Marginal fixed premium for clean hydrogen portfolio standard (CHPS) considering techno-economic analysis of clean hydrogen production based on hydropower plants

Abstract

As the hydrogen economy recently gains momentum, the Korean government is actively encouraging Independent Power Producers (IPPs) to leverage hydrogen energy. The surging uncertainties in the power market, precipitated by the rapid increase in renewable energy sources (RES), necessitates IPPs to formulate a new benefit structure that utilizes green hydrogen. However, the current economic challenges associated with the operation of RES linked to water electrolysis result in diminished participation from IPPs. In response, the Korean government is planning to implement the Clean Hydrogen Portfolio Standard (CHPS), which requires clean hydrogen power generation and offers corresponding Fixed Premium (FP) subsidies. In this paper, we incrementally increase the FP for RES linked to electrolyzers (ELZ) and derive a marginal fixed premium (FPmar). This method initiates a shift towards higher economic feasibility compared to the traditional benefit structure of power trading-based RES. We suggest a green hydrogen-based business model (BM) that synergizes hydropower with water electrolysis and calculate a suitable CHPS subsidy to ensure the economic feasibility of this BM. In conclusion, this paper equips IPPs operating hydropower with the capability to evaluate the adequacy of the government-provided FP for the economical operation of a hydropower plant linked to water electrolysis. Furthermore, it provides policymakers with the framework to make informed decisions regarding the necessary FPmar to stimulate IPPs’ participation.

Keywords

• Clean hydrogen portfolio standard
• Fixed premium
• Hydrogen energy
• Hydropower
• Mixed integer linear programming