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
Student thesis: Master thesis (including HD thesis)
- Luciano Giuseppe Pozzi
4. Term, Urban, Energy and Environmental Planning, Master (Master Programme)
In this study the economic feasibility of an investment in hydrogenbased electricity storage is investigated together with the potential grid applications of the storage. The Italian day-ahead electricity market shows significant prices differential between peak and off-peak hours. Due to the market structure, this differential is even higher if selling electricity from a frequently congested zone. For this reason the storage - formed by electrolysers (charging), pressurized tanks (storing) and fuel cells (discharging) - is located in Sicily. This zone is also a suitable field test for the grid application of the storage.
Time-shifting electricity from off-peak hours to peak hours the storage is expected to: (1) increase renewable energy (RE) depth of penetration, (2) help preventing transmission bottleneck and (3) increase
market competition.
Optimal operation strategy is designed and the net operating income is evaluated by means of the software energyPRO. Current (2014) and future (2025) techno-economic technology development is considered as well as the potential of an incentive scheme for district heating to incentivize the recovered heat. The analysed unit has 3 MW input/2 MW output and 20 MWh energy content.
It is found that the 20-year investment (2,5% real discount rate, 2% inflation) is not feasible, staying to the current techno-economic technology status. On the contrary, when simulating the future technoeconomic development for year 2025 the investment economy gets better with a NPV of EUR 0,352 m without incentives and EUR 5,913 m with incentives (IRR 5,4% and 16%, discounted payback period of 11 and 5). These results show that support policies are fundamental for the development of hydrogen technologies today and they will be in the future.
The impact of the hydrogen storage on the overall zonal grid has resulted in the expected grid benefits. In the analysed year 2013, 62% of the hours in which the storage is charging are peaks in RE production and in 81% of the hours there is lack of zonal RE production. In 98% of the hours in which the storage is discharging is helping to prevent zonal transmission congestion in import and in 22% of the hours in which is charging is helping prevent zonal transmission congestion in export. These result produce an higher market competition which is evaluated by means of the RSI index.
Time-shifting electricity from off-peak hours to peak hours the storage is expected to: (1) increase renewable energy (RE) depth of penetration, (2) help preventing transmission bottleneck and (3) increase
market competition.
Optimal operation strategy is designed and the net operating income is evaluated by means of the software energyPRO. Current (2014) and future (2025) techno-economic technology development is considered as well as the potential of an incentive scheme for district heating to incentivize the recovered heat. The analysed unit has 3 MW input/2 MW output and 20 MWh energy content.
It is found that the 20-year investment (2,5% real discount rate, 2% inflation) is not feasible, staying to the current techno-economic technology status. On the contrary, when simulating the future technoeconomic development for year 2025 the investment economy gets better with a NPV of EUR 0,352 m without incentives and EUR 5,913 m with incentives (IRR 5,4% and 16%, discounted payback period of 11 and 5). These results show that support policies are fundamental for the development of hydrogen technologies today and they will be in the future.
The impact of the hydrogen storage on the overall zonal grid has resulted in the expected grid benefits. In the analysed year 2013, 62% of the hours in which the storage is charging are peaks in RE production and in 81% of the hours there is lack of zonal RE production. In 98% of the hours in which the storage is discharging is helping to prevent zonal transmission congestion in import and in 22% of the hours in which is charging is helping prevent zonal transmission congestion in export. These result produce an higher market competition which is evaluated by means of the RSI index.
| Specialisation | Sustainable Energy Planning and Management |
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| Language | English |
| Publication date | 6 Aug 2014 |
| Number of pages | 95 |
| Keywords | 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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