Balancing act: the impact of electrolyser flexibility on green hydrogen cost, industry decarbonization and system integration

Rotterdam, 14th May 2024

Starting point:
Green hydrogen projects in North-Western Europe are struggling to reach final investment decisions. 

The dominant focus of developers is to bring down development cost (CapEx) and focus on the efficiency of the green hydrogen plant. This focus combined with offtake contracts and subsidies allows some projects to lift off. However, projects that are grid-connected and have access to intermittent renewable energy remain mostly locked. More is needed to lift-off the green hydrogen industry in Europe and reach decarbonization goals.

Results | We show that green hydrogen developers can unlock more projects by monetizing flexibility: purchasing electricity in different ways and performing arbitrage to limit the cost of electricity, which makes up 50-70%  of the LCOH. 

  • Flexible electrolysers have a 10-30% lower LCOH and higher NPV. 

  • Flexibility allows electrolysers to adjust the load during costly hours, leading to lower LCOH and break-even hydrogen prices

  • Flexibility can unlock most value when developers participate in buying and selling electricity on multiple energy markets in a single geography.

Flexible green hydrogen projects are also a must for governments and grid operators: the already strongly congested grids can't deal with more assets requiring baseload electricity supply. 

Recommendations:
Monetizing flexibility is a win-win for project developers and grid operators in North-Western Europe. Developers need to have the tools to act on this.

Firstly, it requires electrolysers like the Battolyser® that can operate fully flexibly and rapidly adjust its load. Secondly, it requires government intervention to invest in infrastructure, import and storage, so that the industry can continue to rely on a relatively constant supply of hydrogen. Thirdly, government support is still required in this nascent industry to bridge the cost gap to grey hydrogen and green hydrogen.