Renewable fuel production and the impact of hydrogen infrastructure — A case study of the Nordics

Abstract

Hard-to-electrify sectors will require renewable fuels to facilitate the green transition in the future. Therefore, it is crucial to identify promising production locations while taking into account the local biomass resources, variable renewable energy sources, and the synergies between sectors. In this study, investments and dispatch operations are optimised of a large catalogue of renewable fuel production technologies in the open-source software SpineOpt, and this is soft-linked to the comprehensive energy system model Balmorel. We analyse future production pathways by comparing various levels of hydrogen infrastructure, including large-scale hydrogen storage, and assess system impacts. The results indicate that methanol may provide synergies in its multipurpose use as an early (2030–2040) shipping fuel and later as an aviation fuel through further refining if ammonia becomes more competitive (2050). We furthermore show that a hydrogen infrastructure increases the competitiveness of non-flexible, hydrogen-based fuel production technologies. Offshore electrolysis hubs decrease energy system impacts in scenarios with 105 TWh of Nordic hydrogen export. However, hydrogen export scenarios are much costlier compared to scenarios with no export unless a high hydrogen price is received. Finally, we find that emission taxes in the range of 250–265 €/tCO2 will be necessary for renewable fuels to become competitive.