Combining diverse renewable energy sources and locations may hold the key to unlocking green hydrogen’s potential, according to new research.
In a co-authored paper, EWI researcher Jun.-Prof. Dr. Oliver Runhau analysed how green hydrogen produced through electrolysis powered by renewable electricity can benefit from a ‘diverse portfolio’ of renewable energy generators.
Such a portfolio, combining renewable generators of multiple locations and technologies, allows for a smoother electricity generation profile, which could help achieve compliance with strict emerging regulatory standards at lower costs, the research found.
Combining two locations within Germany, for example, can already yield cost savings in the range of 3-8%, and that may increase up to 21% for a nationwide portfolio.
“Our research shows that a diversified portfolio is economically advantageous for producing green hydrogen under strict matching requirements,” said Ruhnau.
“This is relevant for investors to minimise the costs of green hydrogen production but also for policymakers to understand the implications of strict matching requirements. In particular, the question arises as to whether large firms gain a competitive advantage through temporal requirements through having easier access to larger generation portfolios.”
In the current market the ramp-up of hydrogen electrolysers may actually lead to increasing power sector emissions because additional electricity demand could trigger increased utilisation of fossil-fuelled power plants.
To avoid such a potential increase in emissions, the European Commission released a second Renewables Energy Directive (RED II) in 2018, which defines three requirements for hydrogen to be labelled as “green”.
Under additionality, green hydrogen should only be produced from renewable power generation capacities that are either built for this purpose or would otherwise not be in operation.
The second requirement concerns the proximity between the electrolyser and any additional renewable energy capacities, which should be as close to each other as possible, and the third concerns temporal matching between the production of renewable electricity and hydrogen.
“Provided there is an hourly matching requirement for green hydrogen production, such portfolio effects imply that accessing an increasing number of locationally and technologically diverse renewable electricity production units reduces the resulting levelised cost of hydrogen (LCOH),” the research notes.
“Investors aiming at reducing their LCOH should consider either investing in (and hence owning) a diverse variable renewable energy (VRE) portfolio or signing PPAs with diverse generation units.”
“Hydrogen producers can conclude from our study that technological and locational diversification is beneficial when producing green hydrogen under an hourly matching requirement.”
The EU is targeting green hydrogen production capacity of at least 6 gigawatts (GW) by 2024 and 40 GW by 2030.
The notion that the cost of green hydrogen will plummet to one or two dollars per kilo needs to be rethought and more realistic scenarios and pricing accepted, according to Air Products’ Director of Public Affairs for North-West Europe, Leiuwe Burger, speaking at the Wood Mackenzie Hydrogen Conference 2024 in London recently.
Read more: Green hydrogen won’t be as cheap as first hoped, says Air Products
