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The Complementary Value of Hydrogen and Battery Storage in Integrated Electricity-Hydrogen Systems

Author

Listed:
  • Ange Blanchard

    (Chaire économie du climat - Chaire économie du climat, LGI - Laboratoire Génie Industriel - CentraleSupélec - Université Paris-Saclay)

Abstract

This paper examines the substitutability between long-term and short-term energy storage in a decarbonized electricity-hydrogen system, using Underground Hydrogen Storage (UHS) and Battery Energy Storage Systems (BESS) as proxies. Employing a Multi-Stage Stochastic Programming (MSDP) model for Germany in 2035, we assess the elasticity of substitution between the two technologies and find an asymmetric relationship: UHS substitutes BESS more effectively than the reverse, with elasticities of substitution of 3 and 1, respectively. Thus, we find UHS is vital for future low-carbon systems as it provides energy during extensive moments of energy shortage, the so-called dark doldrums events. However, we point out the classical missing money problem is very likely to materialize for UHS, as profits of UHS operators are very volatile. In addition to that, technological, regulatory risks as well as the risk of a lower than expected hydrogen demand make the business case of UHS very challenging. This calls for strong public support for UHS to bring to fruition and allow future energy systems to manage long period of low VRE output in a low-carbon fashion.

Suggested Citation

  • Ange Blanchard, 2024. "The Complementary Value of Hydrogen and Battery Storage in Integrated Electricity-Hydrogen Systems," Post-Print hal-04830323, HAL.
    • Handle: RePEc:hal:journl:hal-04830323
    as

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