Thermal constraints are forecast to cost consumers between £500m and £3b a year between now and 2030, owing to an increase in renewable generation and a lack of capacity on the transmission system to transfer power from where it generated to where it is used.
Hydrogen electrolysis has the potential to mitigate some of these constraints by acting to store excess generation at times of high renewable generation. However, this will only be realised if the facilities are located in the right place and can operate in a way which provides a benefit to the electricity system. This project aims to investigate the potential for such facilities to provide constraint management services and suggest the right market signals to encourage investment in the right areas.
Benefits
This project will increase our understanding of how electrolysis technology could help reduce constraint costs, lowering the costs to consumers of integrating renewable energy. It could enable a faster net zero transition through the ability to reduce constraint costs at a quicker rate than building new electricity transmission infrastructure alone. Furthermore, hydrogen produced by these plants could help decarbonise other sectors.
Learnings
Outcomes
This innovation project has determined that it is technically viable to operate a hydrogen production facility in a manner that allows it to support management of thermal constraints on the electricity network. However, the project found that under current market arrangements there is not a sufficiently strong commercial incentive for hydrogen production facilities to play an active role in thermal constraints management without additional support.
This project has found that there is a viable commercial case for hydrogen production facilities to help manage thermal constraints providing:
- There is an alternative electricity supply to draw upon when constraints are not available, to firstly increase utilisation and thus revenue generated from the electrolysers and secondly ensure electrolysers are ‘warm’ enough to ramp up rapidly when required. This may mean hydrogen production facilities drawing energy from the grid during non-constrained times;
- There is access to a flexible offtaker. The most likely available flexible offtake option is blending into the gas network either as a sole or secondary offtaker; and
- A support mechanism is in place that will incentivise hydrogen production facilities to connect in the right locations and maintain operational profiles that will contribute to the management of thermal constraints in the electricity network. The design of this mechanism is critical to the commercial case and our proposed solution to a support mechanism is summarised below.
The project has outlined a number of proposed recommendations to explore the potential for hydrogen production supported by contract mechanisms.
Lessons Learnt
With highly innovative research projects such as this, deliverables and objectives are going to change as further findings as uncovered that alter the direction of the project, one key lesson from the Arup Project Management team was to ensure that there was relevant and available flexibility within the scope, or the mechanism from which to process change control.
