Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/233976
Authors: 
Ruhnau, Oliver
Year of Publication: 
2021
Abstract: 
Wind and solar energy are often expected to fall victim to their own success: the higher their share in electricity production, the more their revenue on electricity markets (their “market value”) declines. While in conventional power systems, the market value may converge to zero, this study demonstrates that “green” hydrogen production, through adding electricity demand in low-price hours, can effectively and permanently halt the decline. With an analytical derivation, a Monte Carlo simulation, and a numerical electricity market model, I find that – due to flexible hydrogen production alone – market values across Europe likely converge above €19 ± 9 per MWh for solar energy and above €27 ± 8 per MWh for wind energy in 2050 (annual mean estimate ± standard deviation). This lower boundary is in the range of the projected levelized costs of renewables and has profound implications. Market-based renewables may hence be within reach.
Subjects: 
Renewable energy
Hydrogen electrolysis
Electricity market
Electricity economics
Integrated energy systems
Flexible electricity demand
JEL: 
Q4
Q40
Q41
Q42
Document Type: 
Working Paper






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