Value creation for renewable hydrogen via local hydrogen hubs

While prominently highlighted in the National Plan Energy of the Netherlands government (2022), green hydrogen has been facing obstacles in terms of scaling up in energy markets and thus fulfilling expectations. An important reason is that production of green hydrogen has remained relatively costly, partly due to the lack of economies of scale as of yet in combination with investment dilemmas caused by market uncertainties.
The project H2opper aims at addressing this dilemma by designing a local hydrogen hub with a governance structure, standardised contracts and a virtual trading platform. This paper explores the economic benefits for suppliers of green hydrogen when modifying their production profiles according to electricity market profiles. Assuming that a producer continues to trade the majority of its produced green hydrogen via long-term hydrogen purchase contracts, as is the default trading option for securing finance investment decisions, and supplies the remainder via short term (‘spot’) market trading, additional financial benefits can be realised. The paper analyses examples of green hydrogen production profiles and impacts of each profile on the levelized costs of green hydrogen.