Economics of Converting Renewable Power to Hydrogen

Nature Energy 4, 216–222 (2019). https://doi.org/10.1038/s41560-019-0326-1

Posted: 10 Mar 2021

Date Written: February 25, 2019

Abstract

The recent sharp decline in the cost of renewable energy suggests that the production of hydrogen from renewable power through a Power-to-Gas process might become more economical. Here we examine this alternative from the perspective of an investor who considers a hybrid energy system that combines renewable power with an efficiently sized Power-to-Gas facility. The available capacity can be optimized in real time so as to take advantage of fluctuations in electricity prices and intermittent renewable power generation. We apply our model to the current environment in both Germany and Texas and find that renewable hydrogen is already cost competitive in niche applications (3.23 €/kg), though not yet for industrial-scale supply. This conclusion, however, is projected to change within a decade (2.50 €/kg) provided recent market trends continue in the coming years.

Keywords: hydrogen, renewable energy, power-to-gas, energy storage

Suggested Citation

Glenk, Gunther and Reichelstein, Stefan, Economics of Converting Renewable Power to Hydrogen (February 25, 2019). Nature Energy 4, 216–222 (2019). https://doi.org/10.1038/s41560-019-0326-1, Available at SSRN: https://ssrn.com/abstract=3767877

Gunther Glenk (Contact Author)

University of Mannheim ( email )

Mannheim Institute for Sustainable Energy Studies
Mannheim, 68131
Germany

Stefan Reichelstein

Stanford University ( email )

Stanford, CA 94305
United States

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