Contracting Strategies for Electrolyzers to Secure Grid Connection

Abstract

In response to increasing grid congestion in the Netherlands, non-firm connection and transport agreements (CTAs) and capacity restriction contracts (CRCs) have been introduced, allowing consumer curtailment in exchange for grid tariff discounts or per-MW compensations. This study examines the interaction between an electrolyzer project, facing sizing and contracting decisions, and a network operator, responsible for contract activations and determining grid connection capacity, under the new Dutch regulations. The interaction is modeled using two bilevel optimization problems with alternating leader-follower roles. Results highlight a trade-off between CRC income and non-firm CTA tariff discounts, showing that voluntary congestion management by the network operator increases electrolyzer profitability at CRC prices below €10/MW but reduces it at higher prices. Furthermore, the network operator benefits more from reacting to the electrolyzer owner's CTA decisions than from leading the interaction at CRC prices above €10/MW. Ignoring the other party's optimization problem overestimates profits for both the network operator and the electrolyzer owner, emphasizing the importance of coordinated decision-making.