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How flexible electricity demand stabilizes wind and solar market values: the case of hydrogen electrolyzers

  • Wind and solar energy are often expected to fall victim to their own success: the higher their share in electricity production, the more their revenue on electricity markets (their “market value”) declines. While in conventional power systems, the market value may converge to zero, this study demonstrates that “green” hydrogen production, through adding electricity demand in low-price hours, can effectively and permanently halt the decline. With an analytical derivation, a Monte Carlo simulation, and a numerical electricity market model, I find that – due to flexible hydrogen production alone – market values across Europe likely converge above €19 ± 9 MWh-1 for solar energy and above €27 ± 8 MWh-1 for wind energy in 2050 (annual mean estimate ± standard deviation). This lower boundary is in the range of the projected levelized costs of renewables and has profound implications. Market-based renewables may hence be within reach. simulation, and a numerical electricity market model, I find that – due to flexible hydrogen production alone – market values across Europe likely converge above €19 ± 9 MWh-1 for solar energy and above €27 ± 8 MWh-1 for wind energy in 2050 (annual mean estimate ± standard deviation). This lower boundary is in the range of the projected levelized costs of renewables and has profound implications. Market-based renewables may hence be within reach.

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Metadaten
Document Type:Article
Language:English
Author(s):Oliver Ruhnau
Parent Title (English):Applied Energy, Elsevier
Publication year:2022
Publishing Institution:Hertie School
DOI:https://doi.org/10.1016/j.apenergy.2021.118194
Release Date:2021/12/09
Tag:Centre for Sustainability; electricity economics; electricity market; flexible electricity demand; hydrogen electrolysis; integrated energy system; renewable energy
Volume:307
Hertie School Research:Centre for Sustainability
Licence of document (German):Metadaten / metadata
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