Market-based renewables: How flexible hydrogen electrolyzers stabilize wind and solar market values

Oliver Ruhnau

EconStor Preprints from ZBW - Leibniz Information Centre for Economics

Abstract: Wind and solar energy are often expected to fall victim to their own success: the higher their share in electricity production, the more their revenue on electricity markets (their “market value”) declines. While in conventional power systems, the market value may converge to zero, this study demonstrates that “green” hydrogen production, through adding electricity demand in low-price hours, can effectively and permanently halt the decline. With an analytical derivation, a Monte Carlo simulation, and a numerical electricity market model, I find that – due to flexible hydrogen production – market values in 2050 likely converge above €19 ± 9 per MWh for solar energy and above €27 ± 8 per MWh for wind energy. This is in the range of the projected levelized costs of renewables and has profound implications. Market-based renewables may hence be within reach.

Keywords: Renewable energy; Hydrogen electrolysis; Electricity market; Electricity economics; Integrated energy system; Flexible electricity demand (search for similar items in EconPapers)
JEL-codes: Q4 Q40 Q41 Q42 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-ene and nep-reg
Note: Please cite as: Ruhnau, Oliver (2021): “How flexible electricity demand stabilizes wind and solar market values: The case of hydrogen electrolyzers”, Applied Energy, https://doi.org/10.1016/j.apenergy.2021.118194
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:esprep:227075

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