Economics of converting renewable power to hydrogen

The recent sharp decline in the cost of renewable energy suggests that the production of hydrogen from renewable power through a power-to-gas process might become more economical. Here we examine this alternative from the perspective of an investor who considers a hybrid energy system that combines...

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Bibliographic Details
Published in:Nature energy 2019-03, Vol.4 (3), p.216-222
Main Authors: Glenk, Gunther, Reichelstein, Stefan
Format: Article
Language:English
Subjects:
4000/159
704/844/4066/4068
Alternative energy sources
Cost analysis
Decarbonization
Economic analysis
Economics
Economics and Management
Electricity
Electricity pricing
Energy
Energy Policy
Energy Storage
Energy Systems
Hybrid systems
Hydrogen
Hydrogen fuels
Hydrogen production
Power-to-gas
Renewable and Green Energy
Renewable energy
Renewable resources
Wind power
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Summary:The recent sharp decline in the cost of renewable energy suggests that the production of hydrogen from renewable power through a power-to-gas process might become more economical. Here we examine this alternative from the perspective of an investor who considers a hybrid energy system that combines renewable power with an efficiently sized power-to-gas facility. The available capacity can be optimized in real time to take advantage of fluctuations in electricity prices and intermittent renewable power generation. We apply our model to the current environment in both Germany and Texas and find that renewable hydrogen is already cost competitive in niche applications (€3.23 kg −1 ), although not yet for industrial-scale supply. This conclusion, however, is projected to change within a decade (€2.50 kg −1 ) provided recent market trends continue in the coming years. Hydrogen fuel, produced from renewable power, could be critical in the decarbonization of the electricity and transportation sectors. Here, a thorough economic analysis shows that hydrogen obtained from wind power is already cost competitive in niche applications and may become widely competitive in the foreseeable future.
ISSN:2058-7546
2058-7546
DOI:10.1038/s41560-019-0326-1