Hydrogen in Europe’s system integration

A “one system view” is necessary for planning and operating hydrogen says the European TSO organisation ENTSO-E.

In a new position paper ENTSO-E points to the need for hydrogen production, currently representing a modest fraction of the energy mix and largely produced from fossil fuels, to expand to a much larger scale and become fully decarbonised if it is to contribute to climate neutrality.

However, while efforts to develop a new role for hydrogen in the decarbonisation of Europe’s energy system are welcome, the region is at a crossroads and needs to implement the right policy, market and investment decisions.

ENTSO-E argues that hydrogen is a tool for reaching decarbonisation targets and not an end in itself. It should be benchmarked against other available options, bearing in mind that direct electrification should be prioritised as the most energy efficient solution without the transformation losses arising in conversion of hydrogen from electricity.

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Coupled to this is the need to develop a business case for hydrogen in an electricity system operation support function, which currently does not exist, along with a properly designed regulated environment to support its development.

ENTSO-E indicates that hydrogen fired power plants should play a role in delivering flexibility to the grid. However, this will require structural investments – beyond those in electrolysers – in hydrogen grids and storage.

Depending on how they are operated, the electrolysers themselves can become consumers of system flexibility instead of providers. A trade-off between electrolyser economic aspects, i.e. CAPEX, OPEX, load factor, and the needs of the system is needed in any future business case.

Last but not least, the location of electrolysers is a strategic structural question and determines whether electricity or hydrogen must be transported from the generation site, says ENTSO-E.

Defining for each asset the best location will depend on different factors such as the availability of cheap and abundant renewables, transport options, industry’s commitment to use and store hydrogen, the supply’s energy security and infrastructure efficiency.

Hence, coordination between hydrogen and the electric network system operators is needed and the installation and system supporting operation of electrolysers should be incentivised at locations suitable for this purpose.

Such a multi-sectoral approach should occur bottom up from regions to Europe to maximise the potential benefits of hydrogen investments and ensure they are developed and operated in a coordinated way.

It also will allow for delivering sound and cost efficient solutions to challenges such as the need for grid reinforcement and leveraging additional flexibility from the use of electrolysers.