Hydrogen Production in the Swedish Power Sector: Considering Operational Volatilities and Long-term Uncertainties

With more renewables on the Swedish electricity market, while decommissioning nuclear power plants, electricity supply increasingly fluctuates and electricity prices are more volatile. There is, hence, a need for securing the electricity supply before energy storage solutions become widespread. Electricity price fluctuations, moreover, affect operating income of nuclear power plants due to their inherent operational inflexibility. Since the anticipated new applications of hydrogen in fuel cell vehicles and steel production, producing hydrogen has become a potential source of income, particularly when there is a surplus supply of electricity at low prices. The feasibility of investing in hydrogen production was investigated in a nuclear power plant, applying Swedish energy policy as background. The analysis applies a system dynamics approach incorporating the stochastic feature of electricity supply and prices. The study revealed that hydrogen production brings alternative opportunities for large-scale electricity production facilities in Sweden. Factors such as hydrogen price will be influential and require in-depth investigation. This study provides guidelines for power sector policymakers and managers who plan to engage in hydrogen production for industrial applications. Although this study was focused upon nuclear power sources, it can be extended to hydrogen production from renewable energy sources such as wind and solar.