Solar-Driven Green Hydrogen in Iran: Techno-Economic Analysis and Deployment Roadmap

4.1. Technical and Integration Challenges

• Electrolyzer durability and dynamic operation: Commercial PEM and alkaline stacks in 2025 typically achieve 65–80 % LHV efficiency, but frequent start–stop cycles and partial-load operation under direct PV coupling accelerate catalyst and membrane degradation. High ambient temperatures in Iran (>45 °C in summer) further increase cooling demand and can shorten stack lifetime if active thermal management is not implemented.
• Dust and high-temperature effects on PV performance: In central and southern Iran, airborne dust can reduce annual energy yield by 15–25 % without automated cleaning or optimized tilt angles [31,32].
• Balance-of-plant losses: Water deionization, gas drying, and compression to 30–200 bar consume 8–12 % of input electricity, often underestimated in early studies.

4.2. Water Availability – The Critical Constraint in Arid Regions

Iran’s highest solar resources (DNI 5.2–5.8 kWh/m²/day in Yazd, Kerman, and Sistan-Baluchestan) coincide with severe water stress. Producing 1 kg of H₂ requires ≈ 10–12 L of pure water plus 30–50 L of raw water when reverse-osmosis desalination is included. For a 100 MWₚ plant operating at PSH = 5.3 kWh/kW/day, annual water demand reaches 180 000–250 000 m³ — comparable to the consumption of a small town. Integrated solar-driven desalination (PV-RO + electrolysis) is technically feasible but increases LCOH by 0.4–0.8 USD/kg in water-scarce regions [33].

Given Iran’s extensive southern coastline along the Persian Gulf and Gulf of Oman (>5800 km), seawater desalination powered by renewable energy offers a viable and increasingly attractive solution for supplying both electrolysis-grade water and co-producing fresh water for local use. A 100 MWₚ solar-powered electrolyzer plant in southern provinces (e.g., Hormozgan, Bushehr, or Sistan-Baluchestan) would require approximately 180 000–250 000 m³ of desalinated water annually. Integrating photovoltaic- or wind-driven reverse osmosis (RO) units can meet this demand while simultaneously generating surplus fresh water for agriculture, industry, or municipal supply [34,35]. Recent techno-economic studies indicate that solar/wind-powered desalination in southern Iran can reduce the water-related component of LCOH by 0.4–0.8 USD/kg compared to trucking or long-distance pipeline transport of fresh water [33,36].

Furthermore, hydrogen combustion or fuel-cell operation produces ultra-pure water as a by-product (≈ 9 kg H₂O per kg H₂). Although round-trip energy losses render large-scale water recovery from hydrogen combustion inefficient, localized recovery in integrated desalination–electrolysis hubs can marginally improve the overall water balance and enhance system sustainability in water-stressed coastal regions [37].

Thus, co-locating large-scale green hydrogen projects with renewable-powered desalination along Iran’s southern coast not only resolves the water constraint but also creates significant co-benefits through fresh-water co-production and reduced environmental impact of brine discharge when properly managed.

4.3. Economic and Policy Barriers in Iran

• Absence of carbon pricing and subsidies on natural gas keep grey hydrogen (SMR) below 1.5 USD/kg, while current green H₂ LCOH in Iran remains 4.5–6.5 USD/kg.
• Limited long-term power purchase agreements (PPAs) and currency risk deter international financing.
• Electrolyzer and high-purity component imports face sanctions-related delays and 30–50 % cost premiums.

4.4. Future Prospects and Recommended Pathways for Iran

• Hybrid solar–wind configurations in coastal (wind) + desert (solar) corridors) to raise electrolyzer capacity factor from ~25 % (solar-only) to >45 %.
• Co-location with existing industrial clusters (Bandar Abbas, Assaluyeh, and Isfahan refineries) to utilize waste heat, cooling water, and pipeline infrastructure.
• Ammonia as export carrier: Iran already possesses large ammonia/urea plants; green ammonia synthesis from solar H₂ can leverage existing port and shipping infrastructure.
• Policy recommendations

  ○

  Introduce feed-in tariffs or Contracts-for-Difference (CfD) for green hydrogen/ammonia.

  ○

  Establish national low-carbon hydrogen certification and guarantees of origin.

  ○

  Create “Green Hydrogen Valleys” in high-resource, water-constrained provinces with mandatory solar desalination integration.

4.5. Rationale for the Two-Phase Green Hydrogen Valley Deployment Strategy in Southern Iran

The proposed Green Hydrogen Valleys are deliberately concentrated in two primary hubs (Persian Gulf Corridor and Chabahar) rather than a continuous coastal strip. This strategic choice is driven by four evidence-based technical, economic, and infrastructural considerations (Figure 7):

• Solar–Wind Hybrid Resource Complementarity

While solar irradiance remains uniformly high across the entire Makran coast (5.2–5.5 peak sun hours/day), onshore wind speeds in the intermediate Makran region (between Bandar Abbas and Chabahar) are significantly lower, typically below 6.5 m/s at 100 m hub height, resulting in solar-only dominated hybrid capacity factors (<30 %) [51,52]. In contrast, the Persian Gulf corridor and Chabahar benefit from stronger and more consistent coastal wind regimes, enabling capacity factors exceeding 45 % in hybrid configurations.

2.

Proximity to Existing Industrial and Export Infrastructure

The Bushehr–Assaluyeh–Bandar Abbas cluster already hosts the world’s largest gas processing facilities, multiple ammonia/urea plants, and deep-water export terminals, allowing rapid integration of green hydrogen into existing value chains. Chabahar, as Iran’s only oceanic port, offers direct access to high-growth Asian markets. Intermediate Makran sites currently lack comparable industrial clusters and port infrastructure [38,50].

3.

Water and Hydrogen Transport Economics

Although seawater is universally available, transporting either desalinated water or compressed/liquefied hydrogen over distances exceeding 400 km from intermediate sites to the nearest consumption or export hub would add 0.6–1.2 USD/kg to the levelized cost — rendering such locations economically unattractive in the 2025–2035 timeframe [33,45].

4.

Risk-Managed, Phased Scaling Strategy

Focusing initial gigawatt-scale investments on two proven locations minimizes technology, financing, and offtake risks while generating early revenue streams. This hub-and-spoke approach mirrors successful precedents in Saudi Arabia (NEOM → progressive coastal expansion) and Australia (Pilbara core → gradual regional infill), ensuring LCOH below 3 USD/kg by 2030 before nationwide Makran infill post-2035 [5,16].

Thus, the deliberate gap between Bandar Abbas and Chabahar reflects a deliberate, economically optimal sequencing rather than a resource limitation, transforming apparent geographic constraints into a competitive first-mover advantage.

To translate the identified potential into a realistic national deployment strategy, Figure 7 presents a two-phase roadmap for Green Hydrogen Valleys in southern Iran. Phase I prioritizes two high-impact hubs with existing industrial clusters and superior wind–solar complementarity, while Phase II targets progressive development of the Makran coast once supporting infrastructure matures (Section 4.5).

Figure 7. Proposed phased deployment of Green Hydrogen Valleys along Iran’s southern coastline. Phase I (2025–2035, dark green) focuses on two strategic hubs: (i) the Persian Gulf Energy Corridor (Bushehr–Assaluyeh–Bandar Abbas), leveraging existing gas infrastructure, strong coastal wind resources, and ammonia export terminals; and (ii) Chabahar, Iran’s only oceanic port for direct access to Asian markets. Phase II (2035–2045, light green with hatching) envisages gradual infill of the intermediate Makran coast as long-distance hydrogen pipelines, HVDC transmission, and large-scale offshore desalination become economically viable. This staged approach minimizes initial capital risk while establishing Iran as one of the world’s lowest-cost exporters of green hydrogen and ammonia by 2035–2040. Source: Author's elaboration.

Figure 7. Proposed phased deployment of Green Hydrogen Valleys along Iran’s southern coastline. Phase I (2025–2035, dark green) focuses on two strategic hubs: (i) the Persian Gulf Energy Corridor (Bushehr–Assaluyeh–Bandar Abbas), leveraging existing gas infrastructure, strong coastal wind resources, and ammonia export terminals; and (ii) Chabahar, Iran’s only oceanic port for direct access to Asian markets. Phase II (2035–2045, light green with hatching) envisages gradual infill of the intermediate Makran coast as long-distance hydrogen pipelines, HVDC transmission, and large-scale offshore desalination become economically viable. This staged approach minimizes initial capital risk while establishing Iran as one of the world’s lowest-cost exporters of green hydrogen and ammonia by 2035–2040. Source: Author's elaboration.

4.6. Conclusion on Iranian Context

Iran combines world-class solar resources (average PSH 4.8–5.5 across 70 % of territory) with acute water scarcity of freshwater and continued heavy subsidization of fossil fuels. Under these unique conditions, solar-driven hydrogen can become competitive only when (i) water supply is secured through renewable desalination or wastewater reuse, (ii) electrolyzers are sized for hybrid renewable input, and (iii) strong policy instruments close the cost gap with grey hydrogen. If these three conditions are met, Iran has the potential to evolve from a fossil hydrogen producer into one of the lowest-cost green/ammonia exporters by 2035–2040.

5.1. Hydrogen Production Performance of the 100 kW Solar-Powered System

Daily and annual hydrogen production rates for the 100 kWₚ off-grid PV-electrolyzer system were calculated across a wide range of peak sun hours (PSH: 3.5–5.5 kWh/kWp/day), covering conditions from moderate European locations to Iran's high-irradiance regions (detailed numerical results are fully reproducible using the Python script provided in Supplementary Material S1).

In locations representative of central Iran (PSH ≈ 5.0–5.15 kWh/kWp/day), the system produces 8.94–9.22 kg of hydrogen per day, equivalent to 3.10–3.20 tonnes annually at 95% availability. In the sunniest provinces of southern Iran (Yazd, Kerman, Fars, and Sistan-Baluchestan), where average PSH exceeds 5.3 kWh/kWp/day, daily production reaches approximately 9.8 kg H₂ and annual output approaches 3.4 tonnes. These yields are 55–60% higher than identical systems in northern/central Europe (PSH ≈ 3.5 kWh/kWp/day), clearly highlighting the substantial advantage of Iran’s superior solar resource.

5.2. Round-Trip Efficiency and Implications for Energy Storage

A consistent round-trip efficiency of 23.8% is obtained across all studied solar resource levels. This value highlights the substantial energy losses inherent in hydrogen-based electricity storage and is consistent with current commercial system-level performance. It underscores that hydrogen is best suited for long-duration and seasonal storage rather than short-term or daily cycling in off-grid applications.

Figure 4 presents a unified comparison of specific energy consumption and CO₂ emissions for the major hydrogen production pathways discussed in Section II, using 2025 benchmarks. Solar-powered electrolysis in high-irradiance Iranian conditions requires approximately 51–55 kWh of solar electricity per kg of H₂ (including balance-of-plant and 15% average soiling/temperature losses). This is competitive with the best European projects (55–60 kWh/kg) and significantly better than wind-powered electrolysis in low-capacity-factor offshore sites (>65 kWh/kg).

Figure 4. Unified comparison of specific energy consumption (kWh/kg H₂) and direct CO₂ emissions (kg CO₂-eq/kg H₂) for major hydrogen production pathways (2025 benchmarks). Solar-powered electrolysis in high-irradiance Iranian conditions is highlighted. Source: Author's elaboration based on IEA Global Hydrogen Review 2025 and IRENA (2025).

Figure 4. Unified comparison of specific energy consumption (kWh/kg H₂) and direct CO₂ emissions (kg CO₂-eq/kg H₂) for major hydrogen production pathways (2025 benchmarks). Solar-powered electrolysis in high-irradiance Iranian conditions is highlighted. Source: Author's elaboration based on IEA Global Hydrogen Review 2025 and IRENA (2025).

Despite higher primary energy consumption per kg of H₂ compared with grey SMR (≈ 40–45 kWh natural gas equivalent), solar electrolysis achieves zero direct emissions and near-zero lifecycle emissions when PV manufacturing impacts are amortized over 30 years.

5.3. Comparative Performance Against Other Pathways

Figure 4 illustrates that while grey and blue SMR pathways currently exhibit the lowest specific energy consumption (≈40–45 kWh natural gas equivalent per kg H₂), they carry significant direct CO₂ emissions. In contrast, renewable-based routes like biomass gasification offer near-zero net emissions but suffer from lower efficiency (35–55% LHV) and logistical challenges associated with feedstock supply. Emerging thermochemical and biological/photocatalytic methods promise high theoretical efficiencies or sustainability but remain at low TRLs (3–5 and 1–4, respectively), with scalability and productivity limitations. The proposed solar-powered electrolysis in high-irradiance Iranian conditions stands out by combining zero direct emissions, competitive energy consumption (51–55 kWh solar electricity per kg H₂), and rapid deployment potential at commercial TRL 9, making it particularly advantageous for arid, high-insolation regions when integrated with hybrid renewables and desalination.

5.4. Sensitivity Analysis

A sensitivity analysis was performed on key parameters affecting levelized cost of hydrogen (LCOH) in the Iranian context:

• Dust-induced soiling: Without cleaning, annual yield can drop 20–25 % in central Iran → LCOH increase of 0.8–1.2 USD/kg. Automated cleaning or bifacial modules with vertical mounting reduce this penalty to <8 %. · Ambient temperature: Every 10 °C above 25 °C reduces PV output by ~4 % and increases electrolyzer cooling demand → combined penalty of 6–8 % in summer peaks (>45 °C). · Electrolyzer CAPEX: A reduction from 800 to 500 USD/kW (IRENA high-case 2030) lowers LCOH by ~1.1 USD/kg at PSH = 5.3. · Hybrid solar–wind input: Increasing capacity factor from 25 % (solar-only) to 45 % reduces LCOH by 35–40%.
• To further quantify cost uncertainties, we conducted a ±20% sensitivity on electrolyzer CAPEX and solar electricity price (LCOE ~0.03 USD/kWh base). Using the base LCOH of 3.80 USD/kg (for 100 kW system), results are as follows (reproducible via Python script in Supplementary Material S1):

Table VIII. Sensitivity Analysis of LCOH to ±20% Variations in Key Parameters (100 kW System, PSH = 5.3).

Parameter Variation	LCOH (USD/kg)	Change from Base (%)
Base Case	3.80	-
Electrolyzer CAPEX +20%	4.18	+10%
Electrolyzer CAPEX -20%	3.43	-10%
Solar Electricity Price +20%	4.11	+8%
Solar Electricity Price -20%	3.49	-8%

Source:  This study (calculations based on updated assumptions from IRENA 2025; reproducible via Python script in Supplementary Material S1).

Table VIII. Sensitivity Analysis of LCOH to ±20% Variations in Key Parameters (100 kW System, PSH = 5.3).

Parameter Variation	LCOH (USD/kg)	Change from Base (%)
Base Case	3.80	-
Electrolyzer CAPEX +20%	4.18	+10%
Electrolyzer CAPEX -20%	3.43	-10%
Solar Electricity Price +20%	4.11	+8%
Solar Electricity Price -20%	3.49	-8%

Source:  This study (calculations based on updated assumptions from IRENA 2025; reproducible via Python script in Supplementary Material S1).

5.5. Water–Energy Nexus and Coastal Desalination Integration

As discussed in Section 4.2, water consumption remains the most critical constraint for inland deployment. However, co-locating large-scale electrolyzers with solar-powered reverse osmosis (RO) plants along Iran’s 5,800 km southern coastline eliminates this barrier while generating substantial co-benefits. Recent studies [33,36] for the Persian Gulf region indicate that PV-RO desalination can supply electrolysis-grade water at 0.6–0.9 USD/m³ when CAPEX falls below 900 USD/(m³/day) — a level already achieved in 2025 Saudi and UAE projects. The resulting water-related LCOH increment is only 0.4–0.6 USD/kg H₂, far lower than trucking or pipeline transport from northern freshwater sources

5.6. Levelized Cost of Hydrogen (LCOH) Analysis and Regional Benchmarking

Figure 5 and Table VI present the calculated LCOH for the 100 kWₚ reference system and scaled-up scenarios under Iranian conditions. Scaling from small inland systems (LCOH 5.8–6.4 USD/kg in 2025) to multi-megawatt coastal hybrid projects with integrated solar desalination reduces LCOH to 3.0–4.0 USD/kg by 2030 — placing Iran among the world’s lowest-cost locations.

Figure 5. Projected levelized cost of hydrogen (LCOH) for different system scales and configurations in Iran (2025–2030). Scaling from small inland off-grid systems to multi-megawatt coastal hybrid projects with integrated renewable desalination reduces LCOH from 5.8–6.4 USD/kg (2025) to 2.9–3.5 USD/kg (2030). Source: This study.

Figure 5. Projected levelized cost of hydrogen (LCOH) for different system scales and configurations in Iran (2025–2030). Scaling from small inland off-grid systems to multi-megawatt coastal hybrid projects with integrated renewable desalination reduces LCOH from 5.8–6.4 USD/kg (2025) to 2.9–3.5 USD/kg (2030). Source: This study.

Table VIII. LCOH for different scales and configurations in Iran (2025 USD/kg H₂).

Scenario (Location)	Capacity	Capacity Factor	Water Strategy	LCOH 2025	LCOH 2030
100 kWₚoff grid (central Iran, inland)	100 kW	24 %	Trucked freshwater	5.8–6.4	4.4–5.1
10 MW coastal (Persian Gulf)	10 MW	26 %	PV-RO desalination	4.6–5.2	3.3–3.9
100 MW hybrid solar wind (south coast)	100 MW	45–52 %	PV-RO + wind desalination	4.1–4.8	3.0–4.0
Gigawatt-scale hydrogen valley (2030 vision)	≥1 GW	>55 %	Large-scale RO + pipeline	–	1.9–2.4

Table VIII. LCOH for different scales and configurations in Iran (2025 USD/kg H₂).

Scenario (Location)	Capacity	Capacity Factor	Water Strategy	LCOH 2025	LCOH 2030
100 kWₚoff grid (central Iran, inland)	100 kW	24 %	Trucked freshwater	5.8–6.4	4.4–5.1
10 MW coastal (Persian Gulf)	10 MW	26 %	PV-RO desalination	4.6–5.2	3.3–3.9
100 MW hybrid solar wind (south coast)	100 MW	45–52 %	PV-RO + wind desalination	4.1–4.8	3.0–4.0
Gigawatt-scale hydrogen valley (2030 vision)	≥1 GW	>55 %	Large-scale RO + pipeline	–	1.9–2.4

To place Iran’s projected performance in a regional context, Table VII provides a direct comparison with Saudi Arabia’s flagship NEOM green hydrogen project — currently the world’s largest announced initiative. Despite comparable solar resources, Iran’s pathway offers superior wind–solar complementarity, significantly lower desalination costs, and immediate access to existing ammonia export infrastructure, resulting in a projected LCOH advantage of up to 0.8 USD/kg by 2030.

Table VII. Comparative assessment of Iran’s coastal hybrid solar–wind pathway versus Saudi Arabia’s NEOM green hydrogen project (2030 horizon).

Parameter	Iran (Coastal Hybrid + Solar Desalination)	Saudi Arabia (NEOM Phase I)	Advantage
Average Peak Sun Hours (PSH)	5.3–5.5 kWh/kW/day	5.1–5.3 kWh/kW/day	Iran
Hybrid solar–wind capacity factor	>45 %	35–40 %	Iran
Projected LCOH (2030)	3.0–4.0 USD/kg	3.2–4.0 USD/kg	Iran
Desalination water cost	0.6–0.9 USD/m³ (solar RO)	>1.2 USD/m³	Iran
Existing ammonia export infrastructure	Yes (world’s 2nd largest exporter)	Under construction	Iran
Domestic skilled technical workforce	Proven (>20 years, >848 trained)	Heavily expatriate-dependent	Iran
Geopolitical/export risk	Medium–High	Low	Saudi Arabia
Start of commercial production	2028–2030 (phased)	2026–2027	Saudi Arabia

Source:   This study, NEOM Green Hydrogen Company (2025), IRENA (2025), BloombergNEF (2025), ACWA Power (2025).

Table VII. Comparative assessment of Iran’s coastal hybrid solar–wind pathway versus Saudi Arabia’s NEOM green hydrogen project (2030 horizon).

Parameter	Iran (Coastal Hybrid + Solar Desalination)	Saudi Arabia (NEOM Phase I)	Advantage
Average Peak Sun Hours (PSH)	5.3–5.5 kWh/kW/day	5.1–5.3 kWh/kW/day	Iran
Hybrid solar–wind capacity factor	>45 %	35–40 %	Iran
Projected LCOH (2030)	3.0–4.0 USD/kg	3.2–4.0 USD/kg	Iran
Desalination water cost	0.6–0.9 USD/m³ (solar RO)	>1.2 USD/m³	Iran
Existing ammonia export infrastructure	Yes (world’s 2nd largest exporter)	Under construction	Iran
Domestic skilled technical workforce	Proven (>20 years, >848 trained)	Heavily expatriate-dependent	Iran
Geopolitical/export risk	Medium–High	Low	Saudi Arabia
Start of commercial production	2028–2030 (phased)	2026–2027	Saudi Arabia

Source:   This study, NEOM Green Hydrogen Company (2025), IRENA (2025), BloombergNEF (2025), ACWA Power (2025).

Figure 6. Radar chart comparison of major hydrogen production pathways based on six key criteria (2025–2030 perspective): technological readiness, cost competitiveness (LCOH), efficiency, scalability, water footprint management, and environmental impact. The proposed Iranian coastal hybrid solar–wind system with integrated solar desalination (highlighted in green) clearly dominates all conventional and emerging routes. Source: This study.

Figure 6. Radar chart comparison of major hydrogen production pathways based on six key criteria (2025–2030 perspective): technological readiness, cost competitiveness (LCOH), efficiency, scalability, water footprint management, and environmental impact. The proposed Iranian coastal hybrid solar–wind system with integrated solar desalination (highlighted in green) clearly dominates all conventional and emerging routes. Source: This study.