Implementing a hydrogen system into the power grid - Business models for hydrogen energy storage applications in the Swedish grid

Abstract

The power grid is more than essential in today’s society, and it needs to remain stable to operate. Today there is a transition from fossil fuels to renewable energy and the power grid needs to be modified stay stable. The increased amount of re- newable energy makes the power grid less plannable due to the energy sources being dependent on the weather itself. This creates potential discrepancies in the grid between consumption and production. To create a power grid that can handle the volatility it is important to store energy. Hydrogen is a storage medium that has recently gained an increased focus. Using a hydrogen system consisting of an elec- trolyzer, a storage tank, and a fuel cell, creates a whole solution for energy storage that can be implemented in the power grid. The report focuses on innovation man- agement and tries to explain patterns in the transition to renewable energy sources. It also focuses on the economic feasibility of implementing a hydrogen system in the power grid in two different scenarios. Firstly it investigates the potential for using a hydrogen system for electricity arbitrage, and secondly, a hydrogen system which helps mitigate fluctuations in frequency through the ancillary services. The model forecasts future prices of electricity and ancillary services based on historical data to help estimate the potential profitability of these two scenarios. The analysis is based on a discounted cash flow model which estimates cash flows during a 10-year investment in the form of a net present value. While the first scenario, i.e., elec- tricity arbitrage is far from profitable, ancillary services appear to be a profitable application of a hydrogen system today.