Low-cost hydrogen in the future European electricity system – Enabled by flexibility in time and space

Journal article, 2023

The present study investigates four factors that govern the ability to supply hydrogen at a low cost in Europe: the scale of the hydrogen demand; the possibility to invest in large-scale hydrogen storage; process flexibility in hydrogen-consuming industries; and the geographical areas in which hydrogen demand arises. The influence of the hydrogen demand on the future European zero-emission electricity system is investigated by applying the cost-minimising electricity system investment model eNODE to hydrogen demand levels in the range of 0–2,500 TWhH2. It is found that the majority of the future European hydrogen demand can be cost-effectively satisfied with VRE, assuming that the expansion of wind and solar power is not hindered by a lack of social acceptance, at a cost of around 60–70 EUR/MWhH2 (2.0–2.3 EUR/kgH2). The cost of hydrogen in Europe can be reduced by around 10 EUR/MWhH2 if the hydrogen consumption is positioned strategically in regions with good conditions for wind and solar power and a low electricity demand. The cost savings potential that can be obtained from full temporal flexibility of hydrogen consumption is 3-fold higher than that linked to strategic localisation of the hydrogen consumption. The cost of hydrogen per kg increases, and the value of flexibility diminishes, as the size of the hydrogen demand increases relative to the traditional demand for electricity and the available VRE resources. Low-cost hydrogen is, thus, achieved by implementing efficiency and flexibility measures for hydrogen consumers, as well as increasing acceptance of VRE.