Producing green hydrogen while avoiding overloading the electricity grid is possible, but is currently an economically viable option only in exceptional situations. For instance, there must be enough customers for hydrogen locally and they must be willing to pay (extra) for it. In addition, electricity prices must be sufficiently low and electrolysis allows the grid operator to avoid grid reinforcement only in specific cases. In the future, the number of situations in which the business case becomes profitable will increase.
With the energy transition, more electricity will be used and generated. This means a heavier load on the existing electricity grids, which can lead to overloading. By laying thicker cables in the ground - grid reinforcement - this problem can be overcome, however, this is very costly and often time-consuming. Enpuls commissioned research to gain insight into possible business models in which hydrogen production from electrolysis could be profitable and also contribute to avoiding unnecessary social investments in thicker power cables. We also looked at the options available to grid operators to encourage this. To this end, four case studies were set up, which together provide a representative picture of the feasibility of deploying hydrogen from electrolysis for socially responsible grid management.
Business case may be profitable in the future
The grid operator can take various measures to accommodate a hydrogen producer. These include granting a discount on the connection and/or transport costs of electricity or by agreeing on a purchase guarantee for the hydrogen produced. However, such measures currently only partly fit within laws and regulations. In the future, when these laws and regulations are amended, more grid reinforcement issues arise due to more sustainable generation, the demand for hydrogen increases or electrolysers become cheaper, the number of situations in which the business case becomes profitable will increase.
Practical cases are needed to learn from
To better understand the feasibility and necessary framework conditions of green hydrogen production to avoid grid reinforcements, more experience needs to be gained from practical cases. The government should encourage certain demonstration and pilot projects - such as pilots at industrial sites where there is demand for hydrogen and hydrogen refuelling stations are nearby. By conducting such pilots at new large-scale wind and solar farms, wind, solar, hydrogen, grid management and flexibility can be cleverly combined.
Green hydrogen in the future profitable and possibly suitable alternative for electricity grid reinforcement. The results of the studies were published in 3 reports, these are available for anyone to download.
These reports were commissioned by Enpuls and prepared in cooperation with TNO and DNV GL. Enpuls is part of Enexis and aims to increase knowledge in the field of green hydrogen production.
