Hydrogen as a long-term storage medium in photovoltaic systems has been a subject of interest in recent years. Such a system uses an electrolyser - H-2 storage - fuel cell combination along with battery as short-term storage to minimize the loss of load probability. Conventionally, the same goal is achieved including a diesel generator (DG) in the photovoltaic (PV) systems. In present work, an economic comparison is carried out between DG based system and various possible configurations of H-2 based systems suitable for standalone application in the range of 5 kW. Both the systems are compared with the help of boundary curve obtained from life cycle cost analysis and excess energy available in the PV-DG system. Boundary curve enables in determining cost-effective system for a site, specified by on-site fuel cost including transportation cost and seasonal solar energy difference. It is found, a system with unitized regenerative fuel cell (URFC) and metal hydride storage offers most cost-effective solution. Further, the scope of the PV-H-2 system is enhanced if the salvage value of the fuel cell is considered. With steeply rising fossil fuel prices and developments in H-2 technology, globally more regions will be cost-effective for PV-H-2 systems. (C) 2012 Elsevier Ltd. All rights reserved.