Power Sector Effects of Green Hydrogen Production in Germany

The use of green hydrogen can support the decarbonization of sectors which are difficult to electrify, such as industry or heavy transport. Yet, the wider power sector effects of providing green hydrogen are not well understood so far. We use an open-source electricity sector model to investigate potential power sector interactions of three alternative supply chains for green hydrogen in Germany in the year 2030. We distinguish between model settings in which Germany is modeled as an electric island versus embedded in an interconnected system with its neighboring countries, as well as settings with and without technology-specific capacity bounds on wind energy. The findings suggest that large-scale hydrogen storage can provide valuable flexibility to the power system in settings with high renewable energy shares. These benefits are more pronounced in the absence of flexibility from geographical balancing. We further find that the effects of green hydrogen production on the optimal generation portfolio strongly depend on the model assumptions regarding capacity expansion potentials. We also identify a potential distributional effect of green hydrogen production at the expense of other electricity consumers, of which policy makers should be aware.