Modifying electricity price signals in Germany for supply-oriented electricity demand and economical hydrogen use in industry

Green hydrogen plays an integral part in the European Union's strategy to reduce greenhouse gas emissions to net-zero and is an important energy carrier for achieving climate targets. To produce hydrogen at lowest cost, low electricity prices are crucial. This paper investigates electrolytic hydrogen production from grid electricity that comes with a modified price signal. The modification is twofold: (1) the annual mean is adjusted and (2) the hourly resolved electricity price is modified. A factor changes the amplitude of the price. Based on the annual hydrogen demand for a company, a cost-minimizing perfect foresight approach is used to calculate minimum hydrogen production costs using the least-cost production hours of the year. The results show that a high amplitude for electricity prices leads to shorter required electrolyzer operating times. This could incentivize flexibility on the consumer side. The costs for the state increase with higher flexibility. The lower the factor, the higher the operating hours and lower the incentive for flexible operation.