Hydrogen |


Intentionally intermittent operation: key to improved electrolyser economics


Confining electrolyser operation to periods of low, zero and negatively priced renewable power is the only way to produce green hydrogen for less than €5 per kg in most European countries. Additional revenue can result from the electrolyser operator offering frequency balancing services to the grid operator.


Stephen B. Harrison sbh4 consulting


Executing an intentionally intermittent electrolyser operational strategy means understanding regulations and complementary hydrogen infrastructure. Over the next ten years, intentionally intermittent operation is likely to be the only way that green hydrogen will be produced with viable un-subsidised business cases in much of Europe.


Breaking down the cost of electrolytic hydrogen The main contributors to the levelised cost of green hydrogen (LCoH) are the capital expense of the electrolyser, the purchase price of renewable electricity and the efficiency at which the electrolyser converts electricity to hydrogen.


The cost of renewable electricity, when supplied on a stable basis through a power purchase agreement (PPA) in Europe, is around 50 €/MWh. When purchasing electricity at that price, the theoretical minimum LCoH is €2/kg H2


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To achieve this theoretical minimum, we must assume zero grid transmission fee, no degradation, no maintenance costs, 100% efficiency of the electrolyser, zero capital cost of the electrolyser, and zero financing cost. Clearly, each of these assumptions is wildly unrealistic. The only way to reduce the LCoH below this theoretical minimum of €2/kg is to reduce the cost of electricity. That means purchasing off- peak electricity during periods when prices are low, zero or negative.


Renewables integration As more non-programmable, renewable electricity generation capacity provided by wind and solar comes onto European grids, the periods where prices fall to zero are becoming longer and more frequent. During peak solar hours and strong winds renewable power generation exceeds the capacity of the grid to absorb that power. The result is negative pricing to incentivise renewable electricity producers to curtail (AKA downward redispatch) their production. See Figure 1.


The ramp up in renewables enables a business model where green hydrogen producers operate only during periods of low,


Figure 1. Curtailed low price power for low cost hydrogen. Source: sbh4 consulting


zero and negatively priced power. This serves the dual function of producing renewable hydrogen at the lowest possible cost and balancing supply and demand on the grid.


Grid frequency


management services As we are well aware, the electricity grid in Europe is designed to operate at a frequency of 50 Hz. Furthermore, motors and other electrical appliances consume electricity at this frequency. When there is an imbalance between electricity supply and demand the frequency changes. Too much demand reduces the frequency; too much supply pushes it up. A key role of the grid operator is to maintain the frequency within extremely tight limits around the 50 Hz target.


However, electricity generation and consumption are not always within the direct control of the grid operator. They often perform this balancing task in collaboration with electricity producers and consumers. When the grid frequency drops, additional power generation capacity is requested to be brought online. This may be from gas peakers or battery energy storage systems (BESS). When the frequency increases, generators are requested to turn down or curtail electricity supply to the grid.


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Demand side frequency control is also important. The grid operator can make agreements with large electricity consumers so that they will either increase or decrease their electricity consumption when requested. With such an agreement, the grid operator pays a fee to reserve this capacity adjustment. Additionally, a fee is paid when the capacity adjustment is implemented at the request of the grid operator.


For multi-MW electrolyser schemes with intentionally intermittent operation, the revenues associated with frequency regulation support can improve the project economics.


Regulatory alignment The EU regulations that define green hydrogen and e-fuels are RED II/III and their Delegated Regulations (EU) 2023/1184 and (EU) 2023/1185. These refer to green hydrogen as a renewable fuel of non-biogenic origin, or RFNBO.


These regulations state that from 1 Jan 2030 strict additionality and an hourly matching temporal correlation will become effective. These are in addition to the requirement for proximity, meaning power for electrolysis must be drawn from the same bidding zone, or an adjacent one if the grid


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