Portfolio Effects in Green Hydrogen Production Under Temporal Matching Requirements

Abstract

This article investigates temporal matching requirements for green hydrogen. While previous studies found that a more granular matching increases production costs, we focus on cost advantages under hourly matching through technological and geographical diversification. To quantify the resulting portfolio effects, we further develop and apply a linear cost-optimization model. We identify two types of portfolio effects, “technological” and “locational”, and quantify them for different portfolio sizes and types of electricity generation technologies. We find portfolio effects in the range of 3–7% when aggregating two locations, and up to 21% for a Germany-wide portfolio. We discuss the implications of our findings in terms of discrimination against small players and for the modeling of temporal matching requirements.

Keywords: Green hydrogen, renewable energy, portfolio effects, risk diversification

JEL Classification: Q42, Q48, Q58