Oliver Ruhnau argues for renewable electricity and hydrogen electrolysis as solutions for fostering energy transition and climate change mitigation.
Oliver Ruhnau, PhD candidate at the Centre for Sustainability and Research Associate to Prof. Lion Hirth, was awarded a prize for the second-best student paper at the annual conference of the International Association of Energy Economics. He focused on renewable electricity and hydrogen electrolysis as two important solutions for the energy transition and climate change mitigation.
In his paper entitled How flexible electricity demand stabilizes wind and solar market values: the case of hydrogen electrolyzers, Oliver Ruhnau takes an alternative look at the future of electricity markets. Although wind and solar power are at the core of the energy transition, there has been a long debate on how to design policy support for renewables. Despite declining cost, it remains unclear whether high shares of renewables can be reached on a market basis without policy support. This is because wind and solar power are not available all the time and, when they are available, they depress electricity prices and hence their market revenue. At the same time, there is an active policy debate on hydrogen. In particular, it is discussed how to ensure that “green” hydrogen is produced using only renewable electricity and if it can be competitive with other types of hydrogen, e.g. “grey” hydrogen produced from fossil gas with carbon emissions.
Oliver’s paper argues that flexible electricity demand of hydrogen electrolyzers can stabilize electricity market prices and, with it, the revenue of wind and solar power. This is because these electrolyzers consume renewable electricity, and their willingness-to-pay for electricity can set electricity prices. This finding demonstrates the economic synergy between renewable electricity and hydrogen electrolysis as two important solutions for the energy transition and climate change mitigation. Finally, the paper also supports the current German policy initiative to exempt hydrogen electrolyzers from the renewable levy. This enables electrolyzers a more direct participation in wholesale electricity markets and, instead of paying a levy, has a potential to support renewables through increased market values.
“Oliver combines both theoretical and empirical approaches, including the use of a techno-economic model of the European electricity market, to provide a comprehensive and robust analysis. His results are convincing and could easily be transferred to other types of flexible electricity demand”, Boris Solier, Assistant Professor at the University of Montpellier and Chairman of the Best Student Paper Committee – IAEE 2021 Online Conference, explained the decision of the jury.
The paper was presented at the annual conference of the International Associating of Energy Economics that took place on June 7–9, 2021.
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