Electrolysis' Potential Value for Supporting the Electrical Grid

Conference · Tue Nov 12 04:00:00 EST 2019

OSTI ID:1574660

Ruth, Mark F ^[1]; Jadun, Paige ^[1]; Levie, Daniel R ^[1]; Frew, Bethany A ^[1]

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1. National Renewable Energy Laboratory (NREL), Golden, CO (United States)

The H2@Scale concept includes a value proposition for electrolysis that benefits both hydrogen markets and the electricity system. Electrolysis has the potential to be an alternative low-cost hydrogen source by using low-price electricity that may be available for only a limited number of hours annually. It also has the potential to provide value to the grid through use of that low-cost electricity. By doing so, electrolysis can create a price floor which could support additional investment in low-cost, dispatch-constrained electricity (LDE) generation such as photovoltaic solar, wind, and nuclear. The rapid-response characteristics of low-temperature electrolysis enables it to also provide ancillary services to the grid such as operating reserves and frequency control. We evaluate the economic performance of water electrolysis in a selection of electricity markets - both current and potential future markets. To perform that evaluation, we collect locational marginal prices (LMPs) in each market, calculate levelized hydrogen costs, and compare them to cost estimates of producing hydrogen via steam methane reforming of natural gas. Those calculations also include electolyzer capital and operating costs. We perform the calculations across a range of capacity factors to identify the minimum levelized hydrogen cost in that range. We discuss the implications of that capacity factor for each market analyzed. For a couple of the analyzed electricity markets, we include the potential value of providing ancillary services in the calculation and discuss those impacts. LDE generation has been shown to suppress electricity prices because it generates electricity when the resource is available (i.e., the sun is shining, wind is blowing, nuclear heat is being produced) and the generation cannot be reduced without an economic penalty. Price suppression is likely to reduce investment in those technologies due to reductions in projected income of each marginal unit. If electrolyzers are willing to pay for the LDE, it could provide a price floor for electricity. We analyze how setting a price for LDE could impact the electricity generation fleet, the availability of LDE, and the potential levelized costs of producing hydrogen using that LDE. Among other results, we will present a set of supply curves showing potential production costs and availability for hydrogen produced from LDE in a future with high penetrations of renewable electricity on the grid.

• Research Organization: National Renewable Energy Laboratory (NREL), Golden, CO (United States)
• Sponsoring Organization: USDOE Office of Energy Efficiency and Renewable Energy (EERE), Fuel Cell Technologies Program (EE-3F)
• DOE Contract Number: AC36-08GO28308
• OSTI ID: 1574660
• Report Number(s): NREL/PR-6A20-75373
• Country of Publication: United States
• Language: English

Related Subjects

24 POWER TRANSMISSION AND DISTRIBUTION
H2@Scale
LDE
OCE
electrical grid
hydrogen
low-cost dispatch-constrained electricity
otherwise-curtailed electricity