Modified electricity price signals as a flexibility incentive for hydrogen production - the impact of hydrogen production profiles on costs and GHG emissions

Abstract

The increasing share of renewable energy has a direct impact on spot prices and electricity-related greenhouse gas (GHG) emissions. Low marginal costs for solar and wind reduce spot prices, especially in times with a high share of renewable electricity production. GHG emissions tend to decrease as the share of renewables increases throughout the year, again, particularly in times with a high share of renewable electricity. Hydrogen production from grid electricity shows the potential to serve as a flexible consumer making use of low electricity and serving threefold: (1) supplying low-cost hydrogen for e.g. industrial processes (2) producing hydrogen leading to low GHG emissions and (3) serving the electricity system through a flexible demand. A policy instrument with modified electricity price signals to stimulate flexible electricity demand from an electrolyzer has been presented (Schütte & Timmerberg, 2024). The modification consists of two parts: (1) the annual average is adjusted and (2) the hourly resolved electricity price is changed. The factor changes the amplitude of the price. It was analyzed which combinations of adjustments lead to a target price of €1.80/kg for hydrogen. Results show that higher price amplitudes lead to shorter electrolyzer operating times. This could be an incentive for flexibility on the consumer side. This research examines how different hydrogen demand profiles affect costs and GHG emissions under the policy instrument, aiming for a target price. A demand profile is understood as a recurring, constant demand. Hydrogen production is considered in different time periods – per day, per week or per month – where the electrolyzer is operated at the least cost hours.