Sector coupling via hydrogen to lower the cost of energy system decarbonization

Abstract

There is growing interest in using hydrogen (H₂) as a long-duration energy storage resource in a future electric grid dominated by variable renewable energy (VRE) generation. Modeling H₂ use exclusively for grid-scale energy storage, often referred to as “power-to-gas-to-power (P2G2P)”, overlooks the cost-sharing and CO₂ emission benefits from using the deployed H₂ assets to decarbonize other end-use sectors where direct electrification is challenging. Here, we develop a generalized framework for co-optimizing infrastructure investments across the electricity and H₂ supply chains, accounting for the spatio-temporal variations in energy demand and supply. We apply this sector-coupling framework to the U.S. Northeast under a range of technology cost and carbon price scenarios and find greater value of power-to-H₂ (P2G) vs. P2G2P routes. Specifically, P2G provides grid flexibility to support VRE integration without the round-trip efficiency penalty and additional cost incurred by P2G2P routes. This form of sector coupling leads to: (a) VRE generation increase by 13–56%, and (b) total system cost (and levelized costs of energy) reduction by 7–16% under deep decarbonization scenarios. Both effects increase as H₂ demand for other end-uses increases, more than doubling for a 97% decarbonization scenario as H₂ demand quadruples. We also find that the grid flexibility enabled by sector coupling makes deployment of carbon capture and storage (CCS) for power generation less cost-effective than its use for low-carbon H₂ production. These findings highlight the importance of using an integrated energy system framework with multiple energy vectors in planning cost-effective energy system decarbonization.