The potential of an energy system that comprises a hydrogen-fueled PEFC (H2-PEFC), a boiler, and a gas turbine combined heat and power system (GT), using by-product hydrogen produced from a caustic soda plant was evaluated using a mathematical model based on linear programming. Based on the optimization results to minimize the system cost by optimizing the equipment capacity and energy balance of the energy system, the system cost reduction effect and CO2 reduction effect were calculated in relation to the power generation efficiency and the installation cost of the H2-PEFC. As a result, the conditions for the H2-PEFC where a system cost reduction could be achieved in the PEFC, boiler, and GT system, compared with the boiler system, were clearly shown to be an initial cost lower than 3500 $/kW or a power generation efficiency greater than 50%. (C) 2016 Hydrogen Energy Publications LLC. Published by Elsevier Ltd. All rights reserved.