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Nuclear hydrogen: An assessment of product flexibility and market viability

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  • Botterud, Audun
  • Yildiz, Bilge
  • Conzelmann, Guenter
  • Petri, Mark C.

Abstract

Nuclear energy has the potential to play an important role in the future energy system as a large-scale source of hydrogen without greenhouse gas emissions. Thus far, economic studies of nuclear hydrogen tend to focus on the levelized cost of hydrogen without accounting for the risks and uncertainties that potential investors would face. We present a financial model based on real options theory to assess the profitability of different nuclear hydrogen production technologies in evolving electricity and hydrogen markets. The model uses Monte Carlo simulations to represent uncertainty in future hydrogen and electricity prices. It computes the expected value and the distribution of discounted profits from nuclear hydrogen production plants. Moreover, the model quantifies the value of the option to switch between hydrogen and electricity production, depending on what is more profitable to sell. We use the model to analyze the market viability of four potential nuclear hydrogen technologies and conclude that flexibility in output product is likely to add significant economic value for an investor in nuclear hydrogen. This should be taken into account in the development phase of nuclear hydrogen technologies.

Suggested Citation

  • Botterud, Audun & Yildiz, Bilge & Conzelmann, Guenter & Petri, Mark C., 2008. "Nuclear hydrogen: An assessment of product flexibility and market viability," Energy Policy, Elsevier, vol. 36(10), pages 3961-3973, October.
    • Handle: RePEc:eee:enepol:v:36:y:2008:i:10:p:3961-3973
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    References listed on IDEAS

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    Cited by:

    1. Zhang, Mingming & Tang, Yamei & Liu, Liyun & Zhou, Dequn, 2022. "Optimal investment portfolio strategies for power enterprises under multi-policy scenarios of renewable energy," Renewable and Sustainable Energy Reviews, Elsevier, vol. 154(C).
    2. Jenkins, J.D. & Zhou, Z. & Ponciroli, R. & Vilim, R.B. & Ganda, F. & de Sisternes, F. & Botterud, A., 2018. "The benefits of nuclear flexibility in power system operations with renewable energy," Applied Energy, Elsevier, vol. 222(C), pages 872-884.
    3. 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).
    4. Mazloomi, Kaveh & Gomes, Chandima, 2012. "Hydrogen as an energy carrier: Prospects and challenges," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(5), pages 3024-3033.
    5. Rob Hovsapian & Julian D. Osorio & Mayank Panwar & Chryssostomos Chryssostomidis & Juan C. Ordonez, 2021. "Grid-Scale Ternary-Pumped Thermal Electricity Storage for Flexible Operation of Nuclear Power Generation under High Penetration of Renewable Energy Sources," Energies, MDPI, vol. 14(13), pages 1-15, June.
    6. Tian Zhao & Zhixin Liu, 2023. "Investment Timing Analysis of Hydrogen-Refueling Stations and the Case of China: Independent or Co-Operative Investment?," Energies, MDPI, vol. 16(13), pages 1-17, June.
    7. Hampe, Jona & Madlener, Reinhard, 2012. "Economics of High-Temperature Nuclear Reactors for Industrial Cogeneration," FCN Working Papers 10/2012, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).

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