Hydrogen Energy Storage and Power-to-Gas: Establishing Criteria for Successful Business Cases: NREL (National Renewable Energy Laboratory)

Joshua Eichman, Marc Melaina

Research output: NRELPresentation


As the electric sector evolves and increasing amounts of variable generation are installed on the system, there are greater needs for system flexibility, sufficient capacity and greater concern for overgeneration. As a result there is growing interest in exploring the role of energy storage and demand response technologies to support grid needs. Hydrogen is a versatile feedstock that can be used in a variety of applications including chemical and industrial processes, as well as a transportation fuel and heating fuel. Traditionally, hydrogen technologies focus on providing services to a single sector; however, participating in multiple sectors has the potential to provide benefits to each sector and increase the revenue for hydrogen technologies. The goal of this work is to explore promising system configurations for hydrogen systems and the conditions that will make for successful business cases in a renewable, low-carbon future. Current electricity market data, electric and gas infrastructure data and credit and incentive information are used to perform a techno-economic analysis to identify promising criteria and locations for successful hydrogen energy storage and power-to-gas projects. Infrastructure data will be assessed using geographic information system applications. An operation optimization model is used to co-optimizes participation in energy and ancillary service markets as well as the sale of hydrogen. From previous work we recognize the great opportunity that energy storage and power-to-gas but there is a lack of information about the economic favorability of such systems. This work explores criteria for selecting locations and compares the system cost and potential revenue to establish competitiveness for a variety of equipment configurations. Hydrogen technologies offer unique system flexibility that can enable interactions between multiple energy sectors including electric, transport, heating fuel and industrial. Previous research established that hydrogen technologies, and in particular electrolyzers, can respond fast enough and for sufficient duration to participate in electricity markets. This work recognizes that participation in electricity markets and integration with the gas system can enhance the revenue streams available for hydrogen storage systems and quantifies the economic competitiveness and of these systems. A few of the key results include 1) the most valuable revenue stream for hydrogen systems is to sell the produced hydrogen, 2) participation in both energy and ancillary service markets yields the greatest revenue and 3) electrolyzers acting as demand response devices are particularly favorable.
Original languageAmerican English
Number of pages14
StatePublished - 2015

Publication series

NamePresented at the 33rd USAEE/IAEE North American Conference, 25-28 October 2015, Pittsburgh, Pennsylvania

NREL Publication Number

  • NREL/PR-5400-65386


  • comparison
  • demand response
  • economics
  • electricity markets
  • electrolyzers
  • hydrogen energy storage
  • operations
  • optimization
  • P2G
  • power-to-gas
  • price-taker
  • storage


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