Negative redispatch power for green hydrogen production: Game changer or lame duck? A German perspective

Abstract Following years of controversial discussions about the risks of market-based redispatch, the German transmission network operators finally installed regional redispatch markets by the end of 2024. Since water electrolysers are eligible market participants, the otherwise down-wards redispatched renewable energy can be used for green hydrogen production in compli-ance with European Union law. This article investigates whether and under which conditions the regional redispatch markets provide an economic incentive for electrolyser participation. We introduce a model of a green hydrogen production project sourcing electricity from differ-ent power purchase options in order to supply a green hydrogen off-taker. By using recreated historic redispatch time series, we evaluate various power purchase scenarios, taking differ-ent regulatory conditions, market price levels and production system configurations into ac-count. Our results show that low redispatch price levels can lead to notable production cost reductions, potentially counteracting uncertainties in redispatch power availability and thus incentivising system-beneficial electrolyser siting and market participation. The magnitude of possible cost reductions depends mainly on project sizes, storage cost and off-taker flexibility. Besides providing an incentive for system-beneficial siting, the cost reductions could increase the competitiveness of German and European green hydrogen compared to fossil-based al-ternatives. In contrast, the possibility of high redispatch price levels can nullify possible cost reductions and discourage market participation.