EU plans for hourly matching will increase cost of green hydrogen by more than 25%, study finds

The recently passed EU Delegated Acts on Renewable Fuels of Non-Biological Origin (RFNBOs) — ie, green hydrogen and their derivatives — allow for monthly matching of green hydrogen production with renewables generation until 2030, when it is due to switch to hour-by-hour temporal correlation.

In other words, producers must prove every hour that their electrolysers have consumed only renewable energy generated within that hour.

And due to the Delegated Act’s additionality clause, all the electricity consumed must have been generated by renewables projects that were built specifically to supply power for green hydrogen production.

Researchers in the US and Germany have carried out a study to see what impact hourly temporal correlation and additionality would have on the production costs of green hydrogen.

They concluded that hourly correlation — or “simultaneity” in their words — would increase the cost of green hydrogen by 27.5%, compared to annual correlation, with both scenarios including additionality.

Their hourly simultaneity modelling found that the levelised cost of green hydrogen (LCOH) would average €4.58 per kilogram, based on 2017-20 wind-power prices in Germany, but under the “flexible” annual simultaneity scenario, it would only be €3.32.

And the EU’s monthly simultaneity requirement, which runs until 2030, would only be about 10% higher than in the flexible scenarios.

The authors add that the “complex hourly definitions are more likely to conflict across jurisdictions, which could impede the international streamlining of hydrogen standards necessary for global trading”.

‘Little evidence’

“By contrast, we find a slight reduction in power sector emissions across most of the considered cases,” it adds. This is because “current trends in the energy transition are likely to further reduce the risk of increasing power sector emissions”.

The authors — Oliver Ruhnau, an assistant professor at the University of Cologne, and Johanna Schiele, a former fellow at Harvard University who now works for the European Commission — therefore recommend “a flexible definition of green hydrogen, with an annual additionality criterion and no strict hourly simultaneity requirement”.

In other words, producers would only have to prove they have bought the same amount of renewable energy as the electricity they have consumed on an annual basis, rather than every hour.

This would allow “the investor and operator of a green hydrogen project to solve the complex trade-off between responding to the availability of the dedicated renewable production, responding to market prices (and hence the system-wide availability of renewable production), and increasing the electrolysers’ utilisation, while matching the temporal patterns of hydrogen demand”.

Back in February, when the European Commission first published its planned Delegated Acts, complete with hourly matching from 2030, trade body Hydrogen Europe declared: “These strict rules can be met but will inevitably make green hydrogen projects more expensive and will limit its expansion potential, reducing the positive effects of economies of scale and affecting Europe’s capacity to achieve the goals set in REPowerEU [to produce ten million tonnes of renewable hydrogen by 2030 and import a further ten million tonnes from outside the bloc].”

The good news for Hydrogen Europe is that the hourly correlation from 2030 is not quite set in stone. A review will be carried out in 2028 ahead of its introduction, which could recommend that it does not go ahead.