# Optimal supply chains and power sector benefits of green hydrogen

**Authors:** Fabian Stockl, Wolf-Peter Schill, Alexander Zerrahn  
**arXiv:** [2005.03464](https://arxiv.org/abs/2005.03464)  
**Date:** 2020-04-09  
**Summary page:** https://www.summarizepaper.com/en/paper/2005.03464v5/

## Key points

- Green hydrogen has the potential to decarbonize parts of the transportation sector
- Interactions between green hydrogen and the power sector are not well understood
- Lack of understanding hinders analysis of benefits and challenges related to integrating variable renewables and different hydrogen production/distribution options
- Researchers conducted a comprehensive study using an open-source co-optimization model to address this gap
- Study is a novel contribution by conducting first full co-optimization of different hydrogen supply chains and power sector
- Trade-off between energy efficiency and temporal flexibility for different hydrogen supply chains was investigated by varying assumptions on future demand and renewable energy shares
- Analysis considered optimal capacity, dispatch outcomes in power sector, utilizing DIETER model for cost minimization and considering various constraints
- Trade-off identified: small-scale electrolysis more energy-efficient but less flexible for lower renewables/hydrogen shares; large-scale supply chains become important with increased renewable shares for storage flexibility
- Research provides insights into how different hydrogen supply chain options impact power sector dynamics and contribute to reducing renewable surplus generation.

## Summary

Green hydrogen has the potential to play a significant role in decarbonizing parts of the transportation sector. However, its interactions with the power sector are not well understood. This lack of understanding hinders a thorough analysis of the benefits and challenges associated with integrating variable renewables and different hydrogen production and distribution options. To address this gap, a team of researchers conducted a comprehensive study using an open-source co-optimization model that considers various scenarios involving future hydrogen demand and the share of renewable energy sources. The study represents a novel contribution to the existing literature by conducting the first full co-optimization of different hydrogen supply chains and the power sector. By systematically varying assumptions on future hydrogen demand and renewable energy shares, the researchers were able to investigate the trade-off between energy efficiency and temporal flexibility for different hydrogen supply chains. The analysis also examined how these factors interacted with optimal capacity and dispatch outcomes in the power sector. The researchers utilized an established open-source power sector model called DIETER, which has been previously used for analyzing renewable energy integration and storage options. The model minimizes total system costs by considering annualized investment costs, hourly variable costs of electricity generation, storage technologies, electrolysis, as well as storage, conversion, and transportation of hydrogen. Constraints such as market balances for electricity and hydrogen supply are taken into account along with capacity limits for generation and investment. The results of the study highlight that there is a trade-off between energy efficiency and temporal flexibility when it comes to choosing between small-scale on-site electrolysis or large-scale hydrogen supply chains. For lower shares of renewables and hydrogen, more energy-efficient but less flexible small-scale electrolysis may be optimal. However, as renewable energy shares increase, more flexible large-scale hydrogen supply chains become important as they allow for disentangling production from demand through storage. Overall, this research provides valuable insights into how different hydrogen supply chain options can impact power sector dynamics and contribute to reducing renewable surplus generation. Energy modelers and system planners should consider these findings when assessing the role of green hydrogen in future energy transition scenarios.