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Quantifying the Additionality of Grid-Connected Hydrogen in a Decarbonising Energy System

Author

Listed:
  • Xing, H.
  • Miles, J.
  • Scott, S. A.

Abstract

This study quantifies the additionality of grid-connected hydrogen production, i.e., the additional CO2 emissions and system costs incurred when electrolysers divert variable renewable energy (VRE) from the grid. Using a power system model for the current and a future Great Britain (GB) power system with high VRE penetration, we define a fair cost and fair carbon intensity to analyse hydrogen with additionality produced via different electricity sourcing strategies: buying from the grid (on-grid), from VRE generators before the market (VRE-ahead), and using curtailment. It is found that the additional thermal generation led by grid-connected hydrogen production prevents hydrogen from being cost-efficient and clean. In the future GB power system with high VRE penetration, using curtailment is the most cost-effective option. Offsetting the additional emissions from hydrogen production requires substantially more VRE capacity in a future decarbonised system than in the current one, though the additional emissions are less in a decarbonised system. This risks increasing the cost of offsetting the additional emissions from hydrogen production in the future.

Suggested Citation

  • Xing, H. & Miles, J. & Scott, S. A., 2025. "Quantifying the Additionality of Grid-Connected Hydrogen in a Decarbonising Energy System," Cambridge Working Papers in Economics 2552, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camdae:2552
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    References listed on IDEAS

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    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q47 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy Forecasting

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