From Natural Gas to Hydrogen

Abstract

Climate change, unfavorable geopolitical developments and resource scarcity pushes the fossil fuel based energy sector in the direction of renewable, carbon-neutral resources. The volatile nature of these, however, created new, technical needs for increased storage capacity and interconnectedness of demand and supporting grid, providing flexibility options. Hydrogen re-emerged as a possibility in the scientific discussion because as a potentially green energy carrier it is easy to store, transport and convert to and from electricity. The economic advantages of transporting hydrogen in its original, molecular form via pipelines rather than relying simply on the electric transmission grid are connected to the amount of energy that needs to be transported – the pipeline transportation usually requiring larger upfront investment but operating with lower unit costs. The uncertainty, however, regarding the competitiveness of hydrogen in possible end-use applications translates into unpredictability in its penetration of the future economy, bringing the return on investment of pipeline transportation options into question.
This thesis, using a quantitative analysis, compares the advantages and disadvantages of the identified, technologically possible transmission options – electric transmission, blended natural gas-hydrogen transmission, or the virtual, retrofitted and dedicated pipeline options – through the resulting average hydrogen price, volatility and grid stability of the Dutch energy grid and market under different penetration scenarios. By formulating the research as a constrained optimization problem, and using the Calliope framework to find an optimal (minimum cost) solution, it is possible to extract the shadow prices of the relevant constraints and use them as an indicator for hydrogen price and grid stability.