Analysis of the wind energy market in Denmark and future interactions with an emerging hydrogen market

Abstract

The transition from fossil fuels to renewable energy sources is critical to reduce future emissions and mitigate the consequences hereof. Yet, the expansion of renewable energy, especially the highly fluctuating production of wind energy, poses economic challenges to the existing energy system in Denmark. This paper investigates the economic feasibility of integrating a 250 kW, 500 kW, 750 kW and 1 MW water electrolysis system in the existing Danish energy market to exploit excessive off- and onshore wind energy for hydrogen production used as fuel for transportation purposes. In 2018, Danish wind turbines produced excess energy during 1238 h, which poses a capacity constraint as the electrolysis systems are limited to only produce hydrogen for 14% of the total available annual hours. This paper concludes that the net present value of each investment is negative as the fixed and variable production costs exceeds the generated revenues and it is therefore not economical feasible to invest in an electrolysis system with the purpose of only operating whenever excess off- and onshore wind energy is available.