Optimizing power-to-H2 participation in the Nord Pool electricity market: Effects of different bidding strategies on plant operation

Leandro Janke,Shane Mcdonagh,Sören Weinrich,Jerry Murphy,Daniel Nilsson,Per-Anders Hansson,Åke Nordberg

doi:10.1016/j.renene.2020.04.080

Abstract

The operation of power-to-X systems requires measures to control the cost and sustainability of electricity purchased from spot markets. This study investigated different bidding strategies for the day-ahead market with a special focus on Sweden. A price independent order (PIO) strategy was developed assisted by forecasting electricity prices with an artificial neural network. For comparison, a price dependent order (PDO) with fixed bid price was used. The bidding strategies were used to simulate H2 production with both alkaline and proton exchange membrane electrolysers in different years and technological scenarios. Results showed that using PIO to control H2 production helped to avoid the purchase of expensive and carbon intense electricity during peak loads, but it also reduced the total number of operating hours compared to PDO. For this reason, under optimal conditions for both bidding strategies, PDO resulted in an average of 10.9% lower levelised cost of H2, and more attractive cash flows and net present values than PIO. Nevertheless, PIO showed to be a useful strategy to control costs in years with unexpected hourly price behaviour such as 2018. Furthermore, PIO could be successfully demonstrated in a practical case study to fulfil the on-demand requirement of an industrial captive customer.

Highlights

Policies and incentives designed to tackle climate change, combined with the declining costs of renewable energy technologies continue to decarbonise the energy system [1]
To provide a more comprehensive assessment of H2 production the current study focuses on three main economic indicators, namely net cash flow (NCF), net present value (NPV) and levelised cost of H2 (LCOH2)
Even though our results showed that the capacity factor tends to decrease in future technological scenarios, the LCOH2 is minimized in the meantime since higher efficiency and lower CAPEX of the systems as well as the lower price paid for electricity compensates such lower number of running hours

Summary

Introduction

Policies and incentives designed to tackle climate change, combined with the declining costs of renewable energy technologies continue to decarbonise the energy system [1]. Variable renewable electricity (VRE), such as wind and solar, is being rapidly integrated into electricity networks. High levels of VRE can exacerbate an imbalance between supply and demand resulting in grid congestion, which in extreme cases forces the system operator to accept less VRE than it is possible to produce (i.e. curtailment) and rely on fossil fuel back up generation [1,3]. To minimize such drawbacks, the concept of using difficult to manage electricity from VRE to produce H2 through water electrolysis has gained attention in the recent years [4]. H2 as an energy carrier can be used in a variety of processes to produce gaseous

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