Decarbonization synergies from joint planning of electricity and hydrogen production: A Texas case study

Hydrogen (H-2) shows promise as an energy carrier in contributing to emissions reductions from sectors which have been difficult to decarbonize, like industry and transportation. At the same time, flexible H-2 production via electrolysis can also support cost-effective integration of high shares of variable renewable energy (VRE) in the power system. In this work, we develop a least-cost investment planning model to co-optimize investments in electricity and H-2 infrastructure to serve electricity and H-2 demands under various low-carbon scenarios. Applying the model to a case study of Texas in 2050, we find that H-2 is produced in approximately equal amounts from electricity and natural gas under the least-cost expansion plan with a CO2 price of $30-60/tonne. An increasing CO2 price favors electrolysis, while increasing H-2 demand favors H-2 production from Steam Methane Reforming (SMR) of natural gas. H-2 production is found to be a cost effective solution to reduce emissions in the electric power system as it provides flexibility otherwise provided by natural gas power plants and enables high shares of VRE with less battery storage. Additionally, the availability of flexible electricity demand via electrolysis makes carbon capture and storage (CCS) deployment for SMR cost-effective at lower CO2 prices ($90/tonne CO2) than for power generation ($180/tonne CO2). The total emissions attributable to H-2 production is found to be dependent on the H-2 demand. The marginal emissions from H-2 production increase with the H-2 demand for CO2 prices less than $90/tonne CO2, due to shift in supply from electrolysis to SMR. For a CO2 price of $60/tonne we estimate the production weighted-average H-2 price to be between $1.30-1.66/kg across three H-2 demand scenarios. These findings indicate the importance of joint planning of electricity and H-2 infrastructure for cost-effective energy system decarbonization. (C) 2020 The Author(s). Published by Elsevier Ltd on behalf of Hydrogen Energy Publications LLC.