• Two-stage stochastic program with Conditional Value-at-Risk (CVaR) minimizes costs under uncertainty. • Empirical learning rates: 18.4% grid electrolysis, 9.0% renewable hydrogen (limited statistical significance) • Natural gas prices explain 63.8% of cost variance, challenging electricity-centric assumptions. • Renewable hydrogen achieves competitiveness with Steam Methane Reforming (SMR) by 2026 under minimal carbon pricing (€1/tCO 2 ) • Optimal portfolios emphasize renewable hydrogen (43.4% share) with immediate investment timing. The transition toward decarbonized energy systems necessitates understanding hydrogen production economics and optimal investment strategies under uncertainty. Current hydrogen production costs remain 2–3 times higher for clean alternatives compared to conventional methods, creating barriers to widespread adoption despite policy momentum targeting substantial capacity deployment by 2030. This study examines cost evolution, learning effects, and optimal investment strategies across four hydrogen production technologies in 29 European countries, addressing empirically observed learning rates, uncertainty impacts on portfolio composition, cost convergence patterns, and geographic deployment factors. The analysis integrates empirically-estimated learning curves using panel data methods with stochastic optimization incorporating geometric Brownian motion and learning-adjusted drift parameters. Two-stage stochastic programming minimizes expected system costs while managing tail risks through conditional value-at-risk. Global sensitivity analysis quantifies parameter importance across scenarios, including high carbon pricing, technology breakthroughs, and energy crises. Learning rates exhibit substantial heterogeneity, with grid electrolysis demonstrating 18.4% cost reduction per production doubling versus 9.0% for renewable hydrogen, though statistical significance remains limited. Natural gas prices explain 63.8% of cost variance, challenging conventional electricity cost emphasis. Renewable hydrogen achieves cost competitiveness with conventional production by 2026 under minimal carbon pricing (€1/tCO 2 ), while optimal portfolios emphasize renewable deployment (43.4% share) with immediate investment timing. Cross-country costs range from €4.01/kg to €7.09/kg, revealing regional specialization opportunities. Achieving decisive competitiveness requires carbon pricing of €147/tCO 2 by 2030, though production subsidies may prove more cost-effective initially. European strategy should exploit regional comparative advantages through coordinated development, requiring tripled R&D investment and prioritized cross-border infrastructure.
Gawusu et al. (Wed,) studied this question.
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