IDEAS home Printed from https://ideas.repec.org/a/gam/jeners/v16y2023i9p3737-d1134149.html
   My bibliography  Save this article

Can Hydrogen Production Be Economically Viable on the Existing Gas-Fired Power Plant Location? New Empirical Evidence

Author

Listed:
  • Andrea Dumančić

    (Faculty of Economics and Business, University of Rijeka, 51000 Rijeka, Croatia)

  • Nela Vlahinić Lenz

    (Faculty of Economics and Business, University of Rijeka, 51000 Rijeka, Croatia)

  • Goran Majstrović

    (Energy Institute Hrvoje Požar, 10000 Zagreb, Croatia)

Abstract

The paper provides an economic model for the assessment of hydrogen production at the site of an existing thermal power plant, which is then integrated into the existing gas grid. The model uses projections of electricity prices, natural gas prices, and CO 2 prices, as well as estimates of the cost of building a power-to-gas system for a 25-year period. The objective of this research is to calculate the yellow hydrogen production price for each lifetime year of the Power-to-gas system to evaluate yellow hydrogen competitiveness compared to the fossil alternatives. We test if an incentive scheme is needed to make this technology economically viable. The research also provides several sensitivity scenarios of electricity, natural gas, and CO 2 price changes. Our research results clearly prove that yellow hydrogen is not yet competitive with fossil alternatives and needs incentive mechanisms for the time being. At given natural gas and CO 2 prices, the incentive for hydrogen production needs to be 52.90 EUR/MWh in 2025 and 36.18 EUR/MWh in 2050. However, the role of hydrogen in the green transition could be very important as it provides ancillary services and balances energy sources in the power system.

Suggested Citation

  • Andrea Dumančić & Nela Vlahinić Lenz & Goran Majstrović, 2023. "Can Hydrogen Production Be Economically Viable on the Existing Gas-Fired Power Plant Location? New Empirical Evidence," Energies, MDPI, vol. 16(9), pages 1-20, April.
    • Handle: RePEc:gam:jeners:v:16:y:2023:i:9:p:3737-:d:1134149
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1996-1073/16/9/3737/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1996-1073/16/9/3737/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ali Ekhtiari & Damian Flynn & Eoin Syron, 2020. "Investigation of the Multi-Point Injection of Green Hydrogen from Curtailed Renewable Power into a Gas Network," Energies, MDPI, vol. 13(22), pages 1-21, November.
    2. Romeo, Luis M. & Cavana, Marco & Bailera, Manuel & Leone, Pierluigi & Peña, Begoña & Lisbona, Pilar, 2022. "Non-stoichiometric methanation as strategy to overcome the limitations of green hydrogen injection into the natural gas grid," Applied Energy, Elsevier, vol. 309(C).
    3. Ruhnau, Oliver, 2022. "How flexible electricity demand stabilizes wind and solar market values: The case of hydrogen electrolyzers," Applied Energy, Elsevier, vol. 307(C).
    4. David Jure Jovan & Gregor Dolanc, 2020. "Can Green Hydrogen Production Be Economically Viable under Current Market Conditions," Energies, MDPI, vol. 13(24), pages 1-16, December.
    5. Mikovits, Christian & Wetterlund, Elisabeth & Wehrle, Sebastian & Baumgartner, Johann & Schmidt, Johannes, 2021. "Stronger together: Multi-annual variability of hydrogen production supported by wind power in Sweden," Applied Energy, Elsevier, vol. 282(PB).
    6. Amin Lahnaoui & Christina Wulf & Didier Dalmazzone, 2021. "Optimization of Hydrogen Cost and Transport Technology in France and Germany for Various Production and Demand Scenarios," Energies, MDPI, vol. 14(3), pages 1-21, January.
    7. Marco Pellegrini & Alessandro Guzzini & Cesare Saccani, 2020. "A Preliminary Assessment of the Potential of Low Percentage Green Hydrogen Blending in the Italian Natural Gas Network," Energies, MDPI, vol. 13(21), pages 1-22, October.
    8. Abigail Gonzalez-Diaz & Juan Carlos Sánchez Ladrón de Guevara & Long Jiang & Maria Ortencia Gonzalez-Diaz & Pablo Díaz-Herrera & Carolina Font-Palma, 2021. "Techno-Environmental Analysis of the Use of Green Hydrogen for Cogeneration from the Gasification of Wood and Fuel Cell," Sustainability, MDPI, vol. 13(6), pages 1-14, March.
    9. Böhm, Hans & Zauner, Andreas & Rosenfeld, Daniel C. & Tichler, Robert, 2020. "Projecting cost development for future large-scale power-to-gas implementations by scaling effects," Applied Energy, Elsevier, vol. 264(C).
    10. Peng Fu & Danny Pudjianto & Xi Zhang & Goran Strbac, 2020. "Integration of Hydrogen into Multi-Energy Systems Optimisation," Energies, MDPI, vol. 13(7), pages 1-19, April.
    11. Alexandra Kopteva & Leonid Kalimullin & Pavel Tcvetkov & Amilcar Soares, 2021. "Prospects and Obstacles for Green Hydrogen Production in Russia," Energies, MDPI, vol. 14(3), pages 1-21, January.
    12. Maeder, Mattia & Weiss, Olga & Boulouchos, Konstantinos, 2021. "Assessing the need for flexibility technologies in decarbonized power systems: A new model applied to Central Europe," Applied Energy, Elsevier, vol. 282(PA).
    13. Bareiß, Kay & de la Rua, Cristina & Möckl, Maximilian & Hamacher, Thomas, 2019. "Life cycle assessment of hydrogen from proton exchange membrane water electrolysis in future energy systems," Applied Energy, Elsevier, vol. 237(C), pages 862-872.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Arkadiusz Małek & Agnieszka Dudziak & Jacek Caban & Monika Stoma, 2024. "Strategic Model for Yellow Hydrogen Production Using the Metalog Family of Probability Distributions," Energies, MDPI, vol. 17(10), pages 1-24, May.
    2. Andrea Dumančić & Nela Vlahinić Lenz & Lahorko Wagmann, 2024. "Profitability Model of Green Hydrogen Production on an Existing Wind Power Plant Location," Sustainability, MDPI, vol. 16(4), pages 1-23, February.
    3. Milana Treshcheva & Daria Kolbantseva & Irina Anikina & Dmitriy Treshchev & Konstantin Kalmykov & Iaroslav Vladimirov, 2023. "Efficiency of Using Heat Pumps in a Hydrogen Production Unit at Steam-Powered Thermal Power Plants," Sustainability, MDPI, vol. 15(21), pages 1-23, October.

    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. Andrea Dumančić & Nela Vlahinić Lenz & Lahorko Wagmann, 2024. "Profitability Model of Green Hydrogen Production on an Existing Wind Power Plant Location," Sustainability, MDPI, vol. 16(4), pages 1-23, February.
    2. Michel Noussan & Pier Paolo Raimondi & Rossana Scita & Manfred Hafner, 2020. "The Role of Green and Blue Hydrogen in the Energy Transition—A Technological and Geopolitical Perspective," Sustainability, MDPI, vol. 13(1), pages 1-26, December.
    3. Pantò, Fabiola & Siracusano, Stefania & Briguglio, Nicola & Aricò, Antonino Salvatore, 2020. "Durability of a recombination catalyst-based membrane-electrode assembly for electrolysis operation at high current density," Applied Energy, Elsevier, vol. 279(C).
    4. Rezaei, Mostafa & Akimov, Alexandr & Gray, Evan Mac A., 2024. "Levelised cost of dynamic green hydrogen production: A case study for Australia's hydrogen hubs," Applied Energy, Elsevier, vol. 370(C).
    5. Anton Manakhov & Maxim Orlov & Mustafa Babiker & Abdulaziz S. Al-Qasim, 2022. "A Perspective on Decarbonizing Mobility: An All-Electrification vs. an All-Hydrogenization Venue," Energies, MDPI, vol. 15(15), pages 1-13, July.
    6. Koponen, Joonas & Ruuskanen, Vesa & Hehemann, Michael & Rauls, Edward & Kosonen, Antti & Ahola, Jero & Stolten, Detlef, 2020. "Effect of power quality on the design of proton exchange membrane water electrolysis systems," Applied Energy, Elsevier, vol. 279(C).
    7. Tarkowski, R. & Uliasz-Misiak, B., 2022. "Towards underground hydrogen storage: A review of barriers," Renewable and Sustainable Energy Reviews, Elsevier, vol. 162(C).
    8. Arturo de Risi & Gianpiero Colangelo & Marco Milanese, 2023. "Advanced Technologies for Green Hydrogen Production," Energies, MDPI, vol. 16(6), pages 1-4, March.
    9. Jimenez, I. Sanchez & Ribó-Pérez, D. & Cvetkovic, M. & Kochems, J. & Schimeczek, C. & de Vries, L.J., 2024. "Can an energy only market enable resource adequacy in a decarbonized power system? A co-simulation with two agent-based-models," Applied Energy, Elsevier, vol. 360(C).
    10. Nejc Klopčič & Thomas Stöhr & Ilena Grimmer & Markus Sartory & Alexander Trattner, 2022. "Refurbishment of Natural Gas Pipelines towards 100% Hydrogen—A Thermodynamic-Based Analysis," Energies, MDPI, vol. 15(24), pages 1-23, December.
    11. Bucksteeg, Michael & Mikurda, Jennifer & Weber, Christoph, 2023. "Integration of power-to-gas into electricity markets during the ramp-up phase—Assessing the role of carbon pricing," Energy Economics, Elsevier, vol. 124(C).
    12. Konstantin Gomonov & Marina Reshetnikova & Svetlana Ratner, 2023. "Economic Analysis of Recently Announced Green Hydrogen Projects in Russia: A Multiple Case Study," Energies, MDPI, vol. 16(10), pages 1-15, May.
    13. Andrea Dumančić & Nela Vlahinić & Minea Skok, 2024. "Replacing Gray Hydrogen with Renewable Hydrogen at the Consumption Location Using the Example of the Existing Fertilizer Plant," Sustainability, MDPI, vol. 16(15), pages 1-33, July.
    14. Kim, Sunwoo & Choi, Yechan & Park, Joungho & Adams, Derrick & Heo, Seongmin & Lee, Jay H., 2024. "Multi-period, multi-timescale stochastic optimization model for simultaneous capacity investment and energy management decisions for hybrid Micro-Grids with green hydrogen production under uncertainty," Renewable and Sustainable Energy Reviews, Elsevier, vol. 190(PA).
    15. Gabriele Loreti & Andrea Luigi Facci & Stefano Ubertini, 2021. "High-Efficiency Combined Heat and Power through a High-Temperature Polymer Electrolyte Membrane Fuel Cell and Gas Turbine Hybrid System," Sustainability, MDPI, vol. 13(22), pages 1-24, November.
    16. 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).
    17. Kolb, Sebastian & Plankenbühler, Thomas & Frank, Jonas & Dettelbacher, Johannes & Ludwig, Ralf & Karl, Jürgen & Dillig, Marius, 2021. "Scenarios for the integration of renewable gases into the German natural gas market – A simulation-based optimisation approach," Renewable and Sustainable Energy Reviews, Elsevier, vol. 139(C).
    18. Lim, Juin Yau & Safder, Usman & How, Bing Shen & Ifaei, Pouya & Yoo, Chang Kyoo, 2021. "Nationwide sustainable renewable energy and Power-to-X deployment planning in South Korea assisted with forecasting model," Applied Energy, Elsevier, vol. 283(C).
    19. Seck, Gondia Sokhna & Hache, Emmanuel & D'Herbemont, Vincent & Guyot, Mathis & Malbec, Louis-Marie, 2023. "Hydrogen development in Europe: Estimating material consumption in net zero emissions scenarios," International Economics, Elsevier, vol. 176(C).
    20. Negar Shaya & Simon Glöser-Chahoud, 2024. "A Review of Life Cycle Assessment (LCA) Studies for Hydrogen Production Technologies through Water Electrolysis: Recent Advances," Energies, MDPI, vol. 17(16), pages 1-21, August.

    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:gam:jeners:v:16:y:2023:i:9:p:3737-:d:1134149. 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: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    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.