Grid-supportive electrolysis in distribution grids: techno-economic and regulatory analysis for Austria

Background: Strong expansion of intermittent renewable generation puts increasing pressure on distribution grids and requires significant grid enforcement measures. Electrolysis may act as an alternative to conventional grid enforcement to overcome grid constraints in a timely and effective manner as it creates additional flexible load and thus enables renewable production peaks to be absorbed. In doing this, conventional grid enforcement measures are avoided and additional value is created through the production of hydrogen.The focus of this work is on two aspects: First, a regulatory analysis is undertaken to develop feasible organisational models since DSOs are typically not allowed to engage in generation activities. Second, a techno-economic analysis is done for four case studies in the network area of 'Energienetze Steiermark' in Austria. Thereby, grid simulation determines the minimum grid-supportive operation and is combined afterwords with profit-maximising dispatch of the electrolysis against market prices. A technical simulation assures that non-linearities and minimum stable generation of the electrolysis are respected. In a cost-benefit analysis, the net benefit was compared against the costs of conventional grid enforcement measures. Results: The regulatory analysis reveals that ownership of electrolysis by DSOs is almost ruled out by European and Austrian legislation. Only after an exceptional permission from the regulatory authority following a negative tender, the DSO is allowed to operate the facility in a grid-supportive way only. The results of the techno-economic analysis show that the capacity factor for the electrolysis is below 5 % when operated in grid-supportive mode only but a hydrogen price above 6 EUR/kg incentivizes market based operation and contributes to resolving the grid congestion. Conclusions: Ownership of the electrolysis can be awarded to a market player and the flexibility service can be procured by the DSO. It is not economically viable to operate electrolysis for grid-supportive purposes only. In general, if the price of hydrogen is high enough, profit maximising behavior of the electrolysis partly resolves the grid congestion and the overall benefits outweigh the costs. This conclusion also holds when comparing the economic results of the electrolyzer against conventional grid enforcement measures.