Techno-economic assessment of grid connected Power to Heat and Power to Hydrogen technologies: An electricity market scenario approach

Wind energy is the most promising renewable energy source for the Netherlands in the energy transition period. However, the investment costs of the offshore wind are huge. Until now, the government was supporting the investments in wind farms with subsidy schemes irrespective of the electricity market dynamics. The latest large-scale offshore wind projects in Germany and the Netherlands (Hollandse Kust Zuid 1 and 2) have been awarded zero-subsidy. However, in the Netherlands, the transmission costs of the offshore wind electricity are socialized. This would force the un-subsidized wind-farms to feed their electricity into the public grid exposing them directly to the whole sale electricity market. With large shares of wind penetration in the market, the value of the electricity is declining. At the same time, the intermittent nature of the renewable energy sources generates large demand for flexibility in the electricity system. These pros and cons of renewable energy sources create new opportunities for electrification of other sectors to support achieving Paris climate agreement goals of the country. Heat and hydrogen sectors are identified as potential flexibility options to facilitate the de-carbonization of the energy system by 2050. European electricity market simulation model COMPETES is identified as potential tool to assess the integrated systems at national level. However, the flexibility provided by heat and hydrogen demands with thermal and hydrogen storage technologies is not part of the model directly. Therefore, an optimization model is developed to determine the size of power to heat and power to hydrogen systems with least cost. The results of this problem determine the outlook for investments in power to heat and power to hydrogen technologies. The problem also determines the operational strategy of these units in response to the hourly power prices. Consequently, the coupled implications of the emerging electricity load from heat, hydrogen markets