Techno-economic analysis of coupling wind-powered green hydrogen production with geological storage

Abstract

The intermittent nature of wind power creates mismatches between electricity supply and demand, limiting its penetration in modern electricity grids. In this study, we explore the techno-economic potential to balance grid loads by coupling wind power generation with hydrogen (H2) production and underground storage. For a hypothetical 1 GW electricity market, we compare costs and logistics of wind power with and without coupled H2 storage in three leading underground storage options: salt caverns, lined rock caverns, and depleted oil and gas reservoirs. We calculate rates of return (ROR) for a 30-year facility lifetime based on 12 320 scenarios that span the full range of project variables, including cavern size, cavern installation costs, cost of hydro-lysis, transmission costs, production tax credit, and compression costs. The model is built from the perspective of a hypothetical wind power producer that owns and operates the storage facility and is large enough to sell directly to end users, such that electricity sale prices can be assumed to be in the retail range. The model does not include infrastructure and maintenance costs for a hydrogen transmission network. Therefore, the model is not an optimization of an entire energy system, but rather is optimized for a large entity (a utility) within an energy system under the assumption of constant parameters. The results suggest that coupled H2 production and storage can increase wind power capacity factors from an average of 0.38 to 0.62 without any loss of wind power generation, or a 40% increase relative to typical capacity factors without H2 storage. Coupled H2 storage can also increase a wind farm’s ROR from c. 8% to over 15% over a 30-year project lifetime, where underground storage in salt caverns provides the greatest potential ROR increase. We also consider different project financing scenarios and find that subsidizing H2 storage is more effective in improving wind power economics than existing production tax credits, which suggests that understanding and reducing underground storage costs has greater potential to expand wind power penetration than measures focused explicitly on incentivizing wind power production itself.