Harnessing the power of hydrogen: Economic feasibility of hydrogen-based electricity storage units applying price arbitrage in the Italian spot market and their potential grid applications

Pozzi, Luciano Giuseppe

4. Term

Urban, Energy and Environmental Planning, Master

2014

2014-08-06

95

Dette speciale vurderer, om investering i brintbaseret el‑lagring kan være økonomisk bæredygtig, og hvilke gevinster den kan give for elnettet. Det italienske day‑ahead elmarked har store prisforskelle mellem lavlast og spidsbelastning, især ved salg fra ofte trængte zoner. Derfor placeres lagringsanlægget på Sicilien. Anlægget bruger billig strøm til at spalte vand til brint i et elektrolyseanlæg (opladning), lagrer brinten i tryksatte tanke og omdanner den senere til el i brændselsceller (afladning). Ved at flytte energi fra lavlast til spidslast skal lagringen: øge andelen af vedvarende energi, mindske overførselsflaskehalse og styrke konkurrence på markedet. En optimal driftsstrategi er udarbejdet, og netto driftsindtægter er modelleret i softwaren energyPRO. Både den nuværende (2014) og en fremtidig (2025) teknologisk udvikling er analyseret, samt en mulig ordning, hvor fjernvarme belønner nyttiggjort spildvarme. Den analyserede enhed har 3 MW elektrisk input, 2 MW elektrisk output og 20 MWh energilager. Med en 20‑årig vurdering, 2,5% real diskonteringsrente og 2% inflation er investeringen ikke rentabel med 2014‑teknologi og ‑omkostninger. Med forventede 2025‑omkostninger og ‑ydelse forbedres økonomien: netto nutidsværdi (NPV, summen af diskonterede fremtidige pengestrømme) er 0,352 mio. EUR uden incitamenter og 5,913 mio. EUR med incitamenter; den interne forrentning (IRR) er 5,4% og 16%; og den diskonterede tilbagebetalingstid er ca. 11 og 5 år. Resultaterne peger på, at politisk støtte er afgørende for brintteknologier i dag og sandsynligvis også fremover. Netvirkningerne er som forventet. I 2013 falder 62% af de timer, hvor anlægget lader op, sammen med toppe i produktion af vedvarende energi, og i 81% af timerne er der mangel på vedvarende produktion i zonen. Når anlægget aflader, hjælper det med at forhindre zonal import‑trængsel i 98% af timerne; under opladning bidrager det til at forhindre eksport‑trængsel i 22% af timerne. Den øgede markedskonkurrence er vurderet med Residual Supply Index (RSI).

This thesis assesses whether investing in hydrogen‑based electricity storage can be financially viable and what benefits it can bring to the power grid. Italy’s day‑ahead electricity market shows large price differences between off‑peak and peak hours, especially when selling from frequently congested zones. For this reason, the storage system is placed in Sicily. The system uses low‑price electricity to split water into hydrogen in an electrolyser (charging), stores the hydrogen in pressurised tanks, and later converts it back to electricity in fuel cells (discharging). By shifting energy from off‑peak to peak periods, the storage aims to: increase the share of renewable energy, reduce transmission bottlenecks, and strengthen market competition. An optimal operating strategy was designed and net operating income was modelled with the energyPRO software. Both current (2014) and projected (2025) technology costs were analysed, along with a possible incentive for district heating that pays for recovered waste heat. The unit considered has 3 MW electrical input, 2 MW electrical output, and 20 MWh of energy storage. Under a 20‑year evaluation with a 2.5% real discount rate and 2% inflation, the investment is not feasible with 2014 technology and costs. With 2025 cost and performance projections, the economics improve: net present value (NPV, the sum of discounted future cash flows) is €0.352 million without incentives and €5.913 million with incentives; the internal rate of return (IRR) is 5.4% and 16%; and the discounted payback period is about 11 and 5 years, respectively. These results indicate that policy support is crucial for hydrogen technologies now and likely will remain so. Grid impacts are in line with expectations. In 2013, 62% of the hours when the storage is charging coincide with peaks in renewable energy production, and in 81% of the hours there is a lack of renewable generation in the zone. When discharging, the storage helps prevent zonal transmission congestion on imports in 98% of hours; during charging, it helps prevent export congestion in 22% of hours. The resulting increase in market competition was assessed using the Residual Supply Index (RSI).

[This abstract was generated with the help of AI]

hydrogen ; price arbitrage ; transmission ; Italian ; spot market ; congestion ; RSI index ; market ; competition ; renewable ; energy ; penetration ; Sicily ; congested ; grid ; storage ; optimization ; operational ; energyPRO

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