Hydrogen can contribute substantially to the reduction of carbon emissions in industry and transportation. However, the production of hydrogen through electrolysis creates interdependencies between hydrogen supply chains and electricity systems. Therefore, as governments worldwide are planning considerable financial subsidies and new regulation to promote hydrogen infrastructure investments in the next years, energy policy research is needed to guide such policies with holistic analyses. In this study, we link a electrolytic hydrogen supply chain model with an electricity system dispatch model. We use this methodology for a cross-sectoral case study of Germany in 2030. We find that hydrogen infrastructure investments and their effects on the electricity system are strongly influenced by electricity prices. Given current uniform zonal prices, hydrogen production increases congestion costs in the electricity grid by 11%. In contrast, passing spatially resolved electricity price signals leads to electrolyzers being placed at low-cost grid nodes and further away from consumption centers. This causes lower end-use costs for hydrogen. Moreover, congestion management costs decrease substantially, by 24% compared to the benchmark case without hydrogen. These savings could be transferred into according subsidies for hydrogen production. Thus, our study demonstrates the benefits of differentiating subsidies for hydrogen production based on spatial criteria.

Integrating Hydrogen in Single-Price Electricity Systems: The Effects of Spatial Economic Signals

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Integrating hydrogen in single-price electricity systems: The effects of spatial economic signals

Blue and green hydrogen energy to meet European Union decarbonisation objectives. An overview of perspectives and the current state of affairs

Life cycle optimization for hydrogen supply chain network design

Fighting the wrong battle? A critical assessment of arguments against nodal electricity prices in the European debate

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Jingyi Qu

Papers

Integrating Hydrogen in Single-Price Electricity Systems: The Effects of Spatial Economic Signals

The effects of electricity tariffs on cost-minimal hydrogen supply chains and their impact on electricity prices and redispatch costs.