Turning the wind into hydrogen: The long-run impact on electricity prices and generating capacity

Hydrogen production via electrolysis has been proposed as a way of absorbing the fluctuating electricity generated by wind power, potentially allowing the use of cheap electricity at times when it would otherwise be in surplus. We show that large-scale adoption of electrolysers would change the shape of the load–duration curve for electricity, affecting the optimal capacity mix. Nuclear power stations will replace gas-fired power stations, as they are able to run for longer periods of time. Changes in the electricity capacity mix will be much greater than changes to the pattern of prices. The long-run supply price of hydrogen will thus tend to be insensitive to the amount produced.

Research Highlights
► Hydrogen production from electrolysis may offset intermittent wind generation.
► The generation capacity mix will change in response to changed demand patterns.
► The long-run equilibrium supply curve for hydrogen will be quite flat.
► The production cost will be very sensitive to fuel prices paid by generators.