Phasing Out Steam Methane Reformers with Water Electrolysis in Producing Renewable Hydrogen and Ammonia: A Case Study Based on the Spanish Energy Markets

Deploying renewable hydrogen presents a significant challenge in accessing off-takers who are willing to make long-term investments. To address this challenge, current projects focus on large-scale deployment to replace the demand for non-renewable hydrogen, particularly in ammonia synthesis for fertiliser production plants. The traditional process, involving Steam Methane Reformers (SMR) connected to Haber-Bosch synthesis, could potentially transition towards decarbonisation by gradually integrating water electrolysis. However, the coexistence of these processes poses limitations in accommodating the integration of renewable hydrogen, thereby creating operational challenges for industrial hubs. To tackle this issue, this paper proposes an optimal dispatch model for producing green hydrogen and ammonia while considering the coexistence of different processes. Furthermore, the objective is to analyse external factors that could determine the appropriate regulatory and pricing framework to facilitate the phase-out of SMR in favour of renewable hydrogen production. The paper presents a case study based in Spain, utilising data from 2018, 2022 and 2030 perspectives on the country's renewable resources, gas and electricity wholesale markets, pricing ranges, and regulatory constraints to validate the model. The findings indicate that carbon emissions taxation and the availability and pricing of Power Purchase Agreements (PPAs) will play crucial roles in this transition - the carbon emission price required for total phasing out SMR with water electrolysis would be around 550 EUR/ton CO2.