Assessment of a coupled electricity and hydrogen sector in the Texas energy system in 2050

Due to its ability to reduce emissions in the hard-to-abate sectors, hydrogen is expected to play a significant role in future energy systems. This study modifies a sector-coupled dynamic modeling framework for electricity and hydrogen by including policy constraints, carbon prices, and possible hydrogen pathways and applies it to Texas in 2050. The impact of financial policies, including the US clean hydrogen production tax credit, on required infrastructure and costs are explored. Due to low natural gas prices, financial levers are necessary to promote low-carbon hydrogen production as the optimized solution. The Levelized Costs of Hydrogen are found to be $1.50/kg in the base case (primarily via steam methane reformation production) and lie between $2.10 - 3.10/kg when production is via renewable electrolysis. The supporting infrastructure required to supply those volumes of renewable hydrogen is immense. The hydrogen tax credit was found to be enough to drive production via electrolysis. • Joint optimization is necessary to show impacts of a sector-coupled hydrogen economy. • Hydrogen from renewable electricity induces immense infrastructure requirements. • Levelized costs in Texas are cost-competitive with other global producers. • Subsidies for renewable energies are required despite decreases in investment costs.