, the cost of hydrogen has a geographical component. For example, solar photovoltaics (PV) are the cheapest option in southern European countries. Meanwhile, in northern European countries, hydrogen production costs are lowest when onshore wind electricity is used. Offshore wind tends to be the cheapest in Belgium and Germany [47]. There were numerous models created by various researchers to calculate the price of hydrogen [48; 49]. In 2023 the analysis provided by Hydrogen Insight discusses the issues calculating the actual cost of production of green hydrogen [50]. The main message of this analysis is that green hydrogen barely exists today; it is made in small quantities, mainly on experimental basis, and therefore the companies producing it typically refuse to reveal their costs, as current pricing does not represent the future costs of large-scale manufacturing. However, various calculations have been carried out showing a clearer picture of possible cost range. [PERSON] et al. created a geospatial model for estimating the levelized cost of hydrogen (LCOH) produced from offshore wind in Irish waters and found out that LCOH values can vary by over 50% depending on location [51]. [PERSON] et al. [52] investigated the possibilities of hydrogen production from wind generated electricity across Algeria, their results show that LCOH can vary from 1.51 to 15.37 USD/kg depending on location and wind turbine used. Green hydrogen is already close to being competitive today in regions with favourable conditions for renewable energy deployment as hydrogen's cost is directly related to the amount of renewable energy installed capacities, generating cheap electricity. [PERSON] et al.