Joint Investment-Operation Planning for Assessing the Economic Impact of Hydrogen Integration in Power Systems

Abstract

The transition to renewable energy is pivotal for achieving decarbonization goals in the electricity sector. The focus on low-carbon emissions extends beyond the power sector, emphasizing the need for efficient planning for other energy carriers like green hydrogen. However, the intermittency of renewable sources necessitates solutions for operational planning and supply security, making energy storage systems vital for grid services. Battery energy storage systems (BESS) play a key role in future power networks dominated by renewables, as a short-term buffer. This study explores the conditions under which integrating large-scale BESS with hydrogen facilities in the power network enhances overall system profitability. We analyze this by formulating a joint investment-operation decision-making process, modeled as a mixed-integer chance-constrained optimization problem. To address computational challenges, we implement a scalable decomposition-based solution method that enables tractable optimization. Through the optimal solutions, we analyze different incentive strategies and technology cost scenarios to accelerate the kick-off of hydrogen production. By addressing the challenges of intermittency, pricing mechanisms, and optimizing the synergy between BESS and hydrogen systems, this research provides insights for resilient and profitable renewable energy networks, highlighting that hydrogen selling price significantly influences investment decisions and that incentives can accelerate market entry and transition.