Benefits from islanding hydrogen production in renewable energy systems

Abstract

Transitioning to a net-zero economy demands analysis of how to produce clean hydrogen cheaply, and at scale. In a fully renewable energy system, production of electricity and green hydrogen may benefit from synergies, e.g., by reducing renewables curtailment. On the other hand, separating electricity and hydrogen production could offer advantages, since stand-alone green hydrogen plants can be placed far away from load-centres, and power electronics of DC to AC to DC conversion can be avoided. We quantify the potential synergies of “integrated” electricity and hydrogen production versus stand-alone (“islanded”) production in systems entirely powered by wind and solar. We explore the trade-offs for several countries in a simple one-node model that enhances analytic understanding. Our findings show that integrated hydrogen production is cheapest if hydrogen demand is low (<20%) compared to electricity demand. If cost reductions for islanded electrolysers are counted, there is significant system benefit to islanding hydrogen production. We show that a moderate reduction to capital costs of islanded electrolysers of 15% reduces total system costs by up to 15%. These results are particularly relevant for hydrogen-exporting countries where hydrogen production may be larger than local electricity demand, and electrolysers should thus mainly be deployed in islanded settings.