Journal of Energy Markets

Scaling up hydrogen production in France: learning rates versus economies of scale strategies

Rodica Loisel and Lionel Lemiale

  • Low-carbon hydrogen is produced with the surplus from nuclear and renewables.
  • Learning rates are prior to economies of scale at early stage of H2 deployment.
  • Residual power is not enough to decarbonize the hydrogen production in France.
  • Economically viable electrolysers cumulates 20 GW in 2035 (2.3€/kg H2).

This paper offers an insight into the infrastructure of hydrogen production in order to achieve a clear vision for electrolyzer planning and to avoid the possibility of huge sunk costs at an early stage. By means of a power plant dispatching model, we evaluate the potential for hydrogen production in France using the residual load of renewables and nuclear power after generating sufficient power to meet the electricity demand. Our results show that intermittency in generation is passed on through electrolyzers, leading to low capacity factors and unclear business models. Installing decentralized multiple electrolyzers with learning rates seems a better strategy than installing a few large electrolyzers with economies of scale; the aim is to achieve this strategy by 2035, with the trend reversed thereafter. However, the cost of hydrogen is set to increase by 2050 due to low capacity and low residual load. Thus, the massive deployment of clean hydrogen production requires ambitious power generation capacities, implying that connecting hydrogen only to surplus power-in might not be enough to decarbonize economies. Dedicated wind and solar power farms or imports of low-carbon hydrogen will most probably be necessary.

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