The terms you meet when you plan, finance or certify a renewable hydrogen project, explained in plain words: from LCOH and WACC to RFNBO, additionality and PPAs.
Regulation
The RFNBO rule that the renewable plant supplying an electrolyser through a PPA must be new: in operation no more than 36 months before the electrolyser and without operating or investment aid. Electrolysers in operation before 2028 are exempt until 2038.
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Anion exchange membrane electrolysis: a newer technology that aims to combine the low-cost materials of alkaline electrolysis with the compact design of PEM. It is less mature and mostly built in smaller units.
Technology
The most mature electrolysis technology, using a liquid alkaline electrolyte. It usually has a lower cost per kW than PEM but responds more slowly to changes in power supply.
Regulation
The area of the electricity market where one wholesale price applies. For RFNBO, the renewable plant and the electrolyser must usually be in the same bidding zone (geographic correlation).
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Capital expenditure: the upfront investment to build the plant, including the electrolyser and the balance of plant. It is often quoted in euros per kW of electrolyser capacity.
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The equipment that splits water into hydrogen and oxygen using electricity. Its size is given in megawatts (MW) of electrical input.
Regulation
The RFNBO rule that the renewable plant must be in the same bidding zone as the electrolyser, in an interconnected zone with an equal or higher day-ahead price, or in a connected offshore zone.
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Hydrogen made by electrolysis with renewable electricity. It is a market term with no single legal definition; in the EU the legal standard is RFNBO.
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Levelized cost of hydrogen: the constant price per kg that recovers all the costs of a project over its life, including the required return on capital.
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The share of the year an electrolyser runs at full power, often given as operating hours per year. More hours spread the CAPEX over more kilograms of hydrogen.
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A method that runs a model thousands of times with inputs drawn from ranges, to give a distribution of results (for example the probability that the LCOH stays below a price) instead of a single number.
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Operation and maintenance: the yearly running costs of the plant apart from electricity, often modelled as a percentage of CAPEX per year.
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Proton exchange membrane electrolysis: a compact technology that responds quickly to changes in power, which suits variable solar and wind supply. It uses precious metals such as platinum and iridium.
Market
Power purchase agreement: a long-term contract to buy electricity from a specific plant at an agreed price. For RFNBO it is the usual way to source renewable power through the grid.
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The revised Renewable Energy Directive, Directive (EU) 2023/2413. It sets the EU targets for renewable fuels, including 42% RFNBO in industrial hydrogen by 2030.
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Renewable fuel of non-biological origin: the EU legal category for renewable hydrogen and its derivatives. It requires renewable electricity under set rules and at least a 70% emissions saving (at most 28.2 gCO2e/MJ).
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Solid oxide electrolysis: a high-temperature technology that can use less electricity per kg when waste heat or steam is available. It is less mature than alkaline and PEM.
Technology
The core of an electrolyser, where the cells that split water sit. Its efficiency falls over time (degradation), and it is replaced after a number of years, a cost included in the LCOH.
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The RFNBO rule that renewable generation and hydrogen production must match in time: within the same calendar month until the end of 2029, and within the same hour from 2030.
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Weighted average cost of capital: the blended return required by lenders and investors. It is the discount rate in the LCOH, and a higher WACC raises the LCOH.
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