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Hydrogen Storage for Wind Parks - A Real Options Evaluation for an Optimal Investment in More Flexibility


  • Kroniger, Daniel

    () (RWTH Aachen University)

  • Madlener, Reinhard

    () (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))


In this paper, we investigate the economic viability of hydrogen storage for excess electricity produced in wind power plants. To this end, we define two scenarios and use both Monte Carlo simulation and real options analysis. The use of hydrogen as a storage medium helps to increase capacity utilization of the wind parks; in the case of disconnection of the wind park (grid overload, grid stability considerations), the investor can also offer system-relevant services by producing reserve energy. It also allows temporal arbitrage, i.e. the purchasing of electrical energy at low spot market prices in order to generate hydrogen, and the selling of electricity that is generated from hydrogen at high spot market prices. Finally, system services can be offered in the form of minute reserve.

Suggested Citation

  • Kroniger, Daniel & Madlener, Reinhard, 2013. "Hydrogen Storage for Wind Parks - A Real Options Evaluation for an Optimal Investment in More Flexibility," FCN Working Papers 3/2013, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  • Handle: RePEc:ris:fcnwpa:2013_003

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    References listed on IDEAS

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    9. Harmsen - van Hout, Marjolein & Ghosh, Gaurav & Madlener, Reinhard, 2013. "An Evaluation of Attribute Anchoring Bias in a Choice Experimental Setting," FCN Working Papers 6/2013, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    10. Lu, Di & Wang, Bende & Wang, Yaodong & Zhou, Huicheng & Liang, Qiuhua & Peng, Yong & Roskilly, Tony, 2015. "Optimal operation of cascade hydropower stations using hydrogen as storage medium," Applied Energy, Elsevier, vol. 137(C), pages 56-63.
    11. Ghandehariun, S. & Wang, Z. & Naterer, G.F. & Rosen, M.A., 2015. "Experimental investigation of molten salt droplet quenching and solidification processes of heat recovery in thermochemical hydrogen production," Applied Energy, Elsevier, vol. 157(C), pages 267-275.
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    14. Locatelli, Giorgio & Palerma, Emanuele & Mancini, Mauro, 2015. "Assessing the economics of large Energy Storage Plants with an optimisation methodology," Energy, Elsevier, vol. 83(C), pages 15-28.
    15. Nistor, Silviu & Dave, Saraansh & Fan, Zhong & Sooriyabandara, Mahesh, 2016. "Technical and economic analysis of hydrogen refuelling," Applied Energy, Elsevier, vol. 167(C), pages 211-220.
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    18. Grueger, Fabian & Möhrke, Fabian & Robinius, Martin & Stolten, Detlef, 2017. "Early power to gas applications: Reducing wind farm forecast errors and providing secondary control reserve," Applied Energy, Elsevier, vol. 192(C), pages 551-562.
    19. Davide Astiaso Garcia & Federica Barbanera & Fabrizio Cumo & Umberto Di Matteo & Benedetto Nastasi, 2016. "Expert Opinion Analysis on Renewable Hydrogen Storage Systems Potential in Europe," Energies, MDPI, Open Access Journal, vol. 9(11), pages 1-22, November.
    20. Xian, Hui & Karali, Berna & Colson, Gregory & Wetzstein, Michael E., 2015. "Diesel or compressed natural gas? A real options evaluation of the U.S. natural gas boom on fuel choice for trucking fleets," Energy, Elsevier, vol. 90(P2), pages 1342-1348.
    21. Locatelli, Giorgio & Invernizzi, Diletta Colette & Mancini, Mauro, 2016. "Investment and risk appraisal in energy storage systems: A real options approach," Energy, Elsevier, vol. 104(C), pages 114-131.
    22. Gao, Cuixia & Sun, Mei & Geng, Yong & Wu, Rui & Chen, Wei, 2016. "A bibliometric analysis based review on wind power price," Applied Energy, Elsevier, vol. 182(C), pages 602-612.

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    Wind power; hydrogen storage; real options analysis; optimal investment decision-making;

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