Search

We perform a model-based analysis of the impact of a renewable hydrogen quota on EU gas and electricity markets. By comparing a scenario in which a renewable hydrogen quota with tradable certificates is imposed on final gas consumption in the sectors of the economy outside the EU ETS with a reference scenario without a quota, we assess price, quantity and welfare effects. Our model simulations show that the hydrogen quota leads to a significant expansion in renewable energy sources (RES) capacity to produce renewable hydrogen and synthetic methane with Power-to-Gas (PtG) technologies. On the electricity market, the price increases substantially, rising by up to 12% - mostly due to increasing emission allowance prices - leading to a higher surplus for power producers. The quota's primary beneficiaries in the power sector are renewable energy producers. On the gas market, the quota leads to a small decrease in prices (by a maximum of -3%) and gas producer surpluses. Quota obliged gas consumers, mainly households, commercial and small industrial consumers, carry the largest part of the burden associated with the obligation. Overall, the quota leads to the redistribution of welfare from these consumers to RES and PtG producers and a significant decline in total welfare.

Hydrogen is viewed as a promising supplement in future energy systems with high penetration rates of renewable energy (RE) generation. As conversion technology between the two secondary energy carriers, hydrogen and electricity, particularly grid-connected electrolysers, have a role to play. During the market ramp-up, grid-connected electrolysers could cause unwanted side-effects through inducing additional CO2 emissions from the power sector. Since the reduction of CO2 remains the overall goal, a simultaneity obligation between RE generation and hydrogen production for the dispatch are being discussed to limit associated emissions from an electrolyser's energy consumption. The paper presents a model framework including a mixed-integer linear program and a Markov chain Monte Carlo simulation for stochastic electricity market prices to assess a grid-connected electrolyser's dispatch. Within a case study representing the current state of the German electricity market, the effect of simultaneity on the electrolyser's dispatch is assessed. The results show that the simultaneity reduces the CO2 emission intensity of hydrogen while constraining the profits from cost-optimal dispatch. The simultaneity represents implicit storage of the RE generation's green characteristic, which allows the electrolyser to shift RE production to low price periods. Depending on the simultaneity interval, this affects both the average contribution margin and the risk of the electrolyser dispatch. Regulations aiming at the interface between hydrogen and electricity must consider the trade-off between the economic viability of electrolysers, fullload hours, and the associated emissions of electricity-based hydrogen.