Conceptual design and optimum operations of the FlexH2 System
The immense growth of offshore wind energy generation, combined with its conversion and storage, leads to new businesses. Supply and demand are becoming less predictable, and markets are changing. It still needs to be determined how much wind energy needs to be incorporated into the energy system, transferred to the industry as electricity, converted into hydrogen and/ or other energy carriers like chemicals and heat, or stored in diverse ways.
In the FlexH2 project, we are designing an offshore wind farm capable of injecting electric energy into the grid and producing green hydrogen. Furthermore, we are investigating which factors play a role in this and how they influence the considerations and decisions of wind farm developers. The overall conceptual design of such a system will be delivered in this project with the following:
the design optimisation of an offshore wind hydrogen-power-plant module,
the operational strategy for efficient system flexibility service delivery and,
the provision of an energy management system.
The optimum concept of the system depends on the specific country under study. The FlexH2 concept is being designed to be integrated into the Dutch Energy system and will provide insights and recommendations to achieve a profitable offshore wind-to-hydrogen business case under different scenarios by 2030 and 2050. The tools used are TNO’s European power market and dispatching business models.
The scenarios considered represent the Dutch electricity system under low and high electrification growth, respectively, following the current national and European policies for supply and demand. Considering different electrification scenarios is essential to the design of the FlexH2 concept: in a low electrification scenario, the electricity demand is low, which usually renders low electricity prices whereas in a high electrification scenario, the opposite occurs. This affects the optimal design of the FlexH2 concept.
Three different business strategies are first studied. The first two, baseload and peak shaving, are driven by the operation of the wind-to-hydrogen module, while the third one is based on what the most economical situation is.
1. The baseload strategy prioritises the electrolyzer since the main focus is to have a continuous green hydrogen production. Any excess electricity production is sold on the market. Under this strategy, the hydrogen price and Levelised Cost Of Hydrogen (LCOH) are the main drivers for a positive business case. Green hydrogen would require high subsidies to turn into a positive business case.
2. The peak shavings strategy uses the electrolyzer to shave the peaks off the wind farm’s production, and the priority is to produce power. The electricity price and the Levelised Cost Of Energy (LCOE) are the main drivers for a positive business case. Subsidising green hydrogen could also support the business case. However, the effect is lower in this strategy because the utilisation of the electrolyzer is lower (the main focus is to reduce curtailment; i.e., the reduction of wind energy production that may have to be imposed if the electric grid cannot take a sudden peak in power).
3. The profit optimisation strategy plays on electricity and hydrogen markets by looking at the forecasted hydrogen price to determine the most profitable production. This is the most flexible strategy: the prices of electricity and hydrogen will determine the production. Under this strategy, generally, when the price of electricity is high, the reason is that the demand is high in such a way that the electricity supply is not enough. Therefore, it is more convenient for society and for the business case of the wind-hydrogen system to take the electric energy produced by the wind turbines and inject it into the grid. In other cases, the electricity price is low, meaning that there is enough green supply to match with demand. Under these assumptions, producing green hydrogen is more beneficial both for the system and for the operator since the hydrogen can be sold or converted as another energy carrier for a better price.
A hydrogen market is required to have profitability of wind-to-hydrogen system. However, still a substantial reduction of LCOH is necessary as well as the support of subsidies to socialise (parts of) the cost of infrastructure (grid connection).
All in all, the aim is to maximise the value of large volumes of wind energy considering conversion to hydrogen in the future energy system (up to 2030 and beyond), ensuring both sustainable business cases for developers and maximum value for society. Integrating feasible business models for offshore wind-to-hydrogen leads to a win-win situation for the industrial transformation to a net-zero emission energy system.