FLEXIBLE GRID HYDROGEN PRODUCTION: BEYOND THE COLOURS TAXONOMY

Electrolytic hydrogen can enhance energy flexibility and security, acting as a clean feedstock and fuel. Modelling has shown that integrating electrolysis with the electricity system can lower consumer costs and curtailment of renewable energy, yet strict carbon intensity policy requirements regarding electrolysis threaten to push hydrogen production ‘off-grid’. This work aims to examine if such policies are optimal by investigating if grid-connected electrolysis can deliver cost-effective emissions reductions in comparison to off-grid electrolysis. Hydrogen production and storage are modelled using hourly data for wind output, electricity market prices, and the carbon intensity of grid electricity. Three scenarios for 2030 are analysed: Flexible grid-connected, off-grid, and hybrid (use of both dedicated renewables and grid electricity) electrolysis. Using grid electricity for electrolysis can deliver lower-cost hydrogen than off-grid electrolysis, whilst delivering similar levels of emissions reductions. The grid-connected scenario produces a levelised cost of hydrogen (LCOH) of 2.05-3.10/kgH2 in 2030, with an emissions reduction of up to 95% when displacing diesel use in buses. This compares to an LCOH of 4.40-11.60/kgH2 for off-grid hydrogen production from offshore wind. This points to the need for transparency in monitoring the carbon intensity of hydrogen and for policymakers to look beyond the reductionist colours taxonomy.