International Journal of Hydrogen Energy 56 (2024) 289–301

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Techno-economic assessment of fuel cell-based power backup system as an

alternative to diesel generators in Nepal: A case study for
hospital applications
Rahul Ghimire *, Sagar Niroula, Bishnu Pandey, Abhishek Subedi, Biraj Singh Thapa
Green Hydrogen Lab, Department of Mechanical Engineering, Kathmandu University, Nepal

A R T I C L E I N F O A B S T R A C T

Handling Editor: Dr Mehran Rezaei A fuel cell-based combined heat and power (CHP) system holds significant potential to be a viable alternative to
conventional diesel generators for providing backup power during disruptions. The system generates power with
Keywords: only water as a byproduct, thus promoting environmental sustainability through reduction in greenhouse gas
Fuel cell emissions. This study provides a comprehensive techno-economic assessment for replacement of 488 kW diesel
Green hydrogen
generator that powers a hospital in Nepal during power disruption. The counter power capacity of fuel cell is 500
Techno-economic assessment
kW. The scope of hydrogen generation has been considered both on-site and off-site. The economic analysis
Hospitals
Power backup performed for the on-site hydrogen production resulted in a net present value of USD 42,717 with a corre­
Diesel generators sponding internal rate of return of 8.40 % and a payback period of around 10 years, making it an economically
viable option. The uncertainty and sensitivity analysis revealed the electricity tariff rate as the most significant
cost factor. For off-site hydrogen production, the proposed system is economically feasible if the hydrogen can be
purchased below 3.5 USD/kg.

1. Introduction pumps can’t take the chances of an undisrupted power supply. In

addition, lighting, communication systems, and medical equipment also
1.1. Background require continuous power supply to ensure uninterrupted operations.
That is why power backup systems are an indispensable necessity in
Nepal has significant potential for hydropower electricity genera­ hospitals.
tion; however, it is struggling to expand its electricity infrastructure and In this study, we have taken the case of Dhulikhel Hospital. Dhulikhel
meet growing demand. Power outages are a chronic problem in Nepal Hospital, located in the Kavre district of Nepal, is a non-profit, com­
[1]. Power cuts can last for several hours, disrupting daily life and munity-based hospital established in 1993. The hospital provides ser­
economic activity. The outages also affect hospitals, schools, and other vices such as pediatrics, obstetrics and gynecology, surgery, radiology,
critical institutions, impacting the delivery of essential services. Along forensics, laboratory services, etc., which require a constant power
with distributed domestic generation capacity, primeval power distri­ supply [3]. The hospital operates with an approved load of 1430 kVA
bution infrastructure is leading to technical failures and breakdowns, and has a peak load of around 700 kVA. For power backup, the hospital
resulting in power outages. Additionally, Nepal being in an active has installed four diesel generators with a total capacity of 610 kVA. In
seismic zone and varied land topography, concerns of earthquakes and recent years, Dhulikhel Hospital has also installed solar panels with a
other natural disasters make it challenging to build and subsequently peak load of 275 kW. The solar panels provide continuous power, and
address the damaged electricity infrastructure, resulting in power out­ the rest of the power is drawn from the grid during regular operation.
ages. Evidently, there was a significant power interruption equivalent to During power outages, power is provided with the help of solar and
15,916 MWh in Nepal from 15 December 2022 to 15 January 2024 alone diesel generators during the day and diesel generators alone at night.
[2]. However, diesel generators have several limitations. Firstly, diesel
Despite the scenarios, in places like hospitals, continuous power fuel can be expensive and subject to price fluctuations, making it diffi­
supply is essential. Life support systems such as ventilators and infusion cult to budget for long-term use. The recent price increase of petroleum

* Corresponding author. Department of Mechanical Engineering, Kathmandu University, 28 Kilo, Dhulikhel, Nepal.
E-mail address: [Link]@[Link] (R. Ghimire).

[Link]
Received 22 August 2023; Received in revised form 13 October 2023; Accepted 17 December 2023
Available online 24 December 2023
0360-3199/© 2023 Hydrogen Energy Publications LLC. Published by Elsevier Ltd. All rights reserved.
R. Ghimire et al. International Journal of Hydrogen Energy 56 (2024) 289–301

products is one example of that. The price of diesel in Nepal has that is being used such as Polymer Electrolyte Membrane FC (PEMFC),
increased drastically in Nepal. In just two years, the price of diesel more Molten Carbonate FC (MCFC), Solid Oxide FC (SOFC), Phosphoric Acid
than doubled from NPR 85 in April 2020 to NPR 175 in February 2023 Electrolyte FC (PAFC), Alkaline FC (AFC), Direct Methanol FC (DMFC),
[4]. Nepal is entirely reliant on imports of fossil fuels and spent almost Alkaline FC (AFC), Zinc-Air Fuel Cell (ZAFC), Protonic Ceramic Fuel Cell
200 million USD annually to import fuels such as diesel, petrol, etc., (PCFC), Microbial Fuel Cell (MFC) and Regenerative Fuel Cells [12].
which is about 10 % of the national GDP [5,6]. Secondly, diesel gener­ Fuel cells can be utilized in a variety of applications, depending on the
ators produce higher levels of noise compared to other types of gener­ power output scale required. Unique benefits, including quick start-up
ators, making them less suitable for use in residential and highly time, wide operating temperature range (− 40 to 90 ◦ C), and high spe­
susceptible areas such as hospitals, schools, etc. For a 250 kVA diesel cific energy, have made proton exchange membrane fuel cells (PEMFC)
generator, the maximum noise level at a 5 m distance is 91.1 dB and at a a standout among all types of fuel cells. As a result, PEMFCs are
50 m distance is 70.1 dB [7]. Thirdly, diesel generators require regular commonly employed in both fuel cell vehicles and stationary applica­
maintenance, including oil changes and filter replacements, to keep tions [11–13].
them running efficiently. Also, diesel generators are less fuel-efficient A PEMFC typically consists of a Membrane Electrode Assembly
than other types of generators, and as a result, they consume more (MEA), Gas Diffusion Layers (GDLs), bipolar plates, a humidifier, a fuel
fuel, increasing operating costs. supply system, and a cooling system. MEA is the central component of a
The exhaust from diesel engines consists of a mixture of various PEMFC, which consists of a proton exchange membrane sandwiched
organic substances, including particles and gases, as well as semi- between two electrodes, an anode, and a cathode. GDLs are attached to
volatile components, which are produced as a result of burning diesel both electrodes and serve as the support structure for the catalyst and as
fuel [8]. The main components of diesel engine exhaust such as carbon the pathway for hydrogen and oxygen to reach the MEA. Bipolar plates
dioxide (CO2), carbon monoxide (CO), methane (CH4), volatile organic are used to separate individual fuel cells and serve as the current col­
compounds (VOCs), nitrous oxides (NOx), sulfur oxides (SOx) etc. can lectors for the anode and cathode [14] (see Fig. 1).
have significant impacts on both human health and the environment [9].
1.3. Fuel cell for stationary power backup system
1.2. Fuel cell technology
In a fuel cell, hydrogen fuel and oxygen from the air combine to form
A fuel cell works on the basic principle of electrochemical reactions water and release electrons. This process generates a flow of electricity.
and converts chemical energy stored in hydrogen to electrical energy However, as the electrons flow through the cell’s components, they
through a chemical reaction with oxygen [10] (see Fig. 1). The process encounter resistance, which results in the conversion of electrical energy
occurs in a fuel cell stack, which is made up of several individual fuel into heat. This process, known as resistive heating, is a significant
cells. Each fuel cell consists of two electrodes, the anode, and cathode, contributor to the heat generated in a PEM fuel cell. Additionally, other
separated by an electrolyte membrane. During the power generation chemical and physical processes, such as the mixing and diffusion of
process, the only byproduct produced by hydrogen fuel cells is water, reactants, can also contribute to the heat generated in the fuel cell [15].
resulting in the absence of carbon dioxide emissions or air pollutants Given the significant amount of heat generated by PEMFCs, recov­
that can contribute to smog and health issues [11]. ering heat from their systems is an innovative idea that can boost their
There are different types of Fuel Cells (FC) based on the electrolyte overall efficiency, reduce operational costs, and introduce a new

Fig. 1. Simple fuel cell structure and basic components of PEMFC [27].

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approach to decreasing greenhouse gas emissions. The recovered heat Table 2

from PEMFCs can be utilized for low-temperature heating, such as Existing diesel generators in Dhulikhel Hospital.
warming a room and providing hot water for household use, which Diesel Number Diesel Consumption at Diesel Consumption at
typically requires low-grade heat [16–19]. Hence, these systems are Generators 100 % Load 60 % Load
known as Combined Heat and Power (CHP) systems. Some of the 100 kVA 2 48.8 L/h 29.28 L/h
commercially available fuel cell CHP systems are listed below in Table 1. 160 kVA 1 39.04 L/h 23.40 L/h
Stationary power backup applications of fuel cell CHP systems 250 kVA 1 59.35 L/h 35.61 L/h
include data centers and telecom towers, industrial facilities and
manufacturing plants, residential and commercial buildings, govern­
ment and military facilities, hospitals, and emergency services, etc. A Table 3
few early applications of fuel cells for stationary power include the GPU Existing heating equipment in Dhulikhel Hospital.
and Ballard 250 kW plant at Crane Naval Air Station in Indiana (1991); a Type Total Power Operation Time Total Heat Requirement in a Day
5 kW PEM unit powering home in Albany, New York; and 6 PEM Alpha
Autoclave 90 kW 12 Hours 1080 kWh
units tested by Bonneville Power Administration (2000) [20]. Geyser 64 kW 5 Hours 320 kWh
Fuel cell-based power backup system has also been widely used in Dryer 160 kW 10 Hours 1600 kWh
hospitals to have 24 h of backup power on-site. In 2012, St. Francis
Hospital located in Hartford, Connecticut put in place a 400-kW fuel cell
at its Mount Sanai location. The following year, Hartford Hospital set up 2.1. CO2 emissions
a 1.4-MW fuel cell [21]. New York-Presbyterian Hospital, New York -
Installed a 2.8-MW fuel cell system in 2016, providing backup power. St. Carbon dioxide (CO2) emissions from the burning of diesel fuel in
Joseph’s Regional Medical Center, Paterson, New Jersey - Installed a diesel generators are a major contributor to the global greenhouse gas
1.4-MW fuel cell in 2014, providing backup power and reducing problem. As the CO2 emissions from these sources contribute to the
dependence on the grid. The University of California, San Francisco increasing levels of atmospheric CO2, the use of diesel generators can
Medical Center - Installed a 2.8-MW fuel cell in 2015, providing reliable also contribute to global climate change. The emission of CO2 from
backup power and reducing its carbon footprint [22]. diesel generators currently being used in the Dhulikhel hospital has been
Not only in the United States but fuel cell power backup system has calculated as follows and the properties used to calculate it are shown in
also been utilized in hospitals worldwide. St. Mary’s Hospital, London, Table 4:
UK - Installed a 1-MW fuel cell in 2013, Prince Court Medical Centre, CO2 emissions per year = Density × Volume of fuel used × Energy
Kuala Lumpur, Malaysia - Installed a 2.6-MW fuel cell in 2014, Royal Content × Carbon Content Coefficient × Fraction Oxidized ×
Molecular Weight of CO2
Brisbane and Women’s Hospital, Brisbane, Australia - Installed a 1-MW Molecular Weight of Carbon = 172.75 metric tons/year
fuel cell in 2015, CHU de Bordeaux, Bordeaux, France - Installed a 2.4-
MW fuel cell in 2016, Hospital Nacional de Niños, San Jose, Costa Rica - 2.2. Other emissions
Installed a 1-MW fuel cell in 2017. Israeli medical center has installed a
power backup system in 2022 for an uninterrupted power supply [23]. In addition to CO2, diesel generators also emit other pollutants, such
as nitrogen oxides (NOx) and particulate matter (PM), which can have
2. Existing system in Dhulikhel Hospital negative impacts on air quality and human health. Emissions apart from
CO2 have been calculated with the help of empirical correlations given
For the purpose of power backup, Dhulikhel Hospital has installed by Harun et al. (2014) which are presented in Table 5.
four diesel generators amounting to a total of 610 kVA (see Table 2).
Currently, the diesel generators are being operated at around 60 % ca­ 3. Technical assessment of the proposed fuel cell CHP system
pacity to meet the backup power needed when a grid connection is not
available. In a month, on average 45–50 h of backup power is needed in A fuel cell-based combined heat and power (CHP) operated with the
the hospital to run all the vital medical services smoothly. help of green hydrogen can be a promising solution to replace existing
Dhulikhel Hospital utilizes an electrical heating method to produce diesel generators in Dhulikhel Hospital. Nepal has huge potential in
the heat required for vital operations and systems such as autoclaves, terms of Green Hydrogen production from Hydropower. A study
geysers, and dryers. Though electrical heating can be convenient, it has a
few drawbacks. It has higher energy costs and limited heating capacity. Table 4
It is inefficient in extreme cold and is dependent on electricity. During Properties used for the calculation of CO2 emissions from diesel generators [24].
power outages, the electrical heating also requires backup power for
Properties Value Unit
continuous operation. The existing heating equipment being utilized in
Dhulikhel Hospital is shown in Table 3. Density of Diesel 0.85 kg/liter
Energy Content of Diesel 45.47 MJ/kg
Oxygen is a vital component of medical care in the case of hospitals.
Carbon content coefficient 0.018909 kg of C per MJ
Currently, in Dhulikhel Hospital, the daily average demand for oxygen is Fraction Oxidized 1
110 cylinders. Out of which 60 cylinders are being produced by the PSA Molar mass CO2 44 g/mol
system installed in the hospital. The remaining 50 cylinders of oxygen Molar mass C 12 g/mol
are purchased from a nearby supplier in Panauti. Diesel Consumption 88.3 liter/hour

Table 1
Commercially available fuel cell-based CHP systems.
Company Name of the Product Fuel Cell Type Electrical Power Output Heat Output Electrical Efficiency CHP Efficiency Noise

HyAxiom PureCell® Model 400 PAFC 440 kW 385 kW 50 % 90 % 60 dB @ 10 m

Bloom Energy Hydrogen Fuel Cell SOFC 300 kW n/a 52 % n/a <70 dBA @ 6 feet
Fuel Cell Energy 250 kW Fuel Cell SOFC 250 kW 59 kW 65 ± 2 % 80 ± 5 % <72 dBA @ 10 Feet
Plug Power GenSure HP Fuel Cell System PEMFC 500 kW n/a 49 % n/a <65 dBA at 15 m
HuaDe Hydrogen CarNeu-500 PEMFC 500 kW 435 kW 50 % 93 % n/a

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Table 5 installed in the hospital along with the fuel cell system required to
Other harmful emissions from diesel generators. produce the power and heat required for the hospital. The power supply
Emissions Empirical relations Emission rates in kg/ Emission in metric coming from renewable energy sources such as solar, wind, hydropower,
[24] hours tons/year etc., is supplied to the PEM electrolyzer. In this study grid electricity is
NOx 4.25 * 10− 3 *P1.15 * 2.92 2.12 used in the electrolyzer. Nepal’s electricity supply is entirely derived
N from hydropower, which makes it 100 % renewable. In the electrolyzer,
CO 15.32 * 10− 3 *P0.68 0.73 0.53 the electricity splits deionized water into hydrogen and oxygen through
*N the process of electrolysis. Hydrogen gas is then stored in a buffer tank
HC 4.86 * 10− 3 *P0.69 * 0.24 0.18
N
which is then compressed and stored in a high-pressure storage tank.
SO2 2.31 * 10− 3 *P * N 0.68 0.49 The compressed hydrogen is then used to produce power whenever a
backup is needed.
P = power (kW) x Engine Load (60 % Load) = 488 kW × 0.6 = 292.8 kW.
The oxygen generated by the electrolysis process is stored in a buffer
N (number of Engines) = 1.
The above relations are valid for generators with power <2000 kW.
tank and purified and compressed in a cylinder to be used for medical
purposes. The oxygen generated from electrolysis is about 95–96 % pure
and can be used for medical purposes with some purification to remove
conducted by Singh et al. [26] suggested that in Nepal, the potential for
traces of water vapor and hydrogen [28]. During the electrolysis process
producing hydrogen has been noted to be 63,072 tons or 3,153,360 tons
heat is generated which can be recovered using a heat exchanger to
using surplus energy at 20 % and 100 % capacity, respectively. This
make use of the generated heat for other heating purposes. The process
amount of production could potentially replace around 20 % of the
flow diagram of the entire hydrogen production, compression and
demand for fossil fuels in the year 2030. By using electricity at 80 % of
storage including heat recovery and oxygen purification and storage is
the regular price, the cost of producing one unit of green hydrogen could
represented in Fig. 4. When the backup power is needed, the stored
be very low, making it a cost-effective option compared to other coun­
hydrogen is then supplied to the fuel cell stack. In fuel cells, hydrogen
tries [26]. In this section, the fuel cell-based CHP system has been
reacts with oxygen from the air to produce electricity and only water as a
assessed in detail from the technical perspective as a potential replace­
byproduct. Air is filtered and humidified before entering the fuel cell.
ment for diesel generators, especially in hospitals in Nepal taking the
The air is humidified to maintain the appropriate level of moisture
case of Dhulikhel Hospital (see Fig. 1).
within the fuel cell, which is necessary for optimal performance. For that
In this study, two different approaches have been investigated for
purpose, an air compressor, air filter, air cooler, and air humidifiers are
obtaining the required hydrogen to power the fuel cell system as shown
integrated into the fuel cell system to supply clean and humidified air to
in Figs. 2 and 3 First is the on-site hydrogen production in the hospital
the fuel cell. The fuel cell produces a DC power supply which needs to be
itself. Another scenario is to purchase the required hydrogen from a
converted into AC to be used in medical equipment in the hospital. For
centralized hydrogen production facility. While Nepal currently does
that purpose, a DC/AC converter is used (see Fig. 5).
not have any large-scale commercial hydrogen production, there have
been studies exploring the possibility of producing green hydrogen in
3.1.1. System sizing
Nepal and the associated production costs (see Fig. 4).
To replace the 488 kW diesel generators currently being installed in
Dhulikhel Hospital, a fuel cell with an electrical output power of 500 kW
has been selected. The hydrogen required by the fuel cell system is
3.1. Case I: On-site hydrogen production
calculated based on the correlation given in Ref. [29].
Peo ×μf
For the on-site hydrogen production, an electrolyzer needs to be H2 usage = 3.04054054 × 10− 4
× ηFC m3/h

Fig. 2. Fuel cell CHP system with on-site hydrogen production.

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Fig. 3. Fuel cell CHP system with the purchase of hydrogen from a centralized production facility.

Fig. 4. Hydrogen production process flow diagram.

Where, Peo = Power rating of the fuel cell. on most of the commercially available combined heat and power sys­
ηFC = Electrical efficiency of the fuel cell. tems as shown in Table 1.
The electrical efficiency of the fuel cell has been taken as 50 % based H2 usage = 288.85 m3/h = 25.79 kg/h

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Fig. 5. Fuel cell system process flow diagram.

Similarly, O2 usage = 1.52027027 × 10− 4

×
Peo ×μf
m3/h = 144.43 Nm3 volume has been selected for this system.
ηFC
Using the ideal gas formula, the mass of hydrogen the buffer tank can
m3/h
store can be calculated.
Air usage = 144.43/0.21 = 687.74 m3/h.
Based on the above hydrogen requirement, the sizing of the elec­ PV =
m
RT Eq1
trolyzer has been done. The fuel cell system has been designed for on M
average 2 h of electricity backup per day. So, the total hydrogen Using Eq. (1), the mass of the hydrogen, a buffer tank of 10 Nm3
requirement per day is 51.58 kg. To reduce the cost of the electrolyzer, a volume capacity can store at 10 bar pressure, comes out to be 4.19 kg.
250 kW electrolyzer has been selected which can produce the required This is equivalent to the amount of hydrogen that can be produced by
51.58 kg of hydrogen in 12 h. The production rate of hydrogen from the the 250 kW electrolyzer in 1 h.
250 kW electrolyzer has been taken from the data provided by the The design of the compressor required to compress the produced
supplier. It is estimated by a mass balance that approximately 9 kg of hydrogen from 10 bar pressure to 250 bar pressure has been done using
water is needed to produce 1 kg of hydrogen, assuming no losses [30]. ASPEN Plus software. Taking the efficiency of the compressor to be 80
Total hydrogen production = 51.58 kg/day = 4.29 kg/h. %, the power required to compress the produced hydrogen is found to be
Water usage for electrolysis = 9 × 4.29 kg/h = 38.685 kg/ h. 14 kW, and the temperature of hydrogen gas coming out of the
Oxygen production from electrolysis = 1.52027 × 10− 4
× Peμ×ηE m3/h compressor is high which needs to be cooled using a heat exchanger
E
3
= 28 m /h = 40 kg/h before being stored in the tank. The cooling system attached to the
Based on the calculation of water usage for electrolysis, a deionizer compressor cools the hydrogen gas before it is stored in the storage tank.
having the maximum capacity of producing 117 kg/h of deionized water To utilize the oxygen coming out of the electrolyzer, the oxygen is first
has been selected. The hydrogen produced from the electrolyzer is then purified. The purification of the oxygen coming out of the electrolyzer
stored in a buffer tank before compressing it to store in a high-pressure can be done by passing it through a molecular sieve to remove any traces
storage tank. The buffer storage tank helps to smooth out any fluctua­ of hydrogen and water vapor present in it. The purified oxygen is then
tions in hydrogen production caused by changes in the electrolyzer input compressed to 150 bar and then stored in medical oxygen cylinder. The
power or other factors. This is important because the amount of compressor design is done in ASPEN Plus software, and it is found that to
hydrogen produced by the electrolyzer is typically not constant over compress 4 kg/h of oxygen to 150 bar pressure, a 6-kW compressor is
time and can vary based on a variety of factors such as changes in the required. But the temperature of the gas rises up to 540 ◦ C because of the
electrical power supply or the temperature and pressure of the electro­ compression process. So, a heat exchanger is also added between the
lyte. Additionally, the buffer storage tank can help to ensure a stable compressor and the oxygen cylinders to decrease the temperature from
supply of hydrogen to the storage unit, by providing a consistent source 540 ◦ C to 20 ◦ C. For that, 15 kg/h of cold fluid needs to be supplied to the
of hydrogen that can be drawn from as needed. A buffer tank having a 10 heat exchanger.

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To recover the heat generated from the PEM electrolysis process, a Table 6).
heat recovery unit has been designed. The system includes a heat After calculating the total equipment cost, additional costs such as
exchanger, which moves heat from the coolant to water, and a pump equipment installation cost and location factor have been added to ac­
that circulates the coolant. The design for both the heat exchanger and count for other direct and indirect costs. Equipment installation costs
pump was generated using ASPEN Plus software. The electrolyzer is have been taken as 10 % of total equipment cost which accounts for costs
cooled by 100 L/h of coolant, which requires a pump with 0.75 kW incurred during the installation such as piping and other fittings
power and 20 m head to circulate it through a shell and tube heat necessary, electrical connections required, etc. The location factor has
exchanger. This heat exchanger has an area of 2.35 m2 and is composed been taken as 1.12 from Ref. [25] for the Southeast Asia region which
of 35 tubes that are each about 1.2 m long. The compressed hydrogen is accounts for costs such as costs of shipping or transporting equipment to
then stored in a high-pressure storage tank before it is used for power the site, import duties or other local tariffs, etc (see Table 6). To compare
backup applications in fuel cells. Using the ideal gas formula, to store the economics for the replacement of traditional diesel generators with
hydrogen at 250 bar needed for one day of power backup, a storage tank the fuel cell-based power backup system, the operating costs of both of
of 4.29 m3 volume is needed. Keeping some tolerance in the design to the systems have been calculated. The annual operating cost of the
account for losses and increases demand, a 5 m3 storage tank was existing system has been calculated with the help of interviews con­
selected for the study. ducted in a field study of Dhulikhel Hospital and the data provided by
the hospital as shown in Table 7. Some missing parameters have been
taken from different literature as a reference.
3.2. Case II: Purchase of hydrogen from centralized production facility

Another approach is to purchase hydrogen from a centralized pro­ 4.1. Annual operating cost of the existing systems
duction facility to make use of economy of scale. As the production scale
increases, the unit production cost of hydrogen decreases making it The proposed fuel cell system has a power output of 500 kW with a
economically more viable [31]. A study performed by Thapa et al. 26 peak electrical output of 734 kW. At the same time, the CHP system can
has explored the hydrogen production cost in Nepal in different sce­ generate 435 kW heat output. So, assuming 2 h of daily operation for the
narios. During the off-peak time, normal time, and peak load time, the fuel cell system, it can generate 870 kWh of heat. In this study, the CHP
variation in hydrogen production cost with electricity tariff rates has system has been designed to replace 870 kWh of heat currently being
been studied. It has been found that at business as usual (S1-UEC) (usual used in autoclaves, geysers, and dryers. While calculating the operating
tariff rate fixed by Nepal Electricity Authority (NEA)), hydrogen pro­ cost of the existing system, the cost of producing the 870 kWh of heat has
duction costs vary significantly from US $5.85 during off-peak to almost been added to the operating cost of the existing system, and calculations
US $12.75 during peak load time. If the electricity can be acquired at have been done accordingly (see Table 7).
lower tariff rates, then the hydrogen production cost decreases as well.
In the best-case scenario, the cost of electricity to produce hydrogen 4.2. Annual operating cost of the proposed fuel cell CHP system
ranges from a minimum of 1.17 US $/kgH2 to a maximum of 6.04 US
$/kgH2 when surplus electricity is utilized during the off-peak load time The annual operating cost of the proposed fuel cell CHP system has
which can be seen in Fig. 6. been calculated based on data from various sources as shown in Table 8.
The electricity cost has been taken from the standard rate provided by
4. Economic assessment Nepal Electricity Authority (NEA). The feed and cooling water cost has
been calculated based on the rate provided by Kathmandu Upatyaka
Out of all the commercially available CHP systems, as shown in Khanepani Limited (KUKL) of NPR 0.07/liter. The annual maintenance
Table 1, the CarNeu-500 system provided by HuaDe Hydrogen is cost for the electrolyzer and the fuel cell system has been estimated
selected for this study. All the capital costs of the fuel cell system have based on the study conducted in Refs. [33,34] respectively. The HuaDe
been taken from the quotation provided by different suppliers (see Hydrogen fuel cell system has a total stack life of 40,000 h. So, over the

Fig. 6. Hydrogen production cost for different tariff rate scenarios (adapted from Ref. 26).

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Table 6
Capital costs (CAPEX) for the proposed fuel cell CHP system.
System Components Size Capital Costs Manufacturer/Source Applicability
/Description

Fuel cell system Fuel cell stack module 500 kW In USD In NPR
Pre-treatment module (Electrical 597,000 7,76,10,000 HuaDe Hydrogen Both Case I and Case
Cooling module Output) II
Pre-treatment module
Storage tank Buffer Storage Tank 10 Nm3 21,950 28,53,500 Light Bridge Inc. Case I
High-pressure storage tank 5 m3 20,000 26,00,000 Taian Strength Equipments Co. Both Case I and Case
Ltd. II
Compressor with Cooling High-pressure compressor with Heat 250 Bar 38,484 50,02,920 Jiangsu minnuo Group Co. Ltd. Case I
Unit Exchanger
Electrolyzer PEM Electrolyzer 250 kW 188,569 2,45,13,970 Jiangsu minnuo Group Co. Ltd. Case I
Deionizer Water Deionizer 117 kg/h 3990 5,18,700 Light Bridge Inc. Case I
Pump Coolant Pump 20 m Head, 0.75 145 18,850 Shandong Zhongrong Fuxing Case I
kW Co., Ltd.
Compressor Oxygen Compressor 150-250 Bar 16,900 21,97,000 Maruti Pneumatics Case I
O2 Purification System Molecular Sieve Technology 40 kg/h 19,500 25,35,000 ASPEN PLUS Economic Case I
Analyzer
Heat Exchanger Heat Recovery System 2.35 m2 area 3056 3,97,280 DSB Engineering Case I

Additional Costs Unit Cost (in USD) Source

Case I Case II
Total Equipment Costs 909,594 637,000
Total Equipment Installation Cost 10 % of the total equipment cost 90,959 63,700 Author Estimation
Contingency Costs 10 % of other CAPEX 100,055 70,070 Author Estimation
Location Factor 1.12 1,232,681 863,262 [25]

Table 7
Annual operating cost of the existing system in Dhulikhel Hospital.
System Unit Unit Cost (In NPR) Total Annual Cost (In NPR) Total Annual Cost (In USD) Source

Diesel Generators
Diesel 294 L/day 172/liter 1,84,81,176 142,163 [4]
Labor Cost 1 1200/day 4,38,000 3369 Dhulikhel Hospital
Maintenance 488 kW 4550/kW 22,20,400 17,080 [32]
Coolant 10 L 7000 70,000 538 Dhulikhel Hospital
Heating Equipment 870 kWh/day 9/kWh 28,57,950 21,984 Dhulikhel Hospital
Oxygen Cylinders 50 cylinders/day 400 per cylinder 73,00,000 56,154 Dhulikhel Hospital

Total 3,13,67,526 241,288

Table 8
Annual operating cost of the proposed fuel cell system.
System Unit Unit Cost (In Total Annual Cost (In Total Annual Cost (In Source Applicability Case
NPR) NPR) USD)

Electrolyzer Case I
Electricity 250 kW 9/kWh 98,55,000 75,808 NEA
Maintenance 2.5 % of CAPEX 6,12,849 6,12,849 4714 [33]
Feed Water 387 L/day 0.07/liter 9888 76 KUKL
Coolant 280 L/day 0.07/liter 7154 55 KUKL
Fuel Cell Both Case I and Case II
Maintenance 1000 kWh/day Ct € 3/kWh 15,33,000 11,792 [34]
Nitrogen 10 m3/min 50/m3 20,44,000 15,723 Supplier
Coolant 280 L/day 0.07/liter 7154 55 KUKL
Auxiliary Unit 14.75 kW 9/kWh 5,81,445 4473 ASPEN PLUS Case I
Electricity
Labor 1 1200/day 4,38,000 3369 Dhulikhel Both Case I and Case
Hospital II
Miscellaneous Costs 5 % of all other 7,54,066 7,54,066 5801 Author Both Case I and Case
OPEX Estimation II

service period of 25 years, stack replacement is not necessary and hence been calculated. It has been found that the OPEX of the existing system is
stack replacement cost has not been included in this study. Miscella­ much greater than the OPEX of the proposed CHP system. So, the dif­
neous costs equal to 10 % of all other OPEX have been included to ac­ ference in OPEX has been taken as the annual cost saving and will be
count for other indirect costs during the operation of the fuel cell system. referred to as revenue for the proposed CHP system in the economic
analysis. Based on these cost data, cash flow, Net Present Value (NPV),
payback period, and Internal Rate of Return (IRR) has been calculated to
4.3. Case I: On-site hydrogen production compare the existing system and the proposed system economically. The
payback period is the time a project takes to pay back what it cost. It is a
The total CAPEX and OPEX for the fuel cell-based CHP system have

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simple method, and the time value of money is not considered in this. If Table 9
the time value of money is incorporated, then it is called discounted Economic parameters for the on-site hydrogen production case.
payback period. The acceptability of an investment project can also be Economic Analysis Parameters Value
determined by comparing the present value of all cash inflows against
Service Life 25 Years
that of all cash outflows. The difference between the present value of Discount Rate 8%
cash inflow and the present value of cash outflow is called Net Present Total CAPEX (In USD) 1,232,681
Value (NPV) which indicates whether the project is acceptable or not Total Annual OPEX (In USD) 121,810
[35]. Payback Period 10.32 years
Discounted Payback Period 22.68 years
∑
N Net Present Value (NPV) (In USD) 42,717
An
NPV (i) = Eq2 Internal Rate of Return (IRR) 8.40 %
n=0
(1 + i)n

Where, An = net cash flow at the end of period n This research supports our calculated payback period of approximately
i = Discount rate or minimum attractive rate of return (MARR). 10 years. The slightly longer payback period can be attributed to the fact
N = Service life of the project. that initial equipment purchases, and transportation costs are higher in
Another economic analysis factor is the internal rate of return (IRR) Nepal due to the necessity of importing all the necessary equipment.
which refers to the interest rate at which the present value of a project’s
cash inflows is equal to the present value of its cash outflows, resulting in 4.3.1. Uncertainty and sensitivity analysis
a break-even scenario. Taking the service life of the fuel cell CHP system The CAPEX and OPEX for the project have been taken from various
to be 25 years and the discount rate 8 %, all the economic parameters literature as well as from the quotations provided by various manufac­
have been calculated taking the cost saving as the revenue. turers. So, there is uncertainty involved in those data as they can vary
After estimating the total CAPEX and annual operating costs over the from manufacturer to manufacturer. To mitigate the risk involved due to
service period of 25 years, cumulative cash flow and discounted cu­ the uncertainty of data, Monte Carlo simulation is performed which is a
mulative cash flow diagrams have been drawn to find the payback widely used method in the field of economic analysis. It involves the use
period and the discounted payback period of the proposed CHP system of probability distributions to simulate various scenarios and assess the
(see Fig. 7). Based on the cash flow diagram, NPV has been calculated potential outcomes of a given economic decision. This type of analysis is
using Eq. (2). The NPV comes out to be USD 42,717 suggesting that the particularly useful when dealing with complex systems or when there is
proposed system is economically feasible. The IRR comes out to be 8.4 % a high degree of uncertainty involved. This analysis is used to provide a
for the electricity tariff rate of NPR 9/kWh. The simple payback period large range of possible outcomes and their associated probabilities by
comes out to be around 10 years and the discounted payback period is running 10,000 simulations. Microsoft Excel software runs the Monte
around 22 years (see Table 9). Carlo simulation with the help of an open-source add-in XL Risk. As
In one study conducted by Acha et al. [36] in 2020, they performed a shown in Table 10, the optimistic, pessimistic, and most likely values for
similar economic analysis on a 460-kW fuel cell CHP system in a different cost parameters have been estimated and provided into the
food-retail sector and compared it with a traditional IC engine CHP software to generate 10,000 random values for each cost parameter
system and found that the payback period for the fuel cell CHP system is between the provided range and the corresponding NPV is calculated
in between 6 and 10 years depending upon different load conditions. and plotted to evaluate the range of net present values and calculate

Fig. 7. Cash flow diagram showing the payback and discounted payback periods.

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Table 10 NPV of the proposed system increases. Fuel cell CAPEX is also a signif­
Parameters used for uncertainty analysis using Monte Carlo simulation. icant parameter. If the cost of the fuel cell system decreases, the fuel cell-
Cost Parameters Optimistic Most Likely Pessimistic based CHP system becomes more attractive.
Considering the earlier uncertainty analysis, which points out that
CAPEX
Electrolyzer USD 150,000 USD 188,500 USD 250,000 the electricity tariff rate plays a crucial role in our study, the variation in
System economic parameters such as NPV and IRR with respect to electricity
Fuel Cell System USD 500,000 USD 597,000 USD 650,000 tariff rate has been studied (see Fig. 10). The findings revealed that with
Other 5 % of all other 10 % of all other 15 % of all other the decrease in electricity tariff rate from the current NPR 9/kWh, the
Contingency CAPEX CAPEX CAPEX
Costs
NPV increases significantly. As the electricity tariff rate decreased to
OPEX NPR 3/kWh from NPR 9/kWh, the NPV increased drastically from USD
Diesel Cost NPR 150/Liter NPR 175/Liter NPR 190/Liter 42,717 to USD 452,727. This substantial increase in NPV signifies a
Electricity Cost NPR 5/kWh NPR 9/kWh NPR 12/kWh substantial improvement in the project’s financial feasibility. Addi­
Miscellaneous 4 % of all other 5 % of all other 6 % of all other
tionally, the corresponding IRR also saw a notable increase from 8.4 %
Costs OPEX OPEX OPEX
Fuel cell NPR 3000/day NPR 4200/day NPR 5000/day to 12.07 %. This demonstrates that not only does a reduction in elec­
maintenance tricity tariff rates positively affect the NPV, but it also enhances the
Electrolyzer 2 % of 2.5 % of 3 % of project’s overall investment attractiveness by increasing the overall rate
maintenance Electrolyzer Electrolyzer Electrolyzer of return for the project. While the project is currently feasible under the
CAPEX CAPEX CAPEX
existing electricity tariff rate, a fuel cell-based combined heat and power
(CHP) system would become a more appealing option for Nepal if the
probabilities of the risk associated with the project. electricity tariff rate were to decrease. This suggests that a reduction in
From the Monte Carlo simulation it has been found that the the electricity tariff rate would increase the competitiveness of a fuel
maximum value of NPV obtained is USD 638,266 with an IRR of 14.68 % cell-based CHP system compared to the current backup system utilizing
and the minimum value of NPV is USD -293,579 with an IRR of 4.89 %. diesel generators. Such a shift could lead to more sustainable and
The project is economically feasible from the perspective of NPV in 87.5 economically advantageous energy solutions, ultimately contributing to
% of all possible cases which can be seen in Fig. 8 and NPV comes out to the growth and development of Nepal’s energy sector.
be negative 12.5 % of the time in which the IRR is less than the discount
rate of 8 % (see Fig. 8).
Sensitivity analysis has been done to find out the most sensitive 4.4. Case II: Purchase of hydrogen from centralized production facility
parameter that affects the NPV. It gives how the change in input vari­
ables impacts the outcome of a particular economic model. It has been The CAPEX of the fuel cell system has been calculated based on the
found that in the case of the proposed fuel cell CHP system, the most cost provided by different suppliers. The operating cost of the systems
sensitive cost parameter is the electrolyzer electricity cost which has a greatly depends upon the purchase cost of the hydrogen. The purchase
negative correlation which means that with the decrease in electricity cost of the hydrogen has been calculated based on the study performed
costs, the NPV of the project increases (see Fig. 9). The second most in Ref. [26]. The study explored the potential cost of green hydrogen
sensitive parameter in this economic model is the diesel price which has production in Nepal. In this study, the annual operating cost of the
a positive correlation. It means that with the increase in diesel price, the system has been calculated at a different cost of hydrogen and economic
parameters have been calculated accordingly based on the service life of

Fig. 8. Cumulative distribution of NPV obtained from Monte Carlo simulation.

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Fig. 9. Sensitivity analysis showing the effect of different cost parameters on NPV.

Fig. 10. Variation on NPV and IRR with respect to electricity tariff rate.

25 years and a discount rate of 8 % (see Table 11). discount rate. The CHP system can only be feasible from the perspective
In the case of off-site hydrogen production in a centralized facility, of NPV only when the hydrogen can be purchased at a cost below 3.5
the operating cost, which includes the purchase cost of hydrogen, plays a USD/kg. For a hydrogen purchase cost of 3 USD/kg, the NPV value of the
significant role in the overall economics of the CHP system. As the project comes out to be USD 68,805 and the corresponding IRR value is
purchase cost of hydrogen decreases, the NPV and IRR value increases 8.92 %.
accordingly which can be seen in Fig. 11. For the purchase cost of Case I, on-site hydrogen production, seems economically more
hydrogen below 3.5 USD, the CHP system is not economically feasible as appealing than case II, purchase of required hydrogen. This is because of
the NPV is negative and the IRR is also significantly lower than the the fact that in case of the on-site hydrogen production, the heat
generated from the electrolyzer as well as the oxygen produced from the
electrolyzer system can be utilized in the hospital which significantly
Table 11
Economic analysis parameters for the case of off-site hydrogen production. boosts the overall economics of the system. Conversely, in the case of
purchasing hydrogen, we miss out on the opportunity to utilize both the
Economic Analysis Parameters Value
heat and oxygen generated by the electrolyzer system for various ap­
Service Life 25 Years plications within the hospital. This makes it a less economically attrac­
Discount Rate 8%
tive option, especially considering the specific scale and application of
Total CAPEX (in USD) 863,262
Total Annual OPEX Varies with the cost of Hydrogen the CHP system we are dealing with.

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Fig. 11. Variation on NPV and IRR with the unit hydrogen production cost.

5. Conclusion costs, generates lower noise, produces no emissions, and helps reduce
reliance on imported fossil fuels.
In this study, the fuel cell-based combined heat and power (CHP) is
assessed both technically and economically for the replacement of Declaration of competing interest
existing diesel generators being used for backup power in Dhulikhel
Hospital. Two cases have been generated and the system has been The authors declare that they have no known competing financial
designed accordingly for both cases. The first case is the production of interests or personal relationships that could have appeared to influence
required hydrogen for the fuel cell by placing an on-site electrolyzer in the work reported in this paper.
the hospital itself. Another case is the purchase of required hydrogen
from a centralized hydrogen production facility in cylinders. All the data Acknowledgment
related to costs has been obtained from various sources and CAPEX and
annual OPEX have been estimated. The OPEX of the existing system has This research was supported by Energize Nepal grant funded by the
been compared with the OPEX of the proposed fuel cell system and the Norwegian Ministry of Foreign Affairs (MFA) through the Royal Nor­
cost saving while using the fuel cell system has been taken as the reve­ wegian Embassy (RNE).
nue. Economic analysis has been performed and NPV and IRR have been
calculated for both of these cases. From the economic analysis, it has References
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