Large Scale Power-to-X Production Enabling Hydrogen Valleys: A Case Study of Future Industrial Hydrogen Valley Opportunity in Finland

Many industrial processes, such as ammonia, fuel, or steel production, require considerable amounts of fossil feedstocks, contributing significantly to global greenhouse gas emissions. Some of these fossil feedstocks and processes can be decarbonised via Power-to-X (P2X) production concepts based on hydrogen (H2), requiring considerable amounts of renewable electricity. Creating hydrogen valleys (HV) may facilitate a cost-efficient H2 production, feeding H2 to multiple customers and purposes. At a large scale, these HVs will shift from price takers to price makers in the local electricity market, strongly affecting investments in renewable electricity. This paper analysed the dynamic evolution of a HV up to GW-scale by adopting a stepwise approach to HV development in North Ostrobothnia, Finland, considering multiple H₂ end uses such as P2X fuel manufacturing including ammonia, methanol, liquefied methane, and H2 for mobility. The analysis was conducted by employing a dynamic linear optimization model “SmartP2X” to minimize LCOH within the HV boundaries. The analysis predicts that with ex-factory sales prices that are equal to or higher than marginal costs for P2X fuels production, a LCOH of 3.4–3.9 EUR/kgH2 could be reached. The LCOH slightly increased with the size of the HV due to a H2 transmission pipeline investment; omitting the pipeline cost, the LCOH exhibited a decreasing trend. The produced H2 will generally meet the EU definitions for clean Renewable Fuel of Non-Biological Origin (RFNBO). The additional wind power required for the HV scenarios was up to 2.1–3.0 GW, depending on the RFNBO-fuel sales price. This represents a fraction of the current investment plans in the North Ostrobothnia region. The results of this paper contribute to the discussion on the interplay between hydrogen ecosystems and the power market, particularly in relation to power-intensive P2X processes.