Critical Updates to the Hydrogen Analysis Production Model (H2A v3) (Text Version)

Below is the text version of the webinar titled "Critical Updates to the Hydrogen Analysis Production Model (H2A v3)," originally presented on February 8, 2012. In addition to this text version of the audio, you can access the presentation slides and a recording of the webinar (WMV 170 MB).

Darlene Steward:
So I have a little presentation here. The real focus of this is to kind of walk folks through the model with the goal of really helping you understand how to use it.

[Next Slide]

So the outline…Sara has already given an introduction, so we're going to talk about an overview of the H2A model, how it's structured and how it works, and then we're going to talk a little bit about the changes to the H2A model for Version 3. Then, we'll spend the bulk of the time kind of walking through a case study and adding some values and kind of working through putting together a case study and then finish up with some resources, which is a list of the default values that may not have been mentioned during the presentation and website addresses and contact information and so forth.

[Next Slide]

So first, looking at an overview of the H2A model, as I mentioned, we're going to look at the model structure and then just really briefly talk about how to kind of navigate through the model. We'll talk about the key worksheets in the model and some dos and don'ts, which I've listed here kind of the overall dos and don'ts. You should enter values in orange cells. Those are the input cells. Use the light green cells for notes and side calculations. It's really helpful when you come back to case studies later to have those notes there so you can remember what you did the last time you looked at this case. And please also fill in the project information sheets.

There are three project information sheets at the beginning of the workbook, and they also really can help you understand how the process works and where values come from. Some don'ts: don't enter values in the blue cells. Those are calculation cells for H2A. They are not locked, or they don't prevent people from making changes to them. We really wanted the model to be as flexible and as transparent as possible. But if you change those cells, you're likely to have some problems with the model. So view those with caution. The worksheets at the end of the workbook have tables for depreciation schedules and things like that, and you really shouldn't change those because some of those are quite critical to the operation of the model.

[Next Slide]

Just looking quickly at the H2A model structure, there are three categories of information that go into H2A. The first, and the most important, is the user input. These would be values that are derived from work that's done outside of H2A. For example, process modeling maybe using Aspen or something like that, vendor quotes for pieces of equipment, literature sources for some designs and things like that. There is also within H2A, a database of information. There are fuel prices that have been downloaded from the AEO (Annual Energy Outlook) website. There are fuel properties that were taken from the HyARC (Hydrogen Analysis Resource Center) website, and there are GREET (Greenhouse gases, Regulated Emissions, and Energy use in Transportation) emissions factors tables as well as industry cost index tables.

And so these are all kind of a database of information that H2A draws on in order to do the calculations of the hydrogen costs. The other values in H2A are the calculations. We have cost escalation calculations, so converting from the basis year—and I'll talk about these different years later—but converting from the basis year to the reference year, calculations that help with plant scaling and financial calculations, for example, depreciation, cash flow calculations, and of course the final result, which is the levelized cost of hydrogen. So those are all kind of the three categories of values that are used in H2A. And of course, the final result is a levelized cost of hydrogen in dollars per kilogram.

[Next Slide]

Just some quick notes on getting around in the model. One of the primary things is when you first open the model, you should probably get a security warning. If you look at this top graphic here…I'm kind of going around that with the mouse…there's a security warning at the top. You want to click on that "Options" button, and there's a little pop-up screen, and you should click on "Enable this Content." That enables the macros that help calculate the hydrogen costs. So that has to be done in order for each H2A to work correctly. The other thing that you can use is there are some help screens, and one of them is this H2A color coding screen, and it kind of guides you in terms of the color coding, which I have already talked about a little bit.

[Viewing H2A Model Spreadsheet]

So, I think now would be a good time to come back here and open up our new H2A case. So this is the one we're going to be working with, and hopefully, it will give us our…what's it doing here? [Laughs] Can't use that one. Sorry! I don't know what it's doing here. Oh, let's just try opening it this way. There we go. OK, so this is the alternate macros screen that you might get. Of course, in this case, you want to click on the "Enable Macros." This one's a little more obvious, and most people don't have any trouble with that one. The other one is the one I wanted to point out because you might get that in certain cases, and that one's more difficult to locate and figure out.

So once you turn the macro on, the case study will go immediately to one of the three initial sheets. So this is the title sheet. Again, as I mentioned earlier, you really want to fill this sheet out. There is also a description sheet. This kind of talks about the general description of the process. This particular one is for steam methane reforming, but you want to put in your own process description there. And then finally, a process flow sheet, and you can put in a process flow diagram and stream number, stream output from Aspen or any other kind of modeling that you might have. Again, it's really important to fill these sheets out because later on it's difficult to follow-up what's going on if you don't do that.

The other thing is that there's these little buttons here that, generally speaking, take you to the input sheet, and those are handy because they'll help you kind of get around the model a little bit more quickly. So the other thing I'm going to do here really quickly is just get rid of the bar so that we can have a little bit more space. So this top part of the H2A model is the table of contents. There is some little internal links that you can click on that get you immediately to different sections of the model. So that particular one we clicked on gives us the energy piece box, so you can kind of navigate around a little bit more quickly that way.

The other thing that I want to point out is this "Default Values" button. I've kind of set this up with a little bit of variation in our default values. The default values are indicated here with these little textboxes. As you can see, we want to use reference year 2007, but it turns out that I had put in 2006 here, so you can see the box is not checked. So if we check that box, it'll change it to 2007. But another thing we can do is, let's say we decide that we want to have straight line depreciation, so as you can see, that's not the H2A default value, either. But what we can do if we want to use all the default values is we can just click on this button, and that gives us a little pop-up screen here.

There are two choices. One is that you can replace all the values on the sheet that are default values with the actual default value, or, you can just click on the "No" button, and that will just replace any blank cells with default values. Of course, you can always cancel this and not do anything. But let's just say we want to have all default values. So now if we go down through here, we can see that we're using MACRS depreciation and we have all the little checkboxes checked. That's probably a good thing to do to make sure that you're using all of the default values within H2A. Most of them have to do with financial input values, and since we want to compare technologies and not financing strategies, we'd like folks to use those default values for finances.

[Next Slide]

OK, so going back to our presentation, there are a few other things that we want to talk about during this presentation. One is our "Toolkit" button, and we're going to talk about that in some depth later, so we'll skip that for now. When you're completely done with all of your input, you're going to click on this "Calculate Cost" button, and that will give you the levelized cost of hydrogen.

[Next Slide]

So moving on to the next section, for anybody who was able to join on audio only, we're on Slide 8 right now.

Moderator:
Can you hear me? This is Christine.

Darlene Steward:
Yes.

Moderator:
We didn't really get a chance to go over how the question and answers will work. But it appears as though all the attendees, well, I guess everyone other than you and I, are on listen-only mode. So I just wanted to tell everyone that if they have a question, type it into the "Question" field, and we at DOE can see those questions. I'm not sure if you can, Darlene, but we will save most of the questions until the end of the presentation, and then we will ask them of you, if that works for everyone.

Darlene Steward:
Yeah, and I did…

Moderator:
Are you there?

Darlene Steward:
I wanted to go through this fairly quickly so that we have time at the end for questions as well.

Moderator:
OK. Great. I just wanted to let everyone know. There were some questions as to how they would be able to ask questions when they're in listen-only mode.

Darlene Steward:
OK.

Moderator:
Just wanted to let everyone know. Thank you.

Darlene Steward:
So if you're on Slide 8, there is a listing of all of the worksheets in the H2A workbook. They're kind of color coded, and those are the same color coding that's used on the actual workbook so you can kind of navigate through the workbook using the color coding on the tab within the workbook as well. Primarily, users are going to be using the input sheet that we looked at so far, so those are the capital costs, replacement costs, the plant scaling sheet, and refueling station, which would be for the corporate model only. Today, we're focusing on the central model, so we are not going to talk about the carbon sequestration sheet just in the interest of time.

The blue ones are the results sheets, and those include the tornado charts and sensitivity analysis. And then this kind of database that I spoke about earlier is coded with these yellow tabs. And then there are some standard calculations like financing and so forth.

[Next Slide]

So looking forward to the H2A Version 3 changes.

[Next Slide]

I only have one slide on this, but we obviously have changed the format of the H2A a fair amount, and I'm hoping that as we go through this walkthrough of how to enter values and things, it will become obvious how those format changes work. But I wanted to kind of emphasize the actual changes to the numbers in H2A. So, one of the primary changes was an update to 2007 dollars. All capital equipment costs are now updated to 2007 dollars using CEPCI indexes. Those are chemical engineering progress indexes. And the change here is that we added a new input field to H2A, and that is the basis year, and the basis year is the year for which you have estimates available for process equipment and things like that.

So if you, for example, got a quote for process equipment in 2006, then you would enter all of your cost numbers in 2006 dollars, and you would specify on the input sheet that you were using 2006 as your basis year. And then H2A has its own algorithm for updating those to the reference year, which is 2007, in this case. So that's one of the main changes within H2A. You previously had to enter costs in the reference year dollars, and so now we've made that a little bit easier for folks so that if you have cost estimates that are in a different year dollars, you can use a different basis year than the reference year.

Of course, if you had 2007 estimates, you can make 2007 your basis year. The other thing that we did was we updated the entire feedstock price projections using AEO 2009 download. We want to use for all of the development of case studies…we want to use the AEO 2009 reference case. I'll talk a little bit more about that later. Labor costs are updated to 2007 dollars using labor cost indexes, and we use some other indexes for updating other values within H2A. Consumer Price Index was used for general numbers. We also use the Chemical Price Index for updating costs for things like other material chemicals that are added to the process. The other thing that we changed or that's new in H2A Version 3 is that we changed assumptions for the central plant.

For example, for the start-up year change from 2005 to 2010, the cost of land increased from $5,000.00 to $50,000.00 per acre. It's a little bit more realistic for a plant being built at the city gate area. The construction period increased from two years to three years, and the rationale for that was, after looking at some actual plants, we realized that there is really very little capital spent usually during the first year of construction. This is a period of time when permits are getting put in place and a lot of upfront work is going on, but not so much capital being expended. The remaining two years is when you really start to spend your capital and put in the equipment. So that was the rationale behind changing from two to three years.

Now, these assumptions for the central plant, these are default values, but they're not hard and fast. If you, for example, have a solar array out in the middle of nowhere, you're probably not going to be paying $50,000.00 per acre for land, so you can put in a lower value. If you do that, we are recommending that you note—again in the green section of the worksheet—where you got the number from that you're using and any kind of back-up information for the reason for your change from these kinds of default values. But again, I want to emphasize that these are not really hard and fast values that you absolutely have to use.

[Next Slide]

So I think now is a good time to start looking at our case study kind of walkthrough, and, as I said earlier, this is what we're going to kind of focus the whole presentation on. I'm going to go through this fairly quickly, and hopefully you'll have time to note down your questions. I'm sure there'll be a lot, but I want to kind of get through it so people have time to ask questions.

[Next Slide]

So in general, what we want to do with H2A is kind of start at the top and work our way down the input sheet. So the first section is the technical operating parameters and specifications and the financial input values. If we switch over here to our SMR case, why is this not in place? It's the wrong one.

[Viewing H2A Model Spreadsheet]

So, if we scroll down here a little bit, we can see the section here in the technical operating parameters. You want to enter the plant basis design size here. Notice that there's a little note here that says that this is the required input. There are various notes like that throughout the workbook, and they hopefully provide some guidance on what values are available for those fields. If you actually put a value in one of these that's outside of that limit, it'll give you a little error message. So we want to put that back to 2007. OK, so the plant design capacity is for when you first start looking at a new H2A study. This plant design capacity is for your design plant.

This is the plant that you've done Aspen modeling for, or this is the size that you have done all your cost estimates for, and so forth. It's possible that once you get done with this basis design or this basic design, you might want to scale the plant up and down to a certain extent later on. But when you first start working with H2A, you want to put in your design plant. And so this would be the design plant capacity. This value you can change later on and the H2A will automatically scale to accommodate that. But for now, when we first start working with it, we want to put in the design capacity for our baseline plant. So I didn't really have a lot of other things to say about these two sections.

Mostly, we want to use the default values for things like plant life, analysis period and so forth. Those in the H2A cases that are up on the web, those will all be kind of filled in already. If you want to take one of those cases and edit it, these values probably pretty much are going to stay the same. And as I mentioned earlier, you definitely do want to use these default values.

So moving on to the next section, which is the Energy Feedstock Section, one of the things we want to do here is make sure that you're using the AEO 2009 reference case. There are two other cases in here. There's a 2010 reference case and a 2009 high price case, but we want to use this reference case. So you can enter in this. This is the energy feed. So this would be energy feedstock such as biomass or something like that or it could be utilities like electricity that you're using for pumps or compressors or something like that. So you have three choices here: you have feedstock, utility, and byproducts.

For some plants, for example, some of the coal-to-hydrogen plants have electricity as a byproduct. So you can specify that in here as well. So these are energy values. In this particular case, we've already got the utility: the industrial electricity there we're going to use. Again, this is an SMR case, so we've already got that, but we need to add the feedstock: the industrial natural gas. So we select "Feedstock" in that drop-down menu, and then we select "Industrial natural gas" here. We can select any number of different feedstocks, so we're going to go with industrial natural gas. You'll notice that all these values are automatically filled in once we select that.

The only thing that hasn't been filled in yet is usage, which we want to specify in millions of BTUs per kilogram of hydrogen. And in this case, it's going to be 0.152. I don't remember if that's the exact value but close enough. So that gives us a cost in our start-up year, which in this case is 2010. We are going to be looking up prices for each year from that AEO price table, so this is just the cost in the start-up year. Costs will be different in other years. So we're not using any of these yet. We're just kind of setting this up. We don't actually enter these into H2A to use until we click on this "Add" button here, and that adds the new feedstock to our table of things that we're actually using.

You can also delete things from the table. We can just delete this feedback that we just added using this "Delete" button. You always want to use the "Add" and "Delete" buttons to change these values. There is some kind of coding back behind here that allows you to use them in sensitivity analyses and things like that, and if you just delete lines or whatever, it'll kind of mess those up. So we're going to add our industrial natural gas back in here again and then move on.

[Next Slide]

So going back to our presentation, we want to go to the next slide. So again, just to reiterate, we're going to use the AEO 2009 reference case, and you want to use the "Add" and "Delete" buttons to change values in this section.

[Next Slide]

So the next section is the capital cost section, and on the input sheet, you're going to see just this summary value of the total capital costs, and you'll need to click on this "View/Edit" button in order to get to the capital costs section where you can enter the actual detail values.

[Viewing H2A Model Spreadsheet]

So going back to our model again, we're in the capital cost section, and we want to click on "View/Edit," and that gets us to the capital cost sheet. This value here is the design plant hydrogen production rate. As you can see, I've entered in here the same value that's on the input sheet. We want to keep those two values the same while we're setting up the case.

We can scale them later, but this is the design plant, and this value is what is going to be used as the baseline for the design capacity. So if you scale the plant, it's going to be scaled based on this value. So again, our basis year for capital costs was 2005, in this case. You can see that this is a blue cell. That means that you should not enter numbers here. The value is actually entered on the input sheet. The only thing that you're going to enter here is the current year for costs. We want to use 2010 for the current year for capital costs. What we're doing is using plant scaling factors or scaling indexes to escalate costs from the basis year to 2010, and then we're going to use the Consumer Price Index to deflate those costs back to the reference year, 2007.

So essentially what we're doing is we're developing a 2010 dollar cost estimate, but we want to show it in 2007 dollars. I know that's confusing, so feel free to ask questions later. OK, so we want to add a fair amount of detail in this section. So there was one other thing that we wanted to do here, and I think I have that on my other sheet. I'll go get it. So we have this NOx control, and we want to put that into our sheet here. We have to add an installation factor. In this case, it's going to be the same as it was before, and that gives us our new cost. Again, we enter all of this process equipment cost in 2005 dollars. You can see that's specified up here, and it's the header for that column.

OK, so we're done with capital costs, so let's go back to the input sheet. So now we've got our updated capital costs. As I mentioned, we're not going to talk about carbon sequestration right now, because most people aren't going to be using that. And scrolling down a little bit more, we can look at the indirect capital costs, and there's not too much too exciting here.

[Next Slide]

But I did want to point out a couple things. Oh, I forgot! Let's go back and before we go to indirect costs, let's talk about replacement costs. Many people forget replacement costs, as I just did.

[Viewing H2A Model Spreadsheet]

And so I think it's probably best to as soon as you get done with specifying the capital costs to go immediately then to the replacement cost sheet and fill in any values here that you might want to add. There's an unplanned replacement cost factor, and we can talk about that a little bit later, but the main thing on this sheet, and the input as you can is orange, is specified yearly replacement costs, and these are replacement costs of specific pieces of equipment. So let's say that in the tenth year of operation you have to replace the compressor or something like that, and it turns out that we think that it's going to be about 25 percent of the direct capital costs. Let's hope it's not a compressor; something bigger than that.

But anyway, let's say that it's 25 percent, and it's going to be in the tenth year. So the best thing to do here is to link this to the direct capital costs so that if you do scale this plant, that you will automatically scale these replacement costs as well. You could just enter a number in here, but then you would have to remember, if you scaled your plant, you'd have to remember to change these values. So that's certainly possible, but it's much easier if you relate it back to the direct capital so that it gets scaled automatically if you change your plant size. So that's just a hint.

[Next Slide]

All right, so thankfully we've gotten through replacement costs and we can move on to indirect capital costs. And I think I'll just focus mostly on the presentation at this point. For most of the indirect capital costs in the case studies that we've developed so far, we're using some default value for things like site preparation and engineering, and those are listed here on this slide. These default values have changed a little bit between H2A Version 2 and H2A Version 3. What I've listed here is the ones that are being used in H2A Version 3. Again, this is not hard and fast. If you want to change these, you certainly can, but we encourage you to make note about why you changed those from those values. Again, here is where our default cost for land is located. And again, if you change that, you should probably put a note in there regarding the value that you used, where you got it from, and why you decided to change that.

[Next Slide]

So the next section is fixed operation costs, and again, this is a pretty straightforward section. Most people will just use the values that are already in here for labor costs and licensing or property tax and insurance and G&A rate and things like that. Again, these are kind of default values, and it's helpful if everyone uses the same ones so that we're comparing apples to apples between case studies. So please use the default values in this section. So really the only thing that you're going to be changing to any extent is the labor: the number of FTEs and things like material costs for maintenance and repairs and things like that.

Moderator:
Darlene, if you're going to stick with the PowerPoint, do you mind going into presentation mode?

Darlene Steward:
Actually, it's difficult for me to go in presentation mode because then I can't switch back to the…

Moderator:
Oh, OK. Sorry, never mind. Thank you.

Darlene Steward:
Yeah. No, sorry about that. I tried various strategies a little bit earlier. I wasn't able to get it to be smooth transition between the two.

[Viewing H2A Model Spreadsheet]

OK. So going back to our spreadsheet, we've talked about fixed operating costs, and now we're going to go down here and talk about other materials and byproducts.

[Next Slide]

Switching back to our presentation, in this section, again, this is set up very similarly to the energy feedstock section. We have a drop-down list of the feedstocks that are available here, and then that's linked to a table on one of the other spreadsheets that gives the prices and so forth. So these two spreadsheets are tied together. This is the nonenergy material prices.

[Viewing H2A Model Spreadsheet]

I'm going to add another feedstock to this because this is pretty quick and easy, and this is where folks occasionally will have feedstocks that are a little bit odd. So if you'll notice here, we have a list here that ends with compressed inert gas, but we decided that we've got a really special SMR process where we're going to take the CO2 from our process and we're going to add a little nutrient feed and we're going to grow some algae. And so, I'm just going to add a nutrient feed to this, and hopefully this will work, but you never know.

So the source year for our cost for our nutrient feed was 2006. And then I want to just copy down this equation here. And then my price was $0.02 a gallon, so I'm going to multiply by this factor here so that I'm using 2007 dollars, and I always want to use the same ones, so I do that. OK, so now I can just copy this and paste it in the rest of this for all the years because our prices didn't change any. Obviously, you can change those if you want. OK. So now we have a new feed here, our nutrient feed. And if we go back to our input sheet, we can only hope that our nutrient feed will show up here.

OK. So we can select that, and then we're going to use one gallon per kilogram of hydrogen—we're not using it yet because we haven't—it doesn't show up down here, but we're going to add it. OK. So now we just added a nutrient feed, and you can check and make sure this worked right by going over to the cash flow sheet, and this is down a ways on the cash flow sheet, but you can see here's all the products, and there is our nutrient feed and it's dollars per kilogram of hydrogen. So it looks like that got transferred over OK.

You can see that there's a limit of three here for these other materials, and there is a limit of four for the utility—the energy feed—so utilities, feedstocks, and so forth. So don't add more than four. If you do, it should give you an error, but that's a big limitation. I just didn't have a huge amount of space. So we've now added our nutrient feed. And again, if we want to delete it, we might want to just get rid of that. So unfortunately, if you do that, you get rid of all of them, so we'll have to add back in our cooling water here. I think it's, oh, I don't remember what it was. It was like three gallons or something like that. No, it was more than that. Well, that's a lot of cooling water, but anyway, we'll add that.

[Next Slide]

So moving on to the next section, which is other variable operating costs. Again, there's not really a lot of, you know, there's not really a lot of things going on here. There are some things, though, that I want to point out. One is that in H2A we haven't previously really looked at waste treatment costs or disposal costs in the past, but it would be helpful if you do have costs in that area to put them in this model. The unplanned replacement cost factor is 0.5 percent. This is a default value, again, for the H2A central cases. And if you change that value, it would be helpful to put in some notes about why you feel that it should be higher or lower.

Royalties, process and tax incentives, again, as a default, those are assumed to be 0, and we want people to use those default values so that we can continue to do an apples-to-apples comparison between these different technologies.

[Next Slide]

OK. So the final step is the results, so if we go back to the input sheet, we're going to click on that "Calculate Costs" button.

[Viewing H2A Model Spreadsheet]

So, we've really made some changes to our case here. But we'll see what happens. Oh, wow! We've improved our costs. OK. So this is the cost results. I want to point out the Lang factor here is something that we added recently. That is the ratio of the total installed capital cost to the equipment costs, and that's kind of a quick and dirty way of looking at how your indirect costs and things like that are affecting your overall costs. So the cost results are split up into different components, so there's a capital cost component.

We also included decommissioning costs, which in this case are zero, our fixed O&M costs, feedstock costs which obviously in this particular case are the highest cost element, and then other raw material costs and byproduct credits and other variable costs. So that all adds up to the total value of dollars per kilogram. We also have some information about the energy balance for this system, and including a process efficiency calculation and some estimates based on GREET of emissions. So those are down here further on this results sheet. I want to emphasize that these values for emissions are just estimates. They are not direct GREET results. They're estimates based on tables that are copied from GREET.

OK. So now we've completed our case study. We've got the capital costs specified. We put in some replacement costs almost at the last second, and we filled in all the cost values and we've gotten our cost results. We're pretty happy with this, and we've kind of vetted it and gone through it a few times to make sure that everything is the way we want it.

[Next Slide]

And then we can move on to sort of the final step, which would be to look at sensitivity analysis. It's helpful to do a sensitivity analysis for H2A case studies. It's a good idea to have a pretty good handle on the base case before you do this, so you might leave this to last or after you have done a bunch of review and things like that, or you might use this to look at the sensitivity of your results to various components and look at where you might be able to save some money or things like that. OK. So there is an automated sensitivity analysis function within H2A, and you can use that, or if you want to, you can just build the sensitivity analysis from scratch. So I'll go through the automated method first, and then we can look at the by-hand way of doing it after that, and you'll see that they can both be used together.

[Viewing H2A Model Spreadsheet]

So going back to our case study again, we're pretty happy with this result, so now we're going to go back to the input sheet, and what we want to do is click on this toolkit button. So this, again, we saw this before, because we were deleting feeds from this section. But this time, we want to look at sensitivity analysis. So the variables that are available for doing sensitivity analysis are sort of built in. They are these ones here. If you do this by hand, you can, of course, use different values, but we're going to just look at these ones. So I think let's look at total capital investment. So the total capital investment is added to our little table here, and you can see that there are euro values for the upper and lower limits, but the central one is still there, and that's the value from the base case.

So this is $215 million or so, so it's really important that this value that you enter into this cell is the value that reduces the hydrogen cost. Some things like operating capacity factor, if you have a lower hydrogen–operating capacity factor, it will increase costs. You don't want to put that number in here. You want to put the one in here that will actually reduce the cost, and I could show you why, but it would be messy. So in this case, we want to reduce costs, so we're going to say that our low-cost plant is $150 million, and our high-cost plant is let's say $300 million. And then let's also look at total fixed operating costs and that is about $7 million, so let's say our low cost is $5 million, and our high cost is $12 million.

OK. Then let's just do one more. How about the labor requirement? So we had 20. So let's say we only need 5 people for our low-cost plant, but we need 30 people for our higher cost plant. OK. So we fill that out. So it's a good idea to click on this and just kind of take a quick look at this and make sure that all the values are filled in. Like, for example, let's say we decided we thought maybe we'd do G&A rate, but, oh, dang, we changed our minds, so we decided not to do that after all. OK. So now we have G&A rate in here, and we don't really want it in there because we decided we weren't going to do a sensitivity analysis on it, so let's select it and just delete that one. OK. So now we have the three that we're really interested in, and we're all done with this section, so now we can calculate costs.

I left the screen updating on, so you can see it go flashing. Someday, I might change that, but I like it flashing back and forth because it makes it feel like it's doing something. OK. So it gets all done, and you wind up here on the sensitivity analysis sheet, and it filled in the values for the minimum hydrogen price. This is the nominal value. This is the one that we came up with when we did our first initial case, and you can see those are all the same. And then our high value, if we click over on the tornado chart, here's the stuff that we just added. So we have total capital investment, total fixed operating costs, and land requirement or labor requirement. Sorry. So this is OK. But we might want to format this a little bit.

Like, for example, in the total capital investment, we might want to add that we had a range of $150 million to $300 million, and so we can do that. So now if we go over to our tornado chart, we have a little bit more informative labels here. So you can do that for all of those. You can add notes on here and things like that. So one word of caution on the tornado charts; if you have a case, and you've done all the tornado charts and everything, you've finished it all up, and you decide to change something in the base case, the tornado chart does not automatically update. So your case will still have this old tornado chart in it until you go through the process of building a new tornado chart.

So there will be a disconnect between the results for your case and the tornado chart until you go back through the process of updating the tornado chart. I just wanted to point that out because I didn't have a really good way of setting it up so that it would automatically update them. So that's kind of the automated method of doing tornado charts, and I would suggest using this at least to get started, and then if you want to add some different values in here, you can use this as a template and change things in here. I probably don't have time to go through this, but say we were going to do feedstock costs, we could type in here, and then by hand, run the model and fill in these values for the tornado charts.

And then in that way, you're really just editing the tornado chart that's already there, but you have a template to start with that gives you the format and helps you actually build the chart. So it's a little bit easier to do it that way. So, like I said, the way I would do it is to start off with the automated one so that you have the values in there and you kind of build the chart and then you can change things if you want.

[Next Slide]

So, that's actually pretty much it. Here's just another example of a tornado chart with some more detailed information about the capital investment and so forth.

[Next Slide]

And the case studies that are on the web will have tornado charts in them so you can see what we've done with those.

[Next Slide]

I just want to talk a little bit about some of the resources and other parameters and default values. This is just a laundry list of the default values that are being used in the H2A central cases right now. We've talked about some of these, but some are more standard from the previous version of H2A, like the after-tax real rate of return is one of those values that are unchanged from Version 2.

[Next Slide]

This is just a table for reference, and then the website is listed on this final slide. H2A, the user's guide is here, and I should have mentioned this earlier, but this entire walkthrough that we've just done is reiterated in the user's guide. I think it's very handy, and it's not so long, so there are some appendices to the user's guide, but the user's guide itself is relatively short. So if you have a chance to download it, it's pretty helpful. There's a blank model. It's not entirely blank. I did leave some default values in there.

You can use that to build a new case study if you want, or you can use one of the existing case studies, but we've done central SMR, central electrolysis, central biomass and those are up on the website. Actually, electrolysis is not up there yet, but the others are up there. And then if you need any additional information or have questions, you can contact Mark or myself. So that's it. I guess I can answer questions. I'm not sure how we're going to do that. Do we have…

Moderator:
The way we're going to do it is…we have a number of questions. We will read the question to you, and then you can answer, and if we don't get to your question, we will have a log of them, and we may attempt to put together some short answers and mail it out to people. A lot of the questions people are asking are very good questions, but they are answered in the user's guide, which I think Darlene said is up on the web now or will be shortly. NREL is adding cases as they are completed, so check back frequently. They will have more cases in a few weeks.

So one question is, "When will the case studies be available?" When we complete them, but we hope to complete the rest within a few weeks. OK. Let's see. What do we have here? Let's start at the very top. "Feedstock costs are a very significant variable. Can users easily change these values? And where did the $50,000.00 per acre come from?"

Darlene Steward:
OK. I'll answer the feedstock costs question first. We have for standard feedstocks like natural gas and electricity, things like that, we're using the AEO 2009 reference case values. Those are projected out to 2050, and those should probably be used for things like natural gas and utilities and things like that. There are some other values in there; for example, biomass. The cost of the biomass feedstock is derived from the most recent I believe April version of the biomass program, MYPP (Multi-Year Program Plan).

Some of those values are custom. The biomass ones are the ones that come to mind most readily, but the other thing about feedstock costs is that we have been using feedstock costs as a sensitivity variable because, as you said, they're very significant contributor to the cost. So it's helpful to view a sensitivity analysis on the feedstock costs. With regard…

[Crosstalk]

Darlene Steward:
With regard to the $50,000.00 and cost, we coordinated with the biomass program, and that was the cost that they were using. We have not actually been able to track down exactly where they got it.

Moderator:
With respect to both feedstocks and land costs, can the user input different values if they want to?

Darlene Steward:
Yes, for land cost that's very simple. There's a single input value on the input sheet that you can use for land cost. For feedstock costs, it's a little bit more complicated.

[Viewing H2A Model Spreadsheet]

As I said, we went through the one for the adding feedstocks for non-energy materials. Adding feedstocks for energy materials is a little bit more complicated, and I guess there are two ways to do it. You can add a new energy feedstock, or you can just modify one of the energy feedstocks that already exist, which is what I would recommend.

[Crosstalk]

Moderator:
Let me just ask the question here. I think the question was, "Can you use different costs?" not different feedstocks.

Darlene Steward:
Yes, you can. Let's go back to the input sheet, and I'm just going to move this control panel. I don't know why it's difficult to get rid of. But anyway, if we scroll back to the feedstocks, what we want to do here is if you click on this "Enter your own price," it changes the cost or the price value to an input value, and let's say we're going to do $5.00 here, so now we're using a different price for the industrial natural gas, and if we add that, we'll get another line here in our feedstock cost. And you'll notice that the look-up prices field over here says, "No." That means that we're just going to use that $5.00 throughout the analysis. So that's another way to do that.

[Crosstalk]

Moderator:
Somebody's recommending that engineering design definitions be provided for terms like "operating capacity," but I think that probably is in most cases in the user's guide.

Darlene Steward:
Yeah.

Moderator:
And the other ones are mostly comments. It says, "Default tax rates are likely significantly higher than actually experienced in plant construction and start-ups."

Darlene Steward:
Yeah. Right. Some of those financial values, like the idea that we're going to use 100 percent equity financing and things like the taxes, are probably unrealistic in the real world. But those were selected as default values by a group of key industry folks about five or six years ago. They went through a pretty extensive process to try to get those values nailed down. Although it does seem unrealistic, and as you said, they are probably high, what we want to do here, and what we're really focusing on is comparing different technologies and apples-to-apples as much as possible. So we wanted to fix the financial values and not vary those.

And certainly for a company's own purposes, you can certainly change those values and look at, for example, the sensitivity of hydrogen costs to tax rates. Things like that, you could certainly do. But in terms of developing H2A cases for DOE's purposes for the Annual Merit Review and things like that, we want everyone to use those default values. As unrealistic as they are, they will all be the same, so everybody will get the same penalty.

Moderator:
OK. Yeah, great. Thank you. Here's another question. How would you handle inputting 2012 pricing? It appears that the reference year only goes to 2010.

Darlene Steward:
Yeah, that's correct. The reason for that is because we only have cost indexes through 2010. There are some estimated cost indexes that you could look up, and what you would want to do is take your 2012 prices and deflate those down to 2010, or, if you want to deflate them all the way down to the reference to your dollars you could do that as well. And then you would just enter 2007 as your basis year and then you would have…and that factor would be 1. Does that answer the question?

Moderator:
I'm not sure. Is it safe to say that indices will be added as they become available?

Darlene Steward:
Yes, we don't have a specific schedule for that, but that's definitely on our to-do list.

Moderator:
OK. Is there any mechanism for adding additional direct or indirect costs? For example, what about licensing and royalty fees?

Darlene Steward:
Well, there is an input field for royalties within the H2A model down here at the bottom. So there's a section for royalties. There are also things like operator profit and tax incentives and things like that that you can do. And those you would enter as the total cost per year. They're typically based on the output rate, and that's why they're listed here as variable costs. If you want to change—I forget what the other value was—property taxes or licensing, the fixed operating costs include a licensing, permitting and fees section, so you can certainly add a value there.

Moderator:
Somebody asked when the distributed cases will be available? That's a really timely question because we, "we" being NREL and Argonne, and with us chiming in, have just finalized what the forecourt costs would be for compression, storage and dispensing. So the answer is they will be available as soon as the cases can be updated, and probably within the next several weeks. Is that a good estimate?

Darlene Steward:
Yeah, I hope so. I think that's probably a good estimate.

Moderator:
We'll let the PIs who are probably most interested in that know when things are available. Another point I think maybe Eric wants to bring up is what the importance and the significance of some of these updates are.

Male:
Yeah, Darlene, so maybe you could make a comment again reemphasizing the importance of the basis year versus the reference year and the importance of the 2007 reference as important for an apples-to-apples comparison with the cost threshold target that has been established by DOE?

Darlene Steward:
Yeah. Excuse me. My voice is getting tired. Let me actually scroll up here to the top of the input sheet where these are all specified. The reference year was selected by DOE for the program. So during the spring and summer, there was a significant effort put in to recalculating the cost threshold for hydrogen. One of the many decisions that were made during that process was that they would use the 2007 reference year. So we want to be able in our analyses, and for all the PIs and Annual Merit Review presentations and things like that, we want everybody to use that 2007 reference year so that we can compare to the cost threshold that was just recently developed.

So that's probably the most significant of these new default values. The change to the 2007 reference year has some kind of impact throughout the cost analysis, and unfortunately, they're mostly increasing costs just because feedstocks and so forth are a little bit more expensive in 2007. But it is important to use that 2007 reference year so that we can compare to the cost threshold. The other important value is the basis year, and honestly, in the last few years, probably from 2008 to 2012 or so, there hasn't been much inflation in cost, and so if you had a cost estimate from 2012, it's probably pretty close to the same dollar value as the cost estimate in 2010 or even 2009.

So the basis year is a little bit less critical in terms of the actual cost calculations within H2A, and this was actually a new addition to H2A Version 3 so that people could use cost estimates from different years. They didn't have to have cost estimates in the reference year dollars or do that escalation themselves. So it's an aid for folks so that you can use the cost estimate from the year that you actually got it. Unfortunately, we don't have indexes for 2012, so you'll have to do a little bit of work to get the basis year back to 2010 or something like that, but, 2009, I guess, is the last year that we have indexes for the basis year.

That was an aid to folks to help with the escalation. And as I said, you can certainly look up new indexes if you have access to them and are able to do that. I believe we might have put the reference on the HyARC table. These are the actual cost index tables, and as you can see there's a little reference here for where we got these from. So if you want to look up and see if you can find more recent ones, you can certainly do that.

Moderator:
Thank you very much. I think we're out of questions. But we have one last thing we thought we might want to ask you to speak to, and that is how we have to be careful not to leak things by accident. Sara, you were saying when you use the toolkit function to delete things, I think you mentioned this briefly, how it doesn't selectively delete the feedstock. Does it delete all of the times that feedstock has been input into the spreadsheet trial?

Darlene Steward:
Yeah, that's actually a good point. It's probably not a good idea to enter the same feedstock twice in the feedstock section. First of all, there are only four spaces for feedstock, so you don't want to overrun that. But the delete function, the way that works … OK, so here I'm just showing the feedstock section, and you'll notice we have two feedstocks here, two industrial and natural gases, and then this utility industrial electricity. This probably wasn't a good idea to put two of these in here, but it doesn't really hurt anything, but it probably makes the sensitivity analysis not work quite correctly.

If you click the "Delete" button, it selects, for example, if you select "Energy Feedstock," it's going to select everything that's labeled as feedstock here and delete that. If you wanted to just delete one of these, what you'd have to do is delete both of them and then add back in the one that you really want. It doesn't allow you to select individual ones, but it would leave the utility one alone. So at least it doesn't delete all of them. But it was sort of a tradeoff between a lot of programming and a function that would be useful.

Moderator:
OK. Also, in the toolkit with the sensitivity analysis, if you try to run a sensitivity analysis a second time, will you get a second set of tornado charts and pages, or will it overwrite the one that you did first?

Darlene Steward:
It will overwrite the ones that you did first. Probably the best way to do a series of tornado charts would be to either do one big tornado chart that has all the values in it so you could do like sections, and there are, I think, 50 spaces available on the tornado chart tool, so you can do, for example, total capital costs five times if you want. The other way to do that would be to run the sensitivity analysis, and then save the workbook as a new file and run a new sensitivity analysis with that new file so that you could keep the old one.

Moderator:
OK. Darlene, I think we're out of questions. Thank you so much, and hopefully this has been successfully recorded and it will be up on our website within a few days.

Darlene Steward:
Great. Thank you.

Moderator:
Bye, everybody.

Darlene Steward:
Bye-bye.

Male:
Bye.