Flexible hydrogen production may prove cost effective

Twice a year, we publish our Technology Outlook where we review renewable energy technologies and their role in the current and future energy system. Each report contains a Special Issue where we focus on one relevant topic. In this edition, we analyse the effect of flexible operation of electrolysers on H2 production cost.

Technology outlook
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Hydrogen is considered a cornerstone in the transition to a low emission energy system. The production of green hydrogen through electrolysis using electricity from renewable energy sources is seen as a major potential flexibility resource in the power system. It can absorb excess power in times of overproduction and stop operation and thus power consumption in times of scarcity. At the same time, in order to maximise the economic rate of return of the electrolyser investments, high utilization rates are considered essential.

In this editions’ Special Issue, we take a closer look at this alleged contradiction. We use our power market model to analyse hydrogen production costs in 2030 in different regions showing that the optimal utilization rate depends on a number of characteristics of the regional market environment. We show that in specific cases it is actually more favourable to react to electricity prices in a flexible way and not blindly trying to maximise operation hours of the electrolysers.

Additionally, the main body of the Technology Outlook report provides an analysis of key decarbonization technologies. We cover three aspects of the renewable energy system: Production, flexibility assets and decarbonization. The technologies covered are:

– Solar PV
– Onshore Wind
– Offshore Wind
– Batteries
– Hydrogen
– Carbon capture and storage (CCS)
– Bioenergy
– E-fuels

We give an overview of important drivers and barriers for each technology. These include both political and market factors. This is viewed in relation to the technologies’ historical and expected cost development. Additionally, we provide our insight into what role we think these technologies will have in the future power system and how this role is supported by innovation and technology development.

If you are interested in learning more about our Technology Outlook, please do not hesitate to reach out.

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