The EU is working on a new definition of “green hydrogen.” The Institute of Energy Economics (EWI) published a policy brief that illustrates the potential effects on electrolyzers.
A definition of “green” hydrogen is being developed by the European Commission. Hydrogen must be produced using green electricity, according to one of the expected criteria. Furthermore, electricity generated from renewable energy (RE) sources should be timed and balanced with the electrolyser’s electricity consumption. The simultaneity obligation is what it’s called.
If the EU interprets this simultaneity obligation strictly, indirect emissions in the electricity sector will decrease, but electrolysers will be significantly less cost-effective and produce less hydrogen. The policy brief “The Simultaneity Obligation for Renewable Electricity and Hydrogen Production – An Analysis of Electrolyser Economic Viability” comes to this conclusion. The Society of Benefactors provided funding for this research, which is based on the recently published working paper “Simultaneity of green energy and hydrogen production: Analyzing the dispatch of a grid-connected electrolyser.”
As part of the revised Renewable Energy Directive, the European Commission intends to decide on a delegated act (RED II). It addresses, among other things, the criteria for green hydrogen.
The EWI team compares an electrolyser dispatch without and with simultaneity in the policy brief. A one-year simultaneity, for example, means that hydrogen production must coincide in time and balance with the availability of renewable electricity throughout the year. Because the full load hours of the RE-plant define the upper limit of hydrogen production, even such a rule would reduce the hydrogen production of an electrolyser by more than 20%. In this case, the effects on the electrolyser’s profit are minor. If the simultaneity rule is tightened, however, both full load hours of hydrogen production and the contribution margin are reduced.
In terms of emissions, the simultaneity rule achieves its goal of reducing indirect emissions in the power sector. In the case of hourly simultaneity, they can be up to 80% lower than the reference case. Interactions with the European Emissions Trading Scheme (EU ETS) also have an impact on actual emissions. In addition to the simultaneous production of RE-electricity and hydrogen, the expansion of RE capacities is critical in order to provide the required electricity surplus for hydrogen production.
