Integrated inventory and capacity management for hydrogen production under consideration of fluctuating electricity prices

Venugopal Ramadasu and Gerald Reiner

International Journal of Production Research, 2025, vol. 63, issue 12, 4540-4562

Abstract: Integrated planning of production and inventory capacities for a risk-hedging supply chain is addressed with the presented paper. Of particular interest is a hydrogen production system, which faces uncertainties in energy supply and costs. In assessing hydrogen production through electrolysis, the model takes into account two sources of energy: stochastic photovoltaic (PV) supply and grid electricity with a stochastic price. As hydrogen produced using PV energy can be categorised as ‘green’, whereas the same is not guaranteed for hydrogen produced through grid energy, the use of PV energy is prioritised in the model. Models with two approaches for determining a threshold price for grid energy usage were developed. One method links the threshold price to Electrolyser utilisation using PV energy, while the other links it to inventory levels at a given time. The effectiveness of the models in a real-world hydrogen production environment was assessed through various performance metrics, yielding the following findings: (1) Decisions based solely on cost may lack adequacy due to the trade-offs in performance measures. (2) Inventory capacity has a major impact on renewable energy usage. (3) With appropriate inventory capacity, a threshold price based on inventory levels can ensure complete utilisation of renewable energy.

Date: 2025
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DOI: 10.1080/00207543.2025.2453646

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