IDEAS home Printed from https://ideas.repec.org/a/eee/appene/v378y2025ipas0306261924020397.html
   My bibliography  Save this article

Investments in green hydrogen as a flexibility source for the European power system by 2050: Does it pay off?

Author

Listed:
  • Ahang, Mohammadreza
  • Granado, Pedro Crespo del
  • Tomasgard, Asgeir

Abstract

The European Union aims to deploy a high share of renewable energy sources in Europe’s power system by 2050. Large-scale intermittent wind and solar power production requires flexibility to ensure an adequate supply–demand balance. Green hydrogen (GH) can increase power systems’ flexibility and decrease renewable energy production’s curtailment. However, investing in GH is costly and dependent on electricity prices, which are important for operational costs in electrolysis. Moreover, the use of GH for power system flexibility might not be economically viable if there is no hydrogen demand from the hydrogen market. If so, questions would arise as to, what would be the incentives to introduce GH as a source of flexibility in the power system, and how would electrolyzer costs, hydrogen demand, and other factors affect the economic viability of GH usage for power system flexibility. The paper implements a European power system model formulated as a stochastic program to address these questions. The authors use the model to compare various instances with hydrogen in the power system to a no-hydrogen instance. The results indicate that by 2050 deployment of approximately 140 GW of GH will pay off investments and make the technology economically viable. We find that the price of hydrogen is estimated to be around €30/MWh.

Suggested Citation

  • Ahang, Mohammadreza & Granado, Pedro Crespo del & Tomasgard, Asgeir, 2025. "Investments in green hydrogen as a flexibility source for the European power system by 2050: Does it pay off?," Applied Energy, Elsevier, vol. 378(PA).
  • Handle: RePEc:eee:appene:v:378:y:2025:i:pa:s0306261924020397
    DOI: 10.1016/j.apenergy.2024.124656
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0306261924020397
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.apenergy.2024.124656?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Komiyama, Ryoichi & Otsuki, Takashi & Fujii, Yasumasa, 2015. "Energy modeling and analysis for optimal grid integration of large-scale variable renewables using hydrogen storage in Japan," Energy, Elsevier, vol. 81(C), pages 537-555.
    2. Stöckl, Fabian & Schill, Wolf-Peter & Zerrahn, Alexander, 2021. "Optimal supply chains and power sector benefits of green hydrogen," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 11.
    3. Pina, André & Silva, Carlos & Ferrão, Paulo, 2012. "The impact of demand side management strategies in the penetration of renewable electricity," Energy, Elsevier, vol. 41(1), pages 128-137.
    4. Karunanithi, K. & Saravanan, S. & Prabakar, B.R. & Kannan, S. & Thangaraj, C., 2017. "Integration of Demand and Supply Side Management strategies in Generation Expansion Planning," Renewable and Sustainable Energy Reviews, Elsevier, vol. 73(C), pages 966-982.
    5. Hainsch, Karlo & Löffler, Konstantin & Burandt, Thorsten & Auer, Hans & Crespo del Granado, Pedro & Pisciella, Paolo & Zwickl-Bernhard, Sebastian, 2022. "Energy transition scenarios: What policies, societal attitudes, and technology developments will realize the EU Green Deal?," Energy, Elsevier, vol. 239(PC).
    6. Gunther Glenk & Stefan Reichelstein, 2019. "Publisher Correction: Economics of converting renewable power to hydrogen," Nature Energy, Nature, vol. 4(4), pages 347-347, April.
    7. Hernandez, Drake D. & Gençer, Emre, 2021. "Techno-economic analysis of balancing California’s power system on a seasonal basis: Hydrogen vs. lithium-ion batteries," Applied Energy, Elsevier, vol. 300(C).
    8. Héctor Marañón-Ledesma & Asgeir Tomasgard, 2019. "Analyzing Demand Response in a Dynamic Capacity Expansion Model for the European Power Market," Energies, MDPI, vol. 12(15), pages 1-24, August.
    9. Michal Kaut & Kjetil Midthun & Adrian Werner & Asgeir Tomasgard & Lars Hellemo & Marte Fodstad, 2014. "Multi-horizon stochastic programming," Computational Management Science, Springer, vol. 11(1), pages 179-193, January.
    10. Xiong, Bobby & Predel, Johannes & Crespo del Granado, Pedro & Egging-Bratseth, Ruud, 2021. "Spatial flexibility in redispatch: Supporting low carbon energy systems with Power-to-Gas," Applied Energy, Elsevier, vol. 283(C).
    11. Lux, Benjamin & Pfluger, Benjamin, 2020. "A supply curve of electricity-based hydrogen in a decarbonized European energy system in 2050," Applied Energy, Elsevier, vol. 269(C).
    12. Hesel, Philipp & Braun, Sebastian & Zimmermann, Florian & Fichtner, Wolf, 2022. "Integrated modelling of European electricity and hydrogen markets," Applied Energy, Elsevier, vol. 328(C).
    13. Farrell, Niall, 2023. "Policy design for green hydrogen," Renewable and Sustainable Energy Reviews, Elsevier, vol. 178(C).
    14. Backe, Stian & Zwickl-Bernhard, Sebastian & Schwabeneder, Daniel & Auer, Hans & Korpås, Magnus & Tomasgard, Asgeir, 2022. "Impact of energy communities on the European electricity and heating system decarbonization pathway: Comparing local and global flexibility responses," Applied Energy, Elsevier, vol. 323(C).
    15. Hanley, Emma S. & Deane, JP & Gallachóir, BP Ó, 2018. "The role of hydrogen in low carbon energy futures–A review of existing perspectives," Renewable and Sustainable Energy Reviews, Elsevier, vol. 82(P3), pages 3027-3045.
    16. Al-Qahtani, Amjad & Parkinson, Brett & Hellgardt, Klaus & Shah, Nilay & Guillen-Gosalbez, Gonzalo, 2021. "Uncovering the true cost of hydrogen production routes using life cycle monetisation," Applied Energy, Elsevier, vol. 281(C).
    17. Fodstad, Marte & Crespo del Granado, Pedro & Hellemo, Lars & Knudsen, Brage Rugstad & Pisciella, Paolo & Silvast, Antti & Bordin, Chiara & Schmidt, Sarah & Straus, Julian, 2022. "Next frontiers in energy system modelling: A review on challenges and the state of the art," Renewable and Sustainable Energy Reviews, Elsevier, vol. 160(C).
    18. Durakovic, Goran & del Granado, Pedro Crespo & Tomasgard, Asgeir, 2023. "Powering Europe with North Sea offshore wind: The impact of hydrogen investments on grid infrastructure and power prices," Energy, Elsevier, vol. 263(PA).
    19. Backe, Stian & Ahang, Mohammadreza & Tomasgard, Asgeir, 2021. "Stable stochastic capacity expansion with variable renewables: Comparing moment matching and stratified scenario generation sampling," Applied Energy, Elsevier, vol. 302(C).
    20. Gunther Glenk & Stefan Reichelstein, 2019. "Economics of converting renewable power to hydrogen," Nature Energy, Nature, vol. 4(3), pages 216-222, March.
    21. Li, Chengzhe & Zhang, Libo & Ou, Zihan & Ma, Jiayu, 2022. "Using system dynamics to evaluate the impact of subsidy policies on green hydrogen industry in China," Energy Policy, Elsevier, vol. 165(C).
    22. Emile Cammeraat & Antoine Dechezleprêtre & Guy Lalanne, 2022. "Innovation and industrial policies for green hydrogen," OECD Science, Technology and Industry Policy Papers 125, OECD Publishing.
    23. Balasubramanian, S. & Balachandra, P., 2021. "Effectiveness of demand response in achieving supply-demand matching in a renewables dominated electricity system: A modelling approach," Renewable and Sustainable Energy Reviews, Elsevier, vol. 147(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Blanco, Herib & Leaver, Jonathan & Dodds, Paul E. & Dickinson, Robert & García-Gusano, Diego & Iribarren, Diego & Lind, Arne & Wang, Changlong & Danebergs, Janis & Baumann, Martin, 2022. "A taxonomy of models for investigating hydrogen energy systems," Renewable and Sustainable Energy Reviews, Elsevier, vol. 167(C).
    2. Lüth, Alexandra & Werner, Yannick & Egging-Bratseth, Ruud & Kazempour, Jalal, 2024. "Electrolysis as a flexibility resource on energy islands: The case of the North Sea," Energy Policy, Elsevier, vol. 185(C).
    3. Kirchem, Dana & Schill, Wolf-Peter, 2023. "Power sector effects of green hydrogen production in Germany," Energy Policy, Elsevier, vol. 182(C).
    4. Lüth, Alexandra & Keles, Dogan, 2024. "Risks, strategies, and benefits of offshore energy hubs: A literature-based survey," Renewable and Sustainable Energy Reviews, Elsevier, vol. 203(C).
    5. Zaiter, Issa & Ramadan, Mohamad & Bouabid, Ali & Mayyas, Ahmad & El-Fadel, Mutasem & Mezher, Toufic, 2024. "Enabling industrial decarbonization: Framework for hydrogen integration in the industrial energy systems," Renewable and Sustainable Energy Reviews, Elsevier, vol. 203(C).
    6. Østergaard, P.A. & Lund, H. & Thellufsen, J.Z. & Sorknæs, P. & Mathiesen, B.V., 2022. "Review and validation of EnergyPLAN," Renewable and Sustainable Energy Reviews, Elsevier, vol. 168(C).
    7. Abadie, Luis Mª & Chamorro, José M., 2023. "Investment in wind-based hydrogen production under economic and physical uncertainties," Applied Energy, Elsevier, vol. 337(C).
    8. Stöckl, Fabian & Schill, Wolf-Peter & Zerrahn, Alexander, 2021. "Optimal supply chains and power sector benefits of green hydrogen," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 11.
    9. Shirizadeh, Behrang & Quirion, Philippe, 2023. "Long-term optimization of the hydrogen-electricity nexus in France: Green, blue, or pink hydrogen?," Energy Policy, Elsevier, vol. 181(C).
    10. Ringkjøb, Hans-Kristian & Haugan, Peter M. & Nybø, Astrid, 2020. "Transitioning remote Arctic settlements to renewable energy systems – A modelling study of Longyearbyen, Svalbard," Applied Energy, Elsevier, vol. 258(C).
    11. Shen, Xiaojun & Li, Xingyi & Yuan, Jiahai & Jin, Yu, 2022. "A hydrogen-based zero-carbon microgrid demonstration in renewable-rich remote areas: System design and economic feasibility," Applied Energy, Elsevier, vol. 326(C).
    12. Schlund, David & Theile, Philipp, 2022. "Simultaneity of green energy and hydrogen production: Analysing the dispatch of a grid-connected electrolyser," Energy Policy, Elsevier, vol. 166(C).
    13. Nyangon, Joseph & Darekar, Ayesha, 2024. "Advancements in hydrogen energy systems: A review of levelized costs, financial incentives and technological innovations," Innovation and Green Development, Elsevier, vol. 3(3).
    14. Okunlola, Ayodeji & Davis, Matthew & Kumar, Amit, 2023. "Assessing the cost competitiveness of electrolytic hydrogen production from small modular nuclear reactor-based power plants: A price-following perspective," Applied Energy, Elsevier, vol. 346(C).
    15. Lifeng Du & Yanmei Yang & Luli Zhou & Min Liu, 2024. "Greenhouse Gas Reduction Potential and Economics of Green Hydrogen via Water Electrolysis: A Systematic Review of Value-Chain-Wide Decarbonization," Sustainability, MDPI, vol. 16(11), pages 1-37, May.
    16. George, Jan Frederick & Müller, Viktor Paul & Winkler, Jenny & Ragwitz, Mario, 2022. "Is blue hydrogen a bridging technology? - The limits of a CO2 price and the role of state-induced price components for green hydrogen production in Germany," Energy Policy, Elsevier, vol. 167(C).
    17. Beckmann, Jonas & Klöckner, Kai & Letmathe, Peter, 2024. "Scenario-based multi-criteria evaluation of sector coupling-based technology pathways for decarbonization with varying degrees of disruption," Energy, Elsevier, vol. 297(C).
    18. Romero, Alberto & Millar, Dean & Carvalho, Monica & Abrahão, Raphael, 2020. "100% renewable fueled mine," Energy, Elsevier, vol. 205(C).
    19. Ma, Huan & Sun, Qinghan & Chen, Lei & Chen, Qun & Zhao, Tian & He, Kelun & Xu, Fei & Min, Yong & Wang, Shunjiang & Zhou, Guiping, 2023. "Cogeneration transition for energy system decarbonization: From basic to flexible and complementary multi-energy sources," Renewable and Sustainable Energy Reviews, Elsevier, vol. 187(C).
    20. Davis, M. & Okunlola, A. & Di Lullo, G. & Giwa, T. & Kumar, A., 2023. "Greenhouse gas reduction potential and cost-effectiveness of economy-wide hydrogen-natural gas blending for energy end uses," Renewable and Sustainable Energy Reviews, Elsevier, vol. 171(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:appene:v:378:y:2025:i:pa:s0306261924020397. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/405891/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.