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Economics of converting renewable power to hydrogen

Nature Energyvolume 4pages216222 (2019) | Download Citation

Abstract

The recent sharp decline in the cost of renewable energy suggests that the production of hydrogen from renewable power through a power-to-gas process might become more economical. Here we examine this alternative from the perspective of an investor who considers a hybrid energy system that combines renewable power with an efficiently sized power-to-gas facility. The available capacity can be optimized in real time to take advantage of fluctuations in electricity prices and intermittent renewable power generation. We apply our model to the current environment in both Germany and Texas and find that renewable hydrogen is already cost competitive in niche applications (€3.23 kg−1), although not yet for industrial-scale supply. This conclusion, however, is projected to change within a decade (€2.50 kg−1) provided recent market trends continue in the coming years.

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Data availability

The data used in this study are referenced in the main body of the paper and the Supplementary Information. Data that generated the plots in the paper are provided in the Supplementary Information. Additional data and information are available from the corresponding author upon reasonable request.

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Change history

  • 07 March 2019

    An amendment to this paper has been published and can be accessed via a link at the top of the paper.

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Acknowledgements

We gratefully acknowledge financial support from the Hanns-Seidel-Stiftung with funds from the Federal Ministry of Education and Research of Germany, and thank G. Friedl and A. Rieger for helpful comments. We also thank F. Steffen for providing valuable assistance with our data collection.

Author information

Affiliations

  1. TUM School of Management, Technical University of Munich, Munich, Germany

    • Gunther Glenk
  2. Department of Business Administration, University of Mannheim, Mannheim, Germany

    • Stefan Reichelstein
  3. Graduate School of Business, Stanford University, Stanford, CA, USA

    • Stefan Reichelstein

Authors

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Contributions

The authors jointly developed the research question, the model framework and the analytical findings. G.G. led the literature review, the data collection and the calculations. Both authors contributed substantially to the writing of the paper.

Competing interests

The authors declare no competing interests.

Corresponding authors

Correspondence to Gunther Glenk or Stefan Reichelstein.

Supplementary information

  1. Supplementary Information

    Supplementary Tables 1–23, Supplementary Notes 1–2, Supplementary Figure 1, Supplementary References

  2. Supplementary Data 1

    Cost review of electrolyzer technologies

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DOI

https://doi.org/10.1038/s41560-019-0326-1