A mathematical model has been developed to determine and optimize the thermal and economical performance of large scale photovoltaic-electrolyzer systems, either with fixed or sun tracking panels using hourly solar radiation data. It has been found that the overall thermal efficiency of photovoltaic-electro lyzer systems may be as high as 10.85% with sun tracking panels and 10.33% with fixed panels. The levelized solar hydrogen cost using either fixed or sun tracking panels is well correlated with the total annual solar radiation on a horizontal surface. Climatic conditions, altitude and latitude are not significant parameters affecting this correlation. The results show that there is a practical minimum cost of hydrogen, which is 44.5 $/GJ hydrogen when the PV system cost is 1 $/Wp and the capital charge rate is 15%. (C) 2001 Elsevier Science Ltd. All rights reserved.