Hydrogen is regarded as a potential future energy carrier. It can be produced by the electrolysis of water with the required power supplied by a photovoltaic module. The hydrogen in this study was produced using a hydrogen generator with a solid polymer electrolyte. The required power was supplied by a photovolraic module rated at 3.4 V, 27.45 A. The experimental system was designed and constructed so that the photovoltaic module was directly coupled to the hydrogen generator. The system characteristics: quantity of hydrogen produced, current/voltage output characteristics of the PV module, PV module and H-2 generator temperatures were measured and analyzed. A method to design a solar hydrogen energy system, providing the most cost effective hydrogen generation, was developed. In this method, the design point is chosen based on the irradiance during system operation under rated capacity. The data supplied by the experimental system clearly showed the importance of considering the ratio of photovoltaic module cost to hydrogen generator cost when designing an optimum solar hydrogen system. (C) 2000 Elsevier Science Ltd. All rights reserved.