Optimal Supply Chains and Power Sector Benefits of Green Hydrogen

Abstract

Green hydrogen can help to decarbonize parts of the transportation sector, but its power sectorinteractions are not well understood so far. It may contribute to integrating variable renewable energysources if production is sufficiently flexible in time. Using an open-source co-optimization model of thepower sector and four options for supplying hydrogen at German filling stations, we find a trade-offbetween energy efficiency and temporal flexibility. For lower shares of renewables and hydrogen,more energy-efficient and less flexible small-scale on-site electrolysis is optimal. For higher sharesof renewables and/or hydrogen, more flexible but less energy-efficient large-scale hydrogen supplychains gain importance, as they allow to temporally disentangle hydrogen production from demandvia storage. Liquid hydrogen emerges as particularly beneficial, followed by liquid organic hydrogencarriers and gaseous hydrogen. Large-scale hydrogen supply chains can deliver substantial powersector benefits, mainly through reduced renewable curtailment. Energy modelers and system plannersshould consider the distinct flexibility characteristics of hydrogen supply chains in more detail whenassessing the role of green hydrogen in future energy transition scenarios. We also propose twoalternative cost and emission metrics which could be useful in future analyses.