Portfolio effects in green hydrogen production under temporal matching requirements

This article investigates temporal matching requirements between electrolytic hydrogen production and dedicated renewable electricity generation for the hydrogen to qualify as “green”. In contrast to previous studies, which found that a more granular matching increases production costs, we study cost advantages for hourly matching through technological and spatial diversification. To this end, we develop and apply a linear cost-optimization model to quantify the resulting portfolio effects. We identify two types of portfolio effects, “technological” and “locational” ones, and quantify these for different portfolio sizes and types of power generation technologies in Germany. Portfolio effects turn out to be in the range of 3–8% when aggregating two locations, and up to 21 % for a nation-wide portfolio. Finally, we discuss the implications of our findings in terms of discrimination against small players and for the modeling of temporal matching requirements. • Temporal matching of green power and hydrogen production yields portfolio effects. • A linear cost-optimization model is proposed to investigate the portfolio effects. • Technological and spatial diversification lead to significant cost mitigation. • Technological portfolio effects reduce costs by 39 % on average. • Locational portfolio effects are 3–7% for two sites and up to 21 % for more sites.