Effect of large-scale variable electric loads and operation strategy in decentralized electricity markets: Case of large electrolyzers

A main characteristic of modern and future energy systems is the intermittent nature of renewable power generation, which is reflected in the day-ahead price of electricity as large fluctuations. Connecting significant new grid-connected loads lead to increased average electricity price in the day-ahead market. This occurs through demand-pull inflation. This study uses bid curves from NordPool to evaluate the effect of different large electrical loads in the day-ahead market. The methodology applied in this study enables the study of the effect of large variable grid-connected loads in the day-ahead markets with different operational electricity price limits within which they are allowed to operate. The results indicate a significant impact on electricity price. The operation strategy plays a key role as increasing the day-ahead price of electricity will disproportionally affect the rest of the market under study. For example, connecting a 400 MW electrolyzer to the grid and day-ahead markets could increase the electricity price by 35 €/MWh, meaning a 52% increase over the median day-ahead price in 2023. The lowest levelized cost of hydrogen was achieved at 45 €/MWh (1.4 €/kg). The results highlight the need for additional power generation to be built alongside large grid-connected loads to maintain low, and competitive electricity price in the day-ahead market. • Methodology developed to assess price impact of new-grid connected loads. • Large electrical loads raise day-ahead electricity prices significantly. • New generation investment is key to keeping electricity prices low. • A 400 MW electrolyzer may increase the price of electricity by 35 €/MWh or 52%. • Levelized cost of hydrogen ranges from 45 to 150 €/MWh (1.4 to 4.54 €/kg).