As Lithuania actively prepares for the development of hydrogen energy and plans the necessary infrastructure, Lithuania’s gas transmission system operator Amber Grid has conducted an analysis of the interaction between the green hydrogen ecosystem and the electricity sector.
Green hydrogen is produced using renewable energy sources (such as solar or wind) through water electrolysis. This is a clean method of hydrogen production compared to other production methods that generate significant amounts of carbon dioxide emissions.
According to the analysis, green hydrogen producers will have the technical capabilities to participate in electricity system flexibility service markets and to provide flexibility services.
“Flexibility needs in the electricity grid are increasing due to the growing integration of variable renewable energy sources (RES), and electrolysis facilities have the potential to respond to these needs. However, participation in flexibility service markets would most likely not be the main source of revenue, but rather one of the ways to optimize hydrogen production operations. Properly planned participation in flexibility service markets could help green hydrogen producers reduce operating costs, which in the long term would account for the largest share of the final green hydrogen price,” says Danas Janulionis, Head of the Energy Transformation Center at Amber Grid.
Given the projected significant expansion of renewable energy sources, national strategic energy documents also foresee the development of flexible capacity services and the contribution of technologies providing such services. Enabling electrolysis technologies to provide flexibility services will be significant – according to the National Energy Independence Strategy, by 2050, 30% (or 6.5 GW) of flexible capacities will consist of green hydrogen production electrolysis facilities.
How electrolyzers could participate in flexibility service markets and whether they could operate as flexible consumers will depend on the chosen electrolyzer technology and the technical capabilities of the entire hydrogen production facility, as well as on the selected business model, the definition of the main product, and the needs of the end user.
D. Janulionis notes that although electrolysis technologies have technical capabilities to provide flexibility services, albeit with certain limitations, the current potential for these facilities to participate in flexibility markets remains limited due to the still-developing green hydrogen ecosystem. The analysis identified three main measures that would support the development of the green hydrogen sector and enhance its interaction with the electricity sector.
“The emergence of hydrogen transport infrastructure would allow hydrogen producers to address hydrogen storage challenges and enable more flexible green hydrogen production. The introduction of a dynamic electricity transmission tariff would allow hydrogen producers to produce hydrogen more cost-effectively and reduce business costs. The definition of national flexibility needs and the development of flexibility services could create conditions for hydrogen production facilities to discover new revenue streams,” says D. Janulionis.
